Paradox of authenticity versus standardization: Expansion strategies of restaurant groups in China

Restaurant customers demand both personalized innovative, yet, affordable service delivery. Accordingly, restaurant groups that seek expansion must consider how to respond effectively to the standardization–authenticity paradox. This paper addresses two questions: what is the relationship between standardization and authenticity? How can restaurant managers use these concepts for the strategic positioning of their restaurant group? Typically, researchers present the two dimensions as a binary. In contrast, this paper first presents a theoretical model and analyzes the variations in the standardization–authenticity relationship. Subsequently, it classifies restaurant group expansion strategies into four categories: standardization of authenticity, authentic alliance, standardized chains and heterogeneity, and examines their respective level of competence required to increase performance. It concludes by presenting suggestions to position restaurants in terms of the extent of standardization and the extent of flexibility.     

Perceived values,satisfaction, and behavioral intentions: The role of familiarity in Korean restaurants

This study examined American customers’ perceptions of values regarding dining experiences in Korean restaurants in the United States. Specifically, the effects of hedonic and utilitarian values on customer satisfaction and behavioral intentions were investigated. This study also examined the moderating effect of familiarity with Korean restaurants on the relationships among perceived values, satisfaction, and behavioral intentions. Overall, the results indicated that American customers valued the utilitarian aspects of Korean restaurants more than the hedonic aspects. Additionally, utilitarian aspects had a stronger impact on customer satisfaction and behavioral intentions than hedonic aspects. However, when considering customers’ familiarity level with the restaurants, hedonic aspects more effectively induced positive behavioral intentions in the low familiarity group, proving that familiarity has a moderating role. Conversely, utilitarian aspects appeared to be more influential in terms of the behavioral intentions of the high familiarity group. Theoretical and practical implications are also discussed.     

Effects of service quality and food quality: The moderating role of atmospherics in an ethnic restaurant segment

This study empirically examined not only the relationship between perceived quality and satisfaction/loyalty, but also the role of customer perceptions of atmospherics in an ethnic restaurant segment. Specifically, this study, using hierarchical regression analyses, investigated the direct effects of service quality and food quality on customer satisfaction and loyalty as well as the moderating effect of the perception of atmospherics, in Korean restaurants. As expected, this study showed that service and food quality have positive and significant effects on customer satisfaction and loyalty. This suggested that, similar to other restaurant segments, employee service and food are of great importance for ethnic restaurants as well. Verifying the moderating role of atmospherics, however, this study found that good employee service can be more effective for increasing the satisfaction and loyalty of customers with a low perception of the atmospherics compared to those with a higher perception. Further, providing quality food is particularly critical for creating customer satisfaction in ethnic restaurants where atmospherics are not satisfactory. More detailed findings and implications are also discussed.     

Benchmarking firm capabilities for sustained financial performance in the U.S. restaurant industry

This study is designed to present an empirical assessment of important firm capabilities appropriate for benchmarking and on which firm capabilities restaurant firms should focus to achieve sustained financial performance. It also examines the key normative benchmarking theory premise that firm capabilities associated with sustained financial performance can be identified and that a firm's capability gaps, defined herein as the capability gaps between the firm and the selected benchmark firms (e.g., Camp, 1995), explain its financial performance. Lastly, this study shows how to use profile deviation to benchmark firm capabilities and extends this methodology by employing a model that incorporates interdependencies among firm capabilities. Findings offer pragmatic guidelines for restaurateurs to exercise benchmarking to pinpoint and enhance firm capabilities that would lead to sustained competitive advantage.     

Moderating effect of capital intensity on the relationship between leverage and financial distress in the U.S. restaurant industry

During the recent and ongoing economic turmoil, countless businesses have been facing financial distress and many have filed for bankruptcy. This issue is especially critical for the restaurant industry due to restaurants’ sensitivity to economic fluctuations. Therefore, the purpose of this study is to examine the financial distress issue in the U.S. restaurant industry. In particular, the study examines a moderating effect of capital intensity on the relationship between a firm's leverage and degree of financial distress. The dataset includes publicly traded U.S. restaurant firms during the period 1990–2008. The study measures the degree of financial distress by modified Z-scores, and findings suggest a positive moderating effect of capital intensity on the relationship between leverage and financial distress.     

Impact of brand recognition and brand reputation on firm performance: U.S.-based multinational restaurant companies’ perspective

Given the importance of a firm's performance, which is of significant interest to many groups of people including management, shareholders and governments, this study aims to examine the impact of brand recognition and brand reputation on firm performance within the U.S. multinational restaurant company context. The study findings suggest that brand reputation, in general, has a positive influence on a firm's value performance but no significant relationship with accounting performance. Brand recognition shows no significant relationship with both value and accounting performance measures controlling for the degree of internationalization of a multinational restaurant company.     

The financial impact of online customer reviews in the restaurant industry: A moderating effect of brand equity

The salient impact of electronic Word-of-Mouth (eWOM) on firm performance has been widely noticed by scholars and practitioners. While eWOM serves as an important source of information that helps reduce perceived uncertainty risks in service purchases, it is highly likely that other sources of information are simultaneously used with eWOM in the purchase decisions. Thus, this study empirically examined the financial effects of restaurant eWOM (review volume and review rating) and their changes in the presence of brand equity. Three-stage least squares analysis was employed in the empirical investigation. Our findings revealed that review volume and review rating contributed to restaurant profitability. Brand equity was found to moderate the effects of the review attributes on restaurants profitability, which implies that eWOM has a greater influence on the financial performance of weak-branded restaurants than strong-branded ones. Implications for researchers and practitioners are discussed.     

Impact of the COVID-19 pandemic: Evidence from the U.S. restaurant industry

The current study examines how the effect of COVID-19 on U.S. restaurant firms’ stock returns varies according to the firms’ pre-pandemic characteristics by employing three firm-level dimensions (financial conditions, corporate strategies, and ownership structure). Employing 795 firm-year observations obtained from annual reports and other databases, this study found that restaurant firms with past characteristics of larger size, more leverage, more cash flows, less ROA, and more internationalization are more resilient to stock declines reacting to COVID-19 than otherwise similar firms. Whereas, dividend, franchising, institutional ownership, and managerial ownership did not show any significant moderating effect on the relationship between COVID-19 and stock returns. This study sheds light on the research topic by providing insights into drivers of restaurant firm’s stock returns during the COVID-19 shock. Future studies can employ the variables and method used in the current study to extend the understanding of the issue.     

Antecedents and consequences of Franchisee satisfaction in the U.S. restaurant industry

This study surveyed 3,177 franchisees from 58 restaurant brands with the purpose of examining the antecedents and consequences of franchisee satisfaction in the U.S. food service sector. Findings indicate that a high level of franchisee income and franchisor care and trust are associated with a high level of franchisee satisfaction. Education had a negative impact on franchisees' satisfaction, suggesting that the higher the level of franchisee education, the less franchisees were satisfied with the franchise. Furthermore, the higher the franchisees' satisfaction was, the stronger the franchisees' intention to remain in the franchise system was, and the higher the likelihood of recommending the franchise to others.     

Determinants of a restaurant average meal price: An application of the hedonic pricing model

This study applies the hedonic pricing model to examine important attributes influencing average customer meal prices in restaurants in Seoul, Korea. Data from 185 restaurants were collected via Internet, phone interviews, site inspections, and ZAGAT Survey, and analyzed using OLS regression. The log-linear model was found to be most suitable for the data, and the proposed hedonic model accounted for as much as 73.7% of the variation in meal prices. The results indicate that food quality and décor were important determinants of restaurants’ average meal prices while service was not. Furthermore, the study found that a restaurant's location within the building (1st floor), the types of cuisine served (Japanese and Italian), parking facilities, private dining settings, franchising, and the number of blogger reviews (e-WOM) have significant effects on restaurants’ average meal prices. The model will provide useful information for restaurateurs in deciding effective menu pricing strategies.     

Motivation and satisfaction of Chinese and U.S. tourists in restaurants: A cross-cultural text mining of online reviews

Tourists with dissimilar cultural backgrounds think and behave differently. Precisely capturing and correctly understanding the cultural difference will help tourism managers generate greater customer satisfaction and increased business revenue. To this end, this paper uncovers and compares the motivation and satisfaction of restaurant tourist customers coming from China and U.S. by investigating their online ratings and reviews. From two major online review communities, customer ratings and reviews have been retrieved, quantified, text-mined, compared, and interpreted using statistics, latent Dirichlet allocation, and frequency analysis. Results suggest that Chinese tourists are less inclined to assign lower ratings to restaurants, and are more strongly fascinated by the food offered, whereas U.S. tourists are more apt to be fun-seeking, and are less uncomfortable with crowdedness.     

Explicit expression of anti-black biases in the full-service restaurant industry: Legal responsibilities and risks

Anecdotes detailing racial prejudices and discriminatory treatment of Black Americans while dining in full-service restaurants surface routinely in the popular press. These anecdotes are buttressed by a small number of studies documenting evidence of racist language and observed mistreatment of Black restaurant customers. In an effort to further explore the pervasiveness and correlates of such explicit expression of anti-Black biases in restaurant workplaces, this study presents findings from an online survey that was administered in two independent, large, and demographically diverse samples of current restaurant employees. We find that on average between 15 % (Qualtrics sample) and 24 % (Facebook sample) of participants agreed with statements indicating that racist language and discrimination against Black customers is common in the restaurants where they work. We explore the individual and organizational correlates of such explicit expression of anti-Black biases in restaurant workplaces and highlight the associated legal ramifications. We conclude by encouraging restaurateurs to take action against manifestations of racial prejudice in their establishments in order to fulfill their legal responsibilities to both their customers and their employees and thereby to minimize the threat of litigation.     

Perceived justice in service recovery and behavioral intentions: The role of relationship quality

This study examined restaurant customers’ perceptions of justice according to service recovery effort levels and whether perceived justice influences customers’ future behavioral intentions. This study also investigated whether the effects of perceived justice on future behavioral intentions vary across customers’ relationship quality levels. The results showed that high recovery efforts were consistently evaluated highly in terms of perceived justice when compared to low recovery efforts, regardless of the level of relationship quality. Additionally, perceived justice brought about by service recovery efforts has a positive effect on customers’ future behavioral intentions. Hierarchical regression analyses suggested that relationship quality plays a moderating role between perceived justice and behavioral intentions in the distributive and procedural justice dimensions. Implications for the restaurant industry are also discussed.     

Duration of advertising effect: Considering franchising in the restaurant industry

How long do the effects of advertising actually last? This issue has received increased attention in the fields of marketing, accounting, and finance. However, despite the importance of advertising for firm management, research on the effective duration of advertising costs still remains in the exploratory stage. To address this research need, this study investigated how long advertising costs function to increase sales and intangible value in association with franchising in the restaurant industry. The results of this study showed that advertising expenditures had a positive short-term effect on sales growth, whereas advertising did not significantly impact sales growth in the long run. However, when advertising expenditures were considered together with franchising, the long-term interaction effect was positively significant. The results suggest that advertising has long-term positive effects on sales growth only in restaurant firms using a franchising system. This implies that advertising costs should be recognized as investment-like assets only in franchising restaurant firms. On the other hand, advertising ratio had both positive short-term and long-term effects on intangible value. In addition, once the advertising ratio was associated with franchising, the long-term interaction effect was negatively significant. More detailed explanations and implications are included in the conclusion.     

Determinants of commodity price risk exposure in the restaurant industry: An analysis by commodity price cycles

The objectives of the present study were to (1) investigate the level and the extent of commodity price risk exposure in the restaurant industry and (2) identify the determinants of risk exposure. The risk exposure was estimated by 60-month rolling regressions based on equity returns. The determinants of equity risk exposure were proposed based on a discounted cash flow model. The results found that 35.39% of sample restaurant firms are exposed to commodity price risk. The level of equity risk exposure was estimated to be 1.148 during commodity price booms and 1.031 during slumps. Empirical testing was consistent with the model prediction that operating leverage and financial leverage are effective tools in managing risk exposure, but the effects are asymmetric during commodity price booms and slumps. Financial leverage was found to be more effective than operating leverage.     

Service in the restaurant industry: an American and Irish comparison of service failures and recovery strategies

The literature on service failure and recovery has to date tended to focus on American experiences or on single nation studies. As large numbers of service firms continue to seek opportunities in foreign markets, more effort needs to be directed at assessing cross-national similarities and differences so that appropriate strategies can be developed. This study compares the effects of failure and recovery strategies in the restaurant sector of two countries with very different dining traditions—the United States and Ireland. Analysis of over 700 personal interviews with restaurant customers shows that there is much commonality with regard to service failures but significant differences in recovery efforts. Especially noteworthy, however is that American customers are much more likely to expect such measures. In both countries, overcompensation methods do not appear to influence customer repeat patronage intentions, nor do they have significant influence on the rating of recovery effort. This last finding suggests that restaurants could and should use less expensive recovery methods.     

The impact of the servicescape on the desire to stay in convention and exhibition centers: The case of Macao

This study examines the important role of the servicescape in relation to customers’ cognitive (beliefs about servicescape quality), affective (affect and satisfaction) and behavioral responses (desire to stay) in the context of convention and exhibition centers in Macao. Unlike previous servicescape studies, we include two personal customer characteristics, namely perceived sacrifice and value-for-money considerations, as potential moderators of the relationship between customers’ satisfaction and the desire to stay. Overall, our results suggest that servicescape elements positively influence customers’ perceived quality of the service, their affect, customer satisfaction and desire to stay. Furthermore, this study reveals that value-for-money considerations enhance the positive impact customer satisfaction has on customers’ desire to stay in convention centers and that customers’ perceived level of sacrifice has a direct effect on their desire to stay. Theoretical and managerial implications are also presented.     

U.S. tourism in Mexico: An empirical analysis

This study estimated demand functions for tourism by U.S. residents in Mexico border areas, the Mexican interior, and overseas. There was no evidence that U.S. tourists substitute Mexico for more distant destinations as transportation costs rise. Border tourism is income elastic when the share of U.S. income of the border states is held fixed. Tourism in the Mexican interior is also income elastic. Tourism along the border is price elastic, while tourism in the interior is elastic with respect to U.S. and overseas prices but inelastic with respect to Mexican prices. The rise in the share of the Mexican interior in U.S. overseas tourism is not related to price factors. Recent devaluations of the Mexican peso are unlikely to provide benefits to the Mexican tourism industry.     

A longitudinal investigation to test the validity of the American customer satisfaction model in the U.S. hotel industry

This study was designed to test the validity of the American Customer Satisfaction Index (ACSI) model specifically for the hotel industry. The main objective of this study was to determine consistency of the ACSI hotel model over three periods: 1994, 2001, and 2009. The model was tested using the Structural Equation Modeling (SEM) technique using a two stage data analysis procedure. The findings from multi-group structural equation modeling showed that the model fit of ACSI lodging is consistent, regardless of economic conditions, demonstrating the validity of that model. Several plausible interpretations are presented in explaining meaningful patterns of path coefficients, for each of the study test periods. Furthermore, as the model tests validate the model fit of the hotel ACSI, academicians studying customer satisfaction may use the theoretical underpinnings and conceptual foundation of the model as a basis for their research.     

Guest Satisfaction in the U.S. Lodging Industry Using the ACSI Model as a Service Quality Scoreboard

SUMMARY

This article extracts data from the American Consumer Satisfaction Index (ACSI) for the lodging industry and for the six hotel brands included in the study. Guest satisfaction scores are analyzed for three important standards: overall satisfaction, expectancy-disconfirmation, and customer experience compared to an ideal product. Findings indicate that [1] the lodging industry scores slightly better than the entire service sector and about the same as the national score, and [2] there is significant variation in satisfaction scores among the six brands tested. Implications for management are included.