Title: Key operating indicators to lever financial performance of publicly traded restaurant companies: a market's perspective from 2007-2011

Authors: G. Demydyuk; H.A. Shawky; J.I. Van der Rest; J.A.A. Adriaanse

Addresses: Leiden Law School, Institute for Tax Law and Economics, Department of Business Studies, Leiden University, Campus The Hague, Leiden University Dual PhD Centre The Hague, Postbus 13228, 2501 EE, The Hague, The Netherlands ' School of Business, Finance Department, University at Albany, State University of New York (SUNY), Albany, NY 12222, USA ' Leiden Law School, Institute for Tax Law and Economics, Department of Business Studies, Leiden University, Steenschuur 25, 2311 ES Leiden, The Netherlands ' Leiden Law School, Institute for Tax Law and Economics, Department of Business Studies, Leiden University, Steenschuur 25, 2311 ES Leiden, The Netherlands

Abstract: This paper develops a market perspective on revenue management by directly linking risk-adjusted market performance of publicly traded restaurants to their revenue and activity-based operating indicators. The results show that higher customer traffic generated by a lower average customer check is a potential business model that leads to superior long-term risk-adjusted stock market performance. Operating profit per guest is also identified as a strong predictor of superior financial and stock market performance. The study contributes to a growing literature in restaurant revenue management that investigates the price-traffic relationship and its influence on financial performance in a multiunit restaurant context. Customer traffic is thereby identified as a key positive revenue and profit driver that is negatively impacted by a higher average guest check. The findings were consistent over all restaurant types (franchised/owned, full-service/quick-service, cuisine) as well as during the years of better and worse state of the economy.

Keywords: risk-adjusted performance; financial performance; restaurants; revenue management; key performance indicators; KPI; key operating indicators; stock market performance; restaurant revenue; customer traffic; restaurant prices.

DOI: 10.1504/IJRM.2015.070006

International Journal of Revenue Management, 2015 Vol.8 No.2, pp.165 - 192

Received: 07 Feb 2014
Accepted: 14 Jan 2015
Published online: 22 Jun 2015 *

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