Exploring the Impacts of Key Economic Indicators and Economic Recessions in the Restaurant Industry

Abstract

The purpose of this study is to investigate the major economic variables associated with sales at full-service restaurants. The study also examines if there is any cyclical movement in the full-service restaurant segment in conjunction with economic recession periods. A Pearson correlation analysis and a 5-year moving average method were used to identify the relationships between full-service restaurant sales and key economic indicators, as well as the existence of a business cycle in the full-service restaurant industry for the past 4 decades, respectively. The results of this study revealed that gross domestic product is positively correlated with the sales of full-service restaurants. The 5-year moving average of sales generated at full-service restaurants indicates that the sales at full-service restaurants show a pattern of a business cycle almost every 10 years.

Two-dimensional mapping of Asia Pacific destinations combining tourism and economic indicators

“…The effects of economic indicators in the hospitality industry and tourism have been analysed for a set of economic variables. Lee & Ha (2012) found a positive relation between GDP and the sales of the restaurant industry. Pranić et al (2012) obtained a positive correlation between the presence of US hotel firms abroad and market interconnectedness, and a non-significant relation for foreign direct investment and tourism flows.…”

The contributions of economics to hospitality literature: A content analysis of hospitality and tourism journals

“…For example, Novak et al (2011) examined the effects of selected macroeconomic variables on the presence of foreign hotels in Croatia. In the restaurant industry, Lee and Ha (2012) explored the effects of key economic indicators and recessions. Within the U.S. market, Enz et al (2009) investigated the relationship between room rates and economic growth cycles to understand room pricing in times of uncertainty.…”

Does Franchising Alleviate Restaurants’ Vulnerability to Economic Conditions?

“…In other words, small swings in consumer sentiment may lead to major shifts in the performance of demand-elastic firms. Lee and Ha (2012) found a significant and positive correlation between sales at full-service restaurants and gross domestic product (GDP) cycles during 1976 to 2007, implying that the restaurant industry is vulnerable to economic climates. Other evidence also indicates that fast-food restaurants showed significantly greater accounting performances than did those of non-fast-food restaurants during recessions (Koh, Lee, & Choi, 2013).…”