Risk-Adjusted Performance of Three Restaurant Segments in the USA

Abstract

This study evaluates the risk-adjusted performance of three restaurant segments between 1 January 1998 and 31 December 2004. The Jensen, the Treynor and the Sharpe indexes were adopted as an analytical framework. The findings here are not entirely consistent with those of Kim and Gu (2003) because they show that the quickservice segment outperforms the other two segments. However, using NASDAQ, NYSE and S&P 500 as benchmarks, this study illustrates that the performance of the economy/buffet segment tops the quickservice and full-service segments. It further indicates that the restaurant industry carries too much unsystematic risk, which it needs to reduce.

The Liquidity Crisis: Evidence from the US Hospitality Industry

“…In contrast, except for lodging stocks, the systematic risk increased for the remaining hospitality stocks. This is consistent with Kim et al (2009) who find that total risk is seen to fall while systematic risk rises during expansionary periods.…”

“…In addition, we propose that capital structure was one potential channel through which the liquidity crisis could be transmitted to corporate firms and reflected in stock returns. Using additional evidence from lodging and casino firms, our study extends the early research by Kim et al (2009) that investigated the stock performance of firms in the restaurant industry from 1998 to 2004. In addition, we compare how various segments of the hospitality sector fared under duress.…”

“…In testing H1, we follow Kim and Gu (2003) and Kim et al (2009) and implement a traditional capital asset pricing model (CAPM) as developed by Sharpe (1964) and Lintner (1965) to compute return performance. We form three stock portfolios, namely restaurant, lodging and casino respectively, and run the following regression model:…”

Does risk matter in CEO compensation contracting? Evidence from US restaurant industry

“…Several factors encourage us to examine our research question in this particular industry. Restaurant business has traditionally been known as a risky business and the risk varies among the segments of the industry (Kim, 2009). For instance, De Noble and Olsen (1986) discuss that restaurant industry has the highest market volatility among seven industries they have tested.…”

Sustainability in the Face of Institutional Adversity: Market Turbulence, Network Embeddedness, and Innovative Orientation

“…First, the unpredictability of the external environment is a feature that is highly salient in the strategic decision making of North American restaurants (Harrington, 2001;McCarthy et al, 2010). This industry is highly fragmented and includes different market segments, with varying levels of turbulence, depending on emerging trends and the inflow of new entrants (Kim et al, 2009). Fads in the restaurant industry tend to come and go, and consumers are fickle (Canadian Restaurant and Foodservice Association, 2013;Harrington, 2001;National Restaurant Association, 2013).…”