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Purpose This study aims to examine how information asymmetry, which refers to an information gap between a firm’s management and its investors regarding the firm’s true value, influences firms’ dividend and investment decisions in the restaurant industry. This study also investigated the moderating role of a firm’s level of franchising in the relationship between information asymmetry and these behaviors of restaurant firms. Design/methodology/approach This study used generalized method of moments panel regression analyses. Principal component analysis was also used to create a composite index of information symmetry. Findings This study demonstrated that in asymmetric information environments, restaurant managers tend to reduce dividend payments. In addition, this study showed that information asymmetry leads to restaurant managers’ investment inefficiency. However, the investment inefficiency of the restaurant industry was found to decrease as restaurant firms’ level of franchising increases. Practical implications Firms’ dividends and investment decisions are of great interest to investors because these decisions heavily influence investors’ wealth-maximization goals. By shedding light on the previously unrecognized determinants of dividend and investment behaviors in the restaurant industry, this study helps individual investors to make informed investing decisions. Originality/value Conflicting arguments can be made regarding the impact of asymmetric information environments on the dividend and investment behaviors of restaurant firms. This study aimed to verify these as-yet unclear relationships in the restaurant industry.

Purpose Does every customer respond in the same way to restaurants’ preventive measures (PM)? To answer this question, the purpose of the present study was to examine the moderating role of need-for-cognition (NC) and customer-restaurant relationship strength (RS) in the impact of restaurants’ PM on dine-in intentions using a trust (Study 1) and psychological discomfort (Study 2) as mediators. Design/methodology/approach Two studies were conducted using a 2 (PM: present vs control) × 2 (RS: strong vs weak) factorial design. NC was treated as a continuous variable in the regression model. Findings The results of two experimental studies showed that people with a high NC are more likely to show positive responses (higher trust and less discomfort) to restaurants’ PM when they have strong relationships with the restaurant. In contrast, people with a low NC did not show any interaction between PM and RS for trust and discomfort. Practical implications For restaurants targeting people with a high NC and with more returning customers than new customers, the study results suggest that safety measures should be promoted. Originality/value The present study expands the knowledge of customers’ reactions to restaurants’ PM by using the theoretical foundation of the ELM. The results of this study contribute to hospitality research by demonstrating the differences in customers’ thought processes according to their NC and the strength of their relationship with the restaurant.

PurposeGiven the increasing need after the outbreak of COVID-19 to encourage restaurant customers to dine in, the purpose of this paper is to examine the effects that anthropomorphic cues jointly with brand awareness and subjective social class have on restaurant-visit intention.Design/methodology/approachTo better comprehend the use of anthropomorphic cues, this paper involved two studies that used two types of anthropomorphic cues: (1) non-food (a spoon) and (2) food ingredients. For each study, a 2 × 2 mixed factorial design was used.FindingsUsing three-way mixed ANOVAs, the results from Study 1 confirmed that adding anthropomorphic cues to a non-food object (a spoon) could induce positive effects for restaurants with lower brand awareness, especially among individuals with low subjective social class. In contrast, Study 2 showed that adding anthropomorphic cues to a food ingredient (e.g. tomato, lettuce and olive) had a weaker effect on restaurants with high brand awareness, especially among individuals with a high subjective social class.Practical implicationsMarketers should use anthropomorphism strategies based on their target customers, especially if their brand is less popular.Originality/valueUsing the theoretical framework from the elaboration likelihood model, this paper contributes to the anthropomorphism literature by showing how an anthropomorphized image that fits an individual’s interests could trigger a careful thinking process that leads to differential behaviors based on brand awareness.

Purpose This study aims to gain an understanding of hotel experiences during the pandemic by examining sentiments of guests posted online. Design/methodology/approach This paper incorporates the balance theory, in a dyadic system to analyze the ways in which guests were motivated to restore a position of balance during the unprecedented COVID-19 crisis. Qualitative content analysis was used to detect thematic patterns of hotel experiences based on examining online reviews shared by actual guests of two major hotel brands – one more closely associated with convenience-driven automation (high-tech) and the other known for providing more guest–employee interaction (high-touch). Findings The analysis of the reviews yielded six main themes: “purpose of visit,” “COVID safety concerns,” “technology adoption,” “COVID limitations,” “exceeded expectation” and “hospitality of staff.” Staff displaying a welcoming attitude was the main factor in creating a convivial experience for guests at both hotel brands, but the technology was not highlighted as much in guests’ reviews. Despite the pandemic, guests of both hotel brands had similar levels of enjoyment regarding their hotel experiences regardless of the high-touch or high-tech nature of the operations. Research limitations/implications User-generated content often reflects the opinions of those who are very satisfied or not satisfied at all. Different data collection techniques could be used to get a “big picture” view of the balance between high-touch and high-tech experiences. Practical implications The findings offer support to researchers and practitioners who advocate that high-touch and high-tech can indeed co-exist, and that these distinct service delivery modes do not have to be mutually exclusive. Originality/value This paper provides new trajectories that can broaden the approaches undertaken by hospitality/tourism scholars and practitioners based on user-generated content. This study is one of the first to adopt the lens of the balance theory, in a dyadic system, to investigate how guests may be psychologically motivated to balance their perceptions and expectations during a time of crisis.

Purpose This study aims to identify effective ways to promote plant-based foods in quick-service restaurants by considering customers’ food-related health involvement. Design/methodology/approach This study conducted a 2 (message format: myth/fact or fact-only) × 2 (message focus: benefit- or attribute-focused) × 2 (health involvement: high or low) quasi-experimental design via a scenario-based online survey. A multivariate analysis of covariance and a bootstrapping approach were used to test the hypotheses (N = 365). Findings The results indicated that message format and focus jointly influenced customers’ perceived health consequences of plant-based foods and purchase intentions; customers’ health involvement altered the two-way interaction between message format and focus; and perceived health consequences mediated the effects of message format and focus as and customers’ health involvement on purchase intentions. Research limitations/implications This study identifies the effectiveness of message format and focus in promoting plant-based foods and extends the sustainable product promotion literature by using resource matching theory and the elaboration likelihood model. Future studies should use field studies to examine how can message framing influence customers’ actual behaviors when purchasing plant-based foods. Practical implications This study can help quick-service restaurants better promote plant-based foods considering message format and focus and customers’ food-related health involvement. Originality/value This is one of only a few studies that have tested how messages containing both negative and positive information about a product could help promote plant-based foods.

PurposeThis paper aims to examine the interaction effect among the subjective social class, service level and recovery type on post-failure service evaluations (recovery satisfaction and willingness to spread positive word-of-mouth).Design/methodology/approachA total of 270 US consumers were recruited via Amazon MTurk. This study adopted a 2 (Subjective social class: high vs low) × 2 (Service level: luxury vs mid-scale) × 2 (Recovery type: customer self-recovery vs joint recovery) between subjects’ factorial design using a scenario-based survey method.FindingsThe results from the three-way multivariate analysis of covariance confirmed that a joint recovery is ineffective for high subjective social class individuals in a mid-scale hotel setting. Moreover, the moderated mediation analysis revealed that this tendency can be explained by high subjective social class individuals’ tendency to attribute blame externally to self-service technologies (SSTs).Practical implicationsThe results of this study suggest that mid-scale hotels should deploy employees in the SST service area based on the profile of their main customers. If a mid-scale hotel is positioning itself to appeal to high subjective social class customers, then employees should be aware of the fact that customers may not be highly satisfied if they receive assistance.Originality/valueThis study expands the current knowledge on customers’ psychological differences based on subjective social class. Furthermore, the findings of this study contribute to academia by providing evidence of external attribution among high subjective social class individuals.

Environmentally responsible behaviors are highly relevant with the sustainability of beach tourism. Research goal is to provide acomprehensive framework for understanding the formation of beach tou...

Considering the increasing number of food recall incidents in the restaurant industry, it is crucial to examine the impact of food recall on consumers' negative word-of-mouth (N-WOM) intentions. This study examined the effects of the food recall announcement on consumers’ N-WOM intentions, focusing specifically on crisis level and two brand-related forms of leverage, brand equity and branding strategy. A 2 (crisis level: low/high) x 2 (brand equity: low/high) x 2 (branding strategy: corporate branding/house of brands) scenario-based research design was employed using a self-administered online survey. The food recall announcement was found to be effective in reducing N-WOM intentions only for loyal consumers when the crisis level was high. Further, the use of the corporate branding strategy was effective in reducing N-WOM intentions compared to the house-of- branding strategy. These findings provide useful guidelines to practitioners on how to effectively announce food recalls.

Despite the importance of intangible assets in firm valuation, the value-relevance and reliability of intangibles remain unclear. Specifically, intangible assets are critically important to restaurant firms because of the intangible nature of their core services. Thus, this study examined the value-relevance and reliability of intangible assets in the restaurant industry. The results of this study confirmed that goodwill and identifiable intangible assets had significant value-relevance and reliability in association with firm value creation. The results also suggested that intangible assets are significantly related to restaurant firm value, implying that restaurant investors can rely on the intangible information on balance sheets when considering future investments. However, this study found that franchising has a positive moderating effect on the relationship between goodwill and market-based/accounting-based firm value measures, but it does not moderate the relationship between identifiable intangibles and restaurant firm value. This means that the value created by franchising is not fully reflected in the valuation of goodwill, while identifiable intangibles are fairly well valued or at least are not closely related to the value created by franchising. Consequently, the value relevance and reliability of non-franchise restaurants were confirmed. In contrast, although the value reliability of franchise restaurants was confirmed, the value relevance of franchise restaurants was not fully supported.

PurposeThis paper aims to explore the effect of hiring outside chief executive officers (CEOs) on restaurant performance. As outside CEOs have a mandate to bring changes but lack internal knowledge, this study expected that outside CEOs impose a significant influence on restaurant performance. It was further expected that the relationship is substantially moderated by franchising and recession.Design/methodology/approachThe CEO data was manually collected from firms’ annual filings and the EXECOMP database. The COMPUSTAT database was used for company financial data. A two-way panel regression was used to examine the proposed relationships.FindingsThe results revealed that outside CEOs have a positive effect on growth but a negative effect on restaurant profitability. It was further turned out that franchising significantly moderates the outside CEO-performance relationship. However, the moderating effect of recession turned out to be insignificant.Practical implicationsThe results suggested that outside CEOs play a critical role in determining restaurant performance. The results further imply that franchising helps to maximize the positive effect of outside CEOs while mitigating the adverse effects of outside CEOs.Originality/valueThis study is one of the first to examine the effect of outside CEOs in the hospitality context. Moreover, this study extended the literature by revealing the relationship in the restaurant industry and highlighting the importance of long-term organizational context.

Due to the cosmetic standards of food service operators, most consumers have had limited exposure to visually unappealing foods. Thus, unused ugly foods end up becoming food waste. To encourage con...

This study identifies whether profit-driven or growth-driven mergers and acquisitions (M&As) are more beneficial to a restaurant firm aiming to achieve profitable growth after an M&A. The results indicate that despite the challenges that must be overcome to achieve profitable growth through M&As, profit-driven acquiring firms are more likely to have better post-M&A operational performance than growth-driven acquiring firms. Therefore, this study suggests that when restaurant firms seek to grow their business through M&As, they should pursue this goal after achieving higher operational profitability, along with better cost controls, supply management, and marketing strategies, rather than optimistically adhering to growth strategies before accumulating any internal, market-based competitive strengths.

Purpose This study aims to examine the motivating factors that influence intentions to book shared rooms through Airbnb as well as the moderating effects of past experience and gender. Design/methodology/approach This study analyzed data from 214 leisure travelers who had previously stayed in shared rooms through Airbnb and 207 participants who had not yet experienced Airbnb. A covariance-based structural equation modeling (CB-SEM) technique was performed to test the significance of attitude, subjective norms, extroverted personality, perceived risk and perceived price. Furthermore, the study explored past experience and gender as moderators. Findings The results suggest that attitude, subjective norms and perceived risk significantly impacted intentions to book shared rooms through Airbnb. However, perceived price was not a significant determinant. In addition, this study verified that past experience and gender moderated the relationship between important referents and attitude/booking intentions. Practical implications This study gives Airbnb hosts a better understanding of travelers who choose Airbnb’s shared rooms. In addition, hosts who offer shared rooms can implement marketing strategies and complementary activities to not only reduce the risk of booking shared rooms but also attract more travelers. Originality/value While previous studies examined Airbnb as one homogeneous type of accommodation, this study focused on Airbnb’s shared rooms. A clearer understanding of consumers who intend to book Airbnb’s shared rooms will enable hosts to develop effective marketing strategies.

Many business leaders have the tendency to vigorously pursue rapid firm growth, but this focus is often criticized as problematic in terms of operating performance. Accordingly, this study suggested that the asset growth anomaly is an inevitable phenomenon for growing restaurant firms: operating profitability increases as assets grow to the optimum level and then decreases after this level. However, most restaurant firms invest their capital below the optimum level, and only a small number of restaurant firms increase their assets too rapidly. Further, the amount of a chief executive officer’s (CEO’s) bonus payments motivates their investments in asset growth, while the amount of stock options increases the probability of overinvestment practices in restaurant firms. Therefore, even though overinvestment practices are not apparent in most restaurant firms, an appropriate proportion of equity-based incentives is beneficial to prevent overinvestment practices by a few restaurant firms to avoid negatively impacting shareholders’ wealth.

This study examined the effect of CEO overconfidence on restaurant performance and how franchising, a key business format in the restaurant industry, affects the relationship. Based on the notion that overconfident individuals take more risks than non-overconfident people, this study hypothesized that CEO overconfidence positively (negatively) influences restaurant growth (profitability). Furthermore, since franchising reduces operational and financial risk, this study hypothesized that franchising moderates the relationship between CEO overconfidence and firm performance. The results of this study confirmed that CEO overconfidence positively influences firm growth but negatively affects firm profitability in the restaurant industry. This study also found that franchising negatively (positively) influences the effect of CEO overconfidence on restaurant firm growth (profitability). The results suggest that overconfident CEOs are more suitable for growth-seeking restaurant firms but less desirable for profit-seeking firms. The results also highlight that franchising mitigates the risk associated with CEO overconfidence. More detailed results and implications are discussed in this article.

Green demarketing is defined as a marketing technique that promotes a brand as environmentally friendly and health conscious by moderately lowering product consumption. Even though the influence of demarketing techniques have previously been explored, how personal characteristics influence customers’ green behavioral intentions under the effects of green demarketing remains unknown. This study explored whether the effectiveness of a demarketing technique varies based on customers’ skepticism (high vs. low), gender (male vs. female), age (young vs. old), and income level (high vs. low). Therefore, four 2 × 2 between subject designs were used, and the median split method was adopted to determine participants’ level of green skepticism and age. The results confirmed significant relationships for green skepticism, age, and income level in response to message type. The study also identified implications for effective marketing communications regarding green marketing and demarketing strategies in the foodservice industry.

The demand for kosher food has increased remarkably as consumers perceive kosher foods to be healthier and safer options. To identify effective ways to promote consumers’ healthy eating at restaura...

PurposeThis study aims to identify why restaurant firms go public (IPO) despite high financing costs and which factors make firms stay public for the long term after an IPO. Also, this study aimed to link and compare restaurant firms’ pre- and post-IPO accounting information and how IPO proceeds were used.Design/methodology/approachThis study used random-effects regression analysis with a number of dependent variables for a sample of 1,347 unbalanced panel data. In addition, logistic regression analyses were used to identify why restaurant firms were delisted within short periods after going public.FindingsFirst, rebalancing financial structures was the most important reason for IPOs, whereas financing future growth was only a minor motivation. Second, post-IPO performance significantly differed between restaurant firms based on their pre-IPO financial conditions, as well as how they used IPO proceeds. Third, restaurant firms with low profitability, inefficient non-operating expenses and difficulties in generating revenue increased their financial burdens, which ultimately caused restaurant firms to be delisted within a short period after an IPO. Furthermore, the reasons for merging included cash shortages, large short-term liabilities and increased major operating expenses, together with increases in capital expenditures.Originality/valueThis study is unique, in that it explains the relationships between motivations for going public and post-IPO performances by directly linking the usages of IPO proceeds with firms’ operational performances. To the best of the authors’ knowledge, this study is the first to examine the effects of IPOs on restaurant firms’ operational, non-operational, investment and financial activities on firms’ performances.

Ethnic restaurant markets are proliferating due to expanding consumer demand for global flavors. This study investigated the most effective advertising formats for encouraging U.S. consumers to eat ethnic foods. This study compared the effectiveness of picture-dominant advertisements (food-focused vs. spokesperson-focused) and text-dominant advertisements with two different text lengths (short vs. long). The two experiments in this study found that the spokesperson-focused ad was more effective for customers with cultural familiarity. This study also found that a detailed description of the ethnic food was evaluated more highly in terms of cognitive understanding than the short summary. The text-dominant ads were significantly more effective than the picture-dominant ads for individuals who were unfamiliar with the culture of the cuisine’s country of origin. The results suggest that marketers need to increase customers’ attention by customizing advertising formats based on target customers with varied levels of cultural familiarity.

The so called “dividend puzzle” has prompted many researchers to examine industry-specific factors in order to explain the dividend behaviors of various industries. However, due to the unique differences in characteristics between franchise and non-franchise restaurants, it may not be appropriate to view the restaurant industry as one entity displaying homogenous dividend behaviors. In this regard, this study investigated the role of franchising in explaining the dividend behaviors of the restaurant industry. The results of this study demonstrate that the dividend behaviors of franchise restaurants are a function of the size of institutional holdings and prior dividend payments, while those of non-franchise restaurants depend on the degree of growth opportunity and financial leverage. The findings further imply that franchise restaurants with higher free cash flows and the resulting information asymmetry closely follow agency theory and signaling theory, whereas non-franchise restaurants with insufficient internal cash strictly follow the pecking order theory.

Earnings management has become more prevalent in many firms. Accordingly, the financial accounting literature has made efforts to identify the determinants of earnings management behavior in various industries. However, for the restaurant industry it may be necessary to consider the effects of franchising to accurately understand earnings management behaviors because franchise restaurants vastly differ from non-franchise restaurants in terms of raising capital and information asymmetry. Therefore, the main purpose of this study was to investigate whether franchising as a firm characteristic causes any meaningful differences in the earnings management behavior of restaurant firms. The results of this study show that during the growth phase, franchise restaurants engage more actively in earnings management than non-franchise restaurants. Further, the deterrence effect of financial leverage on earnings management is weaker for franchise restaurants than non-franchise restaurants. Overall, this study suggests that franchise restaurants are generally more inclined towards earnings management.

PurposeThis study aims to investigate how consumer forgiveness is formed by examining rumination and distraction by consumers in hotel service failures.Design/methodology/approachData were collected using a self-administered questionnaire in the USA. A total of 371 usable responses were obtained. Anderson and Gerbing’s two-step approach was used to assess the measurement and structural models.FindingsThis study suggests that rumination and distraction play significant roles in processing consumer forgiveness. Self-focused rumination and distraction increase consumer forgiveness, whereas provocation-focused rumination exacerbates the negative effects of service failure severity on consumer forgiveness. This study also shows that gender differences exist. Men were more likely than women to link self-focused rumination and distraction to their intentions to forgive a service provider.Practical implicationsThis study is helpful for hotel managers to understand the mechanisms of consumer forgiveness in service failures and develop effective recovery strategies. Managers should aim to lessen consumers’ provocation-focused rumination while encouraging self-focused rumination and distraction. In addition, because of the differences in the process of consumer forgiveness between men and women, it is critical to differentiate the two groups in designing targeted recovery strategies for service failures.Originality/valueThis study investigates consumer forgiveness as a behavioral outcome following service failures that may help consumers achieve psychological balance and allow service providers a chance to restore the broken relationship. This study adds new information for understanding consumer responses and provides a basis for effective service management strategies.

Purpose The purpose of this study is to develop an index for financial constraints, specifically for restaurant firms, and to further validate the developed financial constraint index. Design/methodology/approach This study used logistic regression with a composite criterion based on the dividend payout ratio, KZ index and Cleary index to estimate restaurant firms’ financial constraints. Then, a fixed-effects regression was used to verify the validity of the measurement of restaurant firms’ financial constraints. Findings A restaurant firm’s operating profit, financial leverage, asset tangibility, sale of fixed assets and percentage change in number of employees are critical indicators for identifying financial constraints. The results indicated that in cases with positive operating cash flows, the effect of operating cash flow on capital investments continuously decreased as restaurant firms’ financial constraints increased. Originality/value This study is unique in that the specific financial and operational characteristics of restaurant firms were included in the model to determine financial constraint indicators, such as sale of fixed assets and percentage change in number of employees.

The purpose of this paper is to examine the effects of increasing the federal minimum wage on productivity in the restaurant industry. Based on the equity theory and fair-wage hypothesis, this study empirically investigated the relationship between the federal minimum wage and restaurant productivity. The results revealed that increasing the federal minimum wage immediately enhances restaurant productivity for up to two years. The results further indicated that both full-service restaurants and low-wage restaurants benefit from the positive effect, while there is no significant effect on limited-service restaurants and high-wage restaurants. The results suggest that restaurants should cope with minimum wage policies by focusing on implementing initiatives that can maximize enhanced work efforts and productivity. More importantly, the results further highlight that restaurants should consider either continuously raising wage levels or raising them every two years to consistently obtain enhanced motivation and productivity.

This study investigates the impact of signaling on customers’ evaluations of service qualities, customer satisfaction and revisit intentions in times of service failures. Open kitchen desig...

Purpose The purpose of this study is to explore the dimensions of restaurant customers’ engagement or disengagement with healthy eating in terms of individual and environmental factors to develop a scale. The results identified the underlying constructs of customers’ individual motives for and perceived barriers to healthy eating, as well as environmental elements of restaurants that encourage or discourage healthy eating. Design/methodology/approach To develop an appropriate set of measures to assess factors influencing customers’ healthy eating behaviors at restaurants, the current study undertook the five steps of scale development suggested by Churchill (1979): specifying the domain of constructs, generating a pool of initial measurement items, assessing content adequacy, administering questionnaires (an online survey method) and purifying and finalizing the measurement (via exploratory factor analysis (EFA) using 410 samples and confirmatory factor analysis (CFA) using 423 samples). Findings The results revealed ten individual factors (health, body image, weight control, feeling better, unappealing food, cost perception, lack of knowledge, state of mind (stress), lack of self-control and negative influences) and five environmental factors (healthy indications, social impact, availability of healthy menu, price policy and unhealthy indications) influencing customers’ healthy eating behaviors at restaurants. Originality/value This study developed an appropriate set of measures to assess individual and environmental factors influencing restaurant customers’ healthy eating behaviors, along with identifying underlying sub-constructs. The reliability and validity of the scale and the factor structure are presented and potential applications and theoretical contributions of the scale are provided as well.

This study identifies acceptable premium price levels that customers would be willing to pay for organic menu items at restaurants in the United States. Previous literature indicates that health-related and socio-demographic characteristics significantly influence consumers’ intentions to purchase organic food. To advance our understanding of how different consumers respond to changes in organic food prices, this study examines the moderating effects of the level of health consciousness (high versus low), gender (male versus female), and age (young versus old) on the relationship between premium price levels and purchasing intentions. In addition, this study further investigates acceptable premium price levels for different consumer segments at two types of restaurants (casual dining versus fine dining). The results of this study provide guidelines for menu design and strategies for restaurateurs to devise effective price premiums for organic menu options.

This study tested whether geographic clustering differs by restaurant segment due to the differences in consumers’ hedonic and utilitarian values by using Ripley’s K function and a Tobit model. This study found that higher priced restaurant segments have stronger clusters than lower priced restaurants, which implies that restaurants that focus on hedonic values tend to cluster more than utilitarian focused restaurants. However, the results differ depending on whether or not restaurants are located within a central business district (CBD). For example, quick service restaurants have stronger clusters than casual restaurants outside CBDs. Practical applications may apply to new restaurants that are attempting to open. Up-scale restaurants have the advantage of reducing research costs by locating near similar restaurants. Moreover, casual restaurants do benefit by clustering near existing ones under the condition that demand is not severely hurt by competition, while quick service restaurants benefit by diffusing from each other.

In order for a franchise system to obtain long-term sustainability, balancing the benefits between franchisors and franchisees is critically important. In order to expand this area of research, this study reviewed prior franchise literature and then outlined what a healthy franchise system is. Further, this study also proposed a model for sustainable franchisor-franchisee relationships (SFFR), which supports the ‘franchise win-win theory.’ In developing a model, this study suggested that relationship quality is a vital part of a healthy relationship. This study also identified the three core components of a sustainable franchisor-franchisee relationship (i.e., satisfaction, trust, and commitment), as well as the antecedents and consequences of the relationship. This study conclusively suggested that franchisees are willing to continue their current franchise business only when they are satisfied with a franchisor’s fairness, autonomy, formalization, and support.

This study examined the effectiveness of comparative appeals in destination advertising through an experiment with a randomized paired comparison design. Both cognitive and affective responses were measured toward comparative versus non-comparative advertising of a ski resort. The findings demonstrate that respondents viewed comparative advertising to be more persuasive than non-comparative advertising. However, their attitudes were less favorable toward comparative advertising for destinations. More specifically, comparative advertising was found to be more persuasive in the advertising of famous destinations rather than unknown destinations. Further, comparative advertising was more effective for those who were aware of the advertised destination than those who were not.

The unprecedented global health concerns pertaining to COVID-19 have impacted the hotel industry. In order to ameliorate such concerns, hotels are sending out marketing communication messages. However, whether the messages effectively impact hotel consumers' behaviors is still unknown. To fill this research gap, this study empirically tested the effect that the perceived severity of COVID-19 (PSC) has on hotel booking intentions as well as the roles of message appeal type (rational vs. emotional) and brand loyalty. The data was collected using a scenario-based online survey (n = 311) and analyzed using hierarchical multiple regression. The rational appeal type had a greater positive influence on hotel booking intentions, which suggests that it is preferable for COVID-19 related messages. The results also indicated that PSC had a negative influence on booking intentions for the low loyalty group, and brand loyalty still played a key role even amidst the COVID-19 crisis.

The severe acute respiratory syndrome (SARS) outbreak in 2003 weakened the Taiwanese economy. The tourism industry suffered the most, experiencing the highest stock price decline (approximately 29 percent) within a month of the SARS outbreak. This research examined the effect of the SARS epidemic on Taiwanese hotel stock price movements using an event-study approach. Seven publicly traded hotel companies experienced steep declines in earnings and stock price during the SARS outbreak period. On and after the day of the SARS outbreak, Taiwanese hotel stocks showed significantly negative cumulative mean abnormal returns, indicating a significant impact of the SARS outbreak on hotel stock performance. Empirical findings could be used to prepare businesses for the similar epidemics, such as a deadly bird-flu epidemic.

Food safety events threaten not only consumers’ health, but also the value of associated firms. While previous studies examined the impact of food safety events on consumer demand for products, little attention has been paid to the impact on the market value of firms. Using the event study method (ESM), this study investigated abnormal returns (ARs) and cumulative abnormal returns (CARs) of firms associated with 40 food safety events over the past 25 years in the U.S. The results of this study demonstrated the magnitude and duration of the impact of food safety events on firm value. Moreover, firm-specific factors (past history and firm size) and situational factor (media attention) were found to influence the magnitude of the impact. This study contributes to the hospitality literature by extending the knowledge of the impact of food safety events and its practical implications for effective crisis management strategies for food-related firms.

Despite the enormous impact of food crises on restaurants, limited understanding of their long-term impacts and associated factors has undermined crisis managers’ ability to handle crisis situations effectively. This article investigated the long-term impact of food crises on the financial performance of restaurant firms and identified the factors that influenced this impact. This explanatory study examined the case of Jack in the Box, whose 1993 Escherichia coli scare was the first and largest restaurant-associated food crisis in modern times. An event study method was used to uncover stock price movements of Jack in the Box, in conjunction with 73 unrelated food crises that occurred from 1994 to 2010. Stock prices of Jack in the Box exhibited significantly negative responses to other firms’ food crises, moreover, the negative spillover effect was stronger if the crisis occurred closer in time, was similar in nature, and was accompanied with no recall execution. These findings shed light on the long-term financial impact of food crises and offer insights for crisis managers to develop more effective crisis management strategies.

The main purpose of this study is to examine the marginal value of cash in franchise restaurants by extending Faulkender and Wang’s three cash regimes into the franchise framework. Utilizing theoretical underpinnings from prior studies, this study attempted to verify that franchising is a quasi-debt financing tool for restaurant firms. The sample used in this study was retrieved from Compustat and 10-K annual reports from 1980 to 2015. The results of this study revealed that “raising cash” and “servicing debt” regimes are common in the restaurant industry. This study also found that shareholders place a lower value on the marginal value of cash for franchise restaurants compared with non-franchise restaurants. Furthermore, the market value of additional cash for franchise restaurants decreased when the proportion of franchise sales increased. This study confirmed Norton’s argument that franchising funds are not simply cheap capital. Furthermore, this study found that the value of cash holdings decreased for franchise restaurants based on the level of franchising operations.

The purpose of this article was to provide an understanding of the ownership effect on firm investment in the hotel industry. Specifically, a linear relationship between institutional ownership and firm investment was investigated, while a nonlinear relationship between managerial ownership and firm investment was tested based on the convergence of interest and managerial entrenchment hypotheses. This study used two-stage least square (2SLS) regression for the model estimation because an endogenous relationship was suspected between managerial ownership and firm investment. The results of this study confirmed a positive relationship between institutional ownership and firm investment and an inverted U-shaped relationship between managerial ownership and firm investment with a maxima of 17.34%. The results of this study imply that firm investment is dependent on ownership structure. Furthermore, current shareholders should consider granting a stock ownership to managers up to 17.34% to encourage them to act in shareholders’ best interest while avoiding additional issues associated with high managerial ownership. The findings of this study provided empirical evidence that conventional short-term institutional investors hold a long-term perspective when investing in hotel firms, and managerial ownership is an effective measure to mitigate agency problems. Theoretically, this study provided empirical evidence that firm ownership has a causal effect on firm investment in the hotel industry. This finding is expected to expand our understanding of the corporate governance effect on firm behavior. Furthermore, this study confirmed the use of 2SLS regression in the presence of an endogenous relationship between firm ownership and investment.

Purpose This study aims to investigate, when a service failure occurs, whether circumstantial cues could be used to encourage more positive responses by customers toward restaurants through the mediation of causal attribution. Design/methodology/approach A 2 (cause of service failure: easily observable vs difficult-to-observe) × 2 (kitchen design: open vs closed) between-subject experiment is used to analyze customers’ causal attributions of service failures and resultant responses. Findings When a service failure whose cause is easy to identify occurs, customers at open-kitchen restaurants show more negative responses than those at closed-kitchen restaurants because they are likely to attribute the responsibility to the restaurant. Attribution is confirmed to mediate the relationship between the interaction of service failure by kitchen design and customers’ responses. Practical implications Diverse circumstantial cues should be actively used to encourage more positive responses by customers. The mediating role of causal attribution should be considered in managing customers’ responses toward service failures. Originality/value This study finds that circumstantial cues could be useful in dealing with service failures in restaurants by confirming the mediating role of causal attribution.

Restaurant firms need efficient cost management strategies due to highly competitive market conditions and the weak financial structure of the restaurant industry. In this regard, the objectives of this study were to examine the operating expenses of restaurant firms and their impact on profitability enhancement by business segment and firm size. This study found that high prime costs (food costs and salary expenses) could be a major concern for full-service restaurant businesses and cause lower profitability compared with their limited-service counterparts. Improving the operational performance of full-service restaurants depends on sophisticated cost retrenchment skills, such as balancing productivity and revenues while minimizing quality detrimental. Further, firm size had an impact due to economies of scale decreasing food costs. Nevertheless, managers of limited-service restaurants, especially large firms, need to consider improving food quality instead of relying on advertising effects to maximize profits.

PurposeThis study aims to examine the effects of self-image congruities (i.e. the match between the image of a product or brand and a customer’s image of themselves) as an affective psychological process in the context of a restaurant setting. The study proposed that a customer’s perception of congruity between his or her self-image and a restaurant could be a salient antecedent for eliciting positive affects toward restaurants, which may influences customers’ evaluations of the functional attributes of a restaurant. The relative effects of actual versus ideal self-image congruity on positive affects, along with the moderating effect of the type of restaurant, were also investigated.Design/methodology/approachAn online survey was developed and distributed to randomly selected respondents in the USA and a total of 376 responses were used for the data analyses. Structural equation modeling (SEM) was used to examine the relationships among five constructs: actual self-image congruity, ideal self-image congruity, positive affect, evaluation of the restaurant experience and revisiting intentions. To investigate the moderating effect of the restaurant type – more specifically, to examine differences in relative importance of actual versus ideal self-image congruity based on the type of restaurant (casual dining versus fine dining) – multiple group analyses were executed.FindingsThe results showed that both actual and ideal self-image congruity significantly influence positive affect, which has a significant influence on customers’ evaluations of the functional attributes of a restaurant. Actual self-image congruity effect on positive affect was significant in casual dining restaurants, but it was not significant in fine-dining restaurants. Ideal self-image congruity effect on positive affect was significant in both casual and fine-dining restaurant.Practical implicationsThis study provides practical implications for developing an effective marketing communication in terms of promoting different segments of restaurant (casual dining vs fine-dining) based upon the customers’ perception of self-image congruity.Originality/valueThis paper includes a theoretical model that explains whether self-image congruity is a salient antecedent influencing restaurant customers’ positive feelings toward a restaurant brand. It also examined the relative effects of actual versus ideal self-image congruities in different restaurant settings.

Since Myers (1984) and Myers and Majluf (1984) suggested the pecking order theory, it has frequently been examined by researchers. Recently Frank and Goyal (2003) have questioned its validity. Following De Jong et al.’s (2010) proposition about financing behaviors under financing deficit and surplus situations, this study examined restaurants to verify the validity of the pecking order theory and found that restaurants depend more on equity financing, which is in line with the pecking order puzzle. Specifically, restaurants with financing deficits rely more on equity financing than restaurants with financing surpluses. Further, this study confirmed that franchise funds alleviate financing deficits. Thus, franchise restaurants used less equity financing than non-franchise restaurants in cases of financing deficits. However, both franchise and non-franchise restaurants with financing surpluses showed similar financing behaviors and did not significantly rely on equity financing, which indicates that both types of firms follow the pecking order theory.