A Re-examination of Factors that Influence Restaurant Efficiency in South Africa: A Bootstrapped Meta-Frontier Approach

Abstract

A persistent paradox in restaurant literature reveals that most studies tend to combine different restaurants in one data sample prior to the estimation of efficiency which blurs efficiency. Therefore, the purpose of this study was to provide further validation on the factors influencing restaurant efficiency using a meta-frontier approach. This study endeavour applied the meta-frontier concept to account for the different environmental and technological factors by ensuring that heterogeneous restaurants are compared based on one homogeneous technology. To test the model, the study used a panel data sample of 84 South African restaurants, which operated from 2015 to 2018. The findings revealed that uncontrollable factors, namely, location, size and restaurant type significantly and positively influence (p<0.05) restaurant efficiency. Empirical evidence supports the view that traditional efficiency techniques tend to underestimate efficiency scores resulting in biased efficiency comparisons between different restaurants. Although there are many other explanatory variables (e.g., restaurant ownership) that influence restaurant efficiency, however, these factors were not taken into account in this analysis due to lack of availability of data associated with those variables. The findings could enhance the service data and revenue management in the restaurant industry.

Keywords

• restaurant efficiency
• bootstrapped meta-frontier approach
• restaurant size
• restaurant location
• revenue management