The Impact of CSR on Corporate Value of Restaurant Businesses Using Triple Bottom Line Theory

The main goal of this study was to investigate the association between corporate social responsibility (CSR) and the value of restaurant firms by employing triple bottom line theory, a framework for a business model of sustainable development focusing on profit, environment, and people rather than just maximizing profit. Even though triple bottom line has been a common theoretical foundation in the CSR area, there is sparse literature on the theory in the context of CSR in the restaurant domain. Data regarding CSR dimensions and market-to-book value from 32 publicly traded restaurant firms in the US stock market for the period 1999–2012 were gathered, and panel data analysis methods of ordinary least square, one-way fixed effect, and time series feasible generalized least square were employed. The results revealed that economic CSR enhanced restaurant value, whereas environmental CSR diminished the value. The theoretical contribution of this study is that it will broaden the scope of triple bottom line theory. The results of the study will help restaurant administrators determine CSR policy.

Which Type of M&A Makes an Acquiring Restaurant Firm a Star? Profit-Driven Versus Growth-Driven M&A

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.

Impact of the Menu Labeling Act Upon the Market Value of Foodservice Firms

The Menu Labeling Act (MLA), which requires restaurants to provide customers with nutritional information, has encountered implementation difficulties for more than 8 years, owing to the imposition of administrative costs on restaurant firms. By investigating the market value of 46 restaurant firms that publicly trade in the United States, this research analyzes the impact of MLA-related announcements on the market value of foodservice firms. Announcements associated with restrictions tend to reduce restaurant market value by 0.29% per day (market value is defined as the number of shares times the share price), whereas announcements related to flexibility increase such market value by 0.80%. The final guideline and compliance date announced by the Food and Drug Administration has provoked significant negative effects on restaurant market value. Meanwhile, the congress’ proposed opposition act has elicited great positive effects. This study provides important implications for policy makers and practitioners in the food service industry.

Explaining the asset growth anomaly in the restaurant industry: Motivations and consequences

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.

Corporate social responsibility and idiosyncratic risk in the restaurant industry: does brand diversification matter?

Purpose This study aims to examine the link between corporate social responsibility (CSR) and idiosyncratic risk in the restaurant industry. The study also explores whether brand diversification magnifies the risk reduction effect of CSR in the restaurant industry. Design/methodology/approach The study uses an unbalanced panel of 274 firm-year observations for 43 restaurant firms over the period 1995–2015. Models are estimated via fixed effect regression with robust standard errors. Findings The study finds that CSR involvement reduces idiosyncratic risk and this risk reduction is intensified when restaurant firms operate a portfolio of brands. Research limitations/implications The study’s findings are limited to restaurant industry, therefore, generalization of the findings to other industries requires delicate care. Brand diversification is a simple brand count due to a lack of brand sales data. Practical implications CSR activities are not cost burden for restaurant firms. Indeed, CSR could be a viable strategy to reduce the volatility in future expected cash flows, hence the idiosyncratic risk. This risk reduction could help owners/managers access to capital with lower cost. Moreover, the study suggests that CSR practices should not be implemented in isolation from firm marketing strategy such as portfolio of brands. Originality/value Although prior hospitality research puts forth some evidence using systematic risk as the measure of firm risk, this measure may not best suit the purpose in CSR context given that CSR is a direct, firm-specific strategy. Hence, the current study provides both new evidence with firm-specific, idiosyncratic risk and introduces an important contingency situation when the risk reduction effect of CSR would become more profound for restaurant firms.