Factors that Impact Unsystematic Risk in the U.S. Restaurant Industry

Michael Dalbor
Nan Hua, University of Central Florida
William Andrew


The purpose of this research is to explore the relationship between restaurant management factors and the unsystematic risk portion of restaurant stock returns. The riskiness of the restaurant business has been brought to the forefront of popular culture through a number of reality television shows. Although the riskiness of the business overall has been exaggerated, these shows highlight the importance of the ability of the owner-manager. We examine three critical areas of restaurant management, including financial management, operations management, and firm size, and find that all are significantly related to a firm's unsystematic risk.