An Empirical Framework of Financial Characteristics and Outperformance in Troubled Economic Times: Evidence from the Restaurant Industry

Nan Hua, University of Central Florida
Qu Xiao
Elizabeth Yost, University of Central Florida


Purpose– The purpose of this paper is to explore the financial characteristics associated with outperformance of US public restaurant firms in challenging economic times and the empirical measure of outperformance proposed herein. Design/methodology/approach– This study utilizes a Logit model and considers the relevant financial variables in annual deviation forms to explore an empirical model that explains financial outperformance in troubled economic times for the restaurant industry. Findings– The results of the study indicate that larger market share, asset turnover, and profit margin, combined with lower leverage, BM, earnings variance, and size, in addition to franchise utilization, appear to produce collectively a fine balance for success in difficult economic times. Research limitations/implications– This paper does not address the fine balance between short‐term financial performance and long‐term sustainability. Further, the employed contemporaneous modeling framework may limit generality of findings of this paper.