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Title: Restaurant operating expenses and their effects on profitability enhancement
Authors: Mun, SG 
Jang, SS
Keywords: Full-service restaurants
Limited-service restaurants
Operating expenses
Prime costs
Restaurant firms
Issue Date: 2018
Publisher: Elsevier Ltd
Source: International journal of hospitality management, 2018, v. 71, p. 68-76 How to cite?
Journal: International journal of hospitality management 
Abstract: 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.
ISSN: 0278-4319
EISSN: 1873-4693
DOI: 10.1016/j.ijhm.2017.12.002
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