How Do Economic Recessions Affect the U.S. Restaurant Industry?

Abstract

The objective of this study is to examine how the U.S. economic recessions have affected the restaurant industry using the key economic indicators such as gross domestic product (GDP), unemployment rate, and interest rates. The analysis has been conducted separately for the full-service restaurant and limited-service restaurant sectors. Despite growing concerns about the consequences of economic recessions in the restaurant industry, little research has been conducted in this area. During an economic recession, limited-service restaurant sales might increase since consumers opt to use relatively inexpensive dining options such as fast-food while full-service restaurant sales are more likely to plunge due to high menu prices. The results of this study will provide useful guidance and assistance to restaurant operators as well as practitioners, in particular during periods of economic recession.

KEYWORDS:

• U.S. recessions
• restaurant sales
• full-service and limited-service restaurant