The restaurant industry: Business cycles, strategic financial practices, economic indicators, and forecasting.

摘要

A basic feature of the economy, and life in general, is that decisions are made under conditions of uncertainty---the future is unknowable. Having reliable guidelines or indicators that provide discipline and signposts to the future is required for the process of successful investing. To answer for this demand this study developed the restaurant industry business cycle models and examined financial practices of the high and low performing firms over the industry cycles.;The U.S. restaurant industry demonstrated three cycles (peak to peak or trough to trough) for the period of 1970 through 1998.;The restaurant industry experienced high growth (boom) every five years on average. Restaurant industry growth cycles, then, tend to be relatively symmetrical. In contrast, the restaurant industry business cycles in the same period show a strong asymmetry.;This study supports the view that the cyclical fluctuations of the growth of the restaurant industry can be projected by measuring and analyzing series of economic indicators and each economic indicator has specific characteristics in terms of time lags, and thus can be classified into leading, coincident, and lagging indicators.;The high performing firms' financial practices regarding investment decisions measured by capital spending, and price earning ratio, and part of financing and dividend decisions measured by market value of common share outstanding are independent of the cyclical fluctuations of the industry cycles. Conclusively, high performers exercise their capital investment (reflected by capital spending) and equity management (reflected by common share outstanding and P/E ratio) independently while being less influenced by the industry swings.;The financial practices exercised by the low performing firms are independent from the events in the industry cycle.;It is expected that the above results can be used for improving investment performance through understanding the cyclical behavior of the economy and the restaurant industry. (Abstract shortened by UMI.).