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The Restaurant Industry
Restaurants are known to operate on razor thin profit margins, and also tend to have very limited cash on hand. In a recent survey of the retail industry, results showed that the average business had less than one month’s cash on hand and median expenses of $10,000 or more (Bartik, et al., 2020). In addition to minimal cash on hand, restaurants operate with high costs resulting in excruciatingly low profit margins. When looked at in the aggregate the industry average is between 3% - 5%, with subsections between 0% - 15% (Resendes, 2020).
The restaurant industry is one of the largest in the United States, employing nearly 15.6 million people, representing nearly 10% of the Country’s workforce. The most common position in the industry is that of a server, having direct contact with guests (Datausa, n.d.). Most restaurants in The United States have less than 50 employees and 99% of all restaurants are family owned (Gangitano, 2020). The United States restaurant industry is the second largest private employer, and as a result of COVID-19 the industry is expected to lose $225 Billion in the three months following shut downs, with as many as 75% of independent operations not expected to survive (Noguchi, 2020; Severson & Yaffe-bellany, 2020). While the U.S. federal government attempted to mitigate the damage by allocating money for small businesses, larger chains like Ruth’s Chris Steakhouse and Shake Shack, swept in to capture the majority of the money. While Ruth’s Chris did return the $20MM it was allocated, only 5% of independent restaurants secured funds through the federal act, even though 60% applied for help (Peterson, 2020; Taylor, (2020).
Restaurant Experience
A general principle of marketing is the idea of customer orientation, a process where the firm is oriented to the customer’s needs (Kohli & Jaworski, 1990; Kotler, 1972; What is Customer Orientation?, N.D.). Within the servicescape of retail environments the Customer Orientation of Service Employees (COSE) is considered to be central to the experience of the customers, and firms that are more customer oriented have better success. A principal determinant of positive outcomes is the service employee’s social skills (Hennig‐Thurau, 2004). In some cases, it has been shown that COSE enhances customer satisfaction as well as customer repurchase intention specifically within the restaurant environment (Kim, & Ok, 2010). The importance of the employee’s social skills is further born out in its relation to the environment of the restaurant. Mechanic attributes of a restaurant, which is the overall ambiance, is dominated by the humanic aspects of the restaurant experience, which are the interactions with the service staff, with particular regard to their social skills and overall appearance (Wall, & Berry, 2007). The restaurant environment is seen as a predictor of customer repeat patronage intent, particularly with regards to perceived cleanliness (Barber, Goodman, & Goh, 2011).
Foodborne Illness
Foodborne illnesses is the contamination of food by various pathogens that can cause illness. The most common pathogens are norovirus, salmonella, clostridium perfringens, campylobacter, and staphylococcus aureus. Foodborne illness is most harmful to older adults, younger children, pregnant women, and people with compromised immune systems (CDC. 2020).
For potential guests of restaurants an outbreak of foodborne illness can be a significant predictor of future consumer intent. Ali, Harris, & Ryu, (2019) found that Perceived Severity (PS) and Perceived Vulnerability (PV) were the major forces in future purchasing intent, and that these antecedents were moderated by chain vs independent restaurant type, and the frequency of restaurant consumption. Interestingly, their study found that PS and PV had negative impacts on future intent in the case of independent restaurants, whereas in the case of chain restaurants only PS had negative influence. The frequency of dining had no impact on the outcome of future consumer intent. In a previous study the same authors found support for the same outcomes, however in that study they introduced factors of subjective norms, and perceived behavioral control into the model. For the latter two there was no support found for influence on consumer purchasing intent (Harris, Ali, & Ryu, 2018).
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