Over the last 25 years there have been many studies examining firm survival within the restaurant and fast food industries. One of the first was Freeman and Hannan’s (1983) investigation of specialist/generalist restaurant survival across 18 California cities. Their study challenged the previously held assumption that generalist firms would be favored during times of environmental instability. However, the population ecology approach employed by Freeman and Hannan has been the subject of much academic debate (see Young, 1988; Zucker, 1989) as to the validity of the approach developed and employed. A specific limitation of the study was the assumption that environmental variation could be related solely to seasonality.
An investigation by O’Neil and Duker (1986) failed to find a positive relationship between marketing expenditure and firm survival. Instead, they found that the efficient use of marketing expenditure was more important than the total amount spent vis-à-vis survival. Inspired in part by Freeman and Hannan’s population ecology approach, Muller and Inman (1994) devised a new approach to restaurant management that incorporated spatial analysis. Differentiating between restaurants located in hamlets, villages, towns,
cities and a metropolis they agued that distance and transportation are key factors related to restaurant survival. A related study by Shriber, Muller and Inman (1995) confirmed the importance of accounting for spatial variation when predicting restaurant performance outcomes. Indeed, rather than advocating the collapsing of various restaurant forms into two types (i.e. specialists and generalists), Muller and Woods (1994) propose a typology of restaurant forms (i.e. quick service, moderate upscale, upscale, and business dinning), each with a distinctive set of related competencies required achieve optimal performance.
The growing impact of franchised entrants in the restaurant and fast food industry was examined by Bates (1995). Across a relatively short time span (1984 to 1987), Bates found that despite higher levels of turnover, franchised firms during the study period were less profitable than independent firms due to higher upfront establishment costs and the increased likelihood of competing in overcrowded niches. English, Josiam, Upchurch and Willems (1996) drawing inspiration from Michael Porter’s strategic planning model also found an inverse relationship between the initial start-up investment and eventual success. However, they found that franchised restaurants held a survival advantage over independent restaurants. During this period, Muller (1997) noted the (somewhat obvious) food-service price distributions between the various types of firms operating in the restaurant and fast food industry, highlighting the lack of direct competition between many marketplace offerings.
The survival of Danish restaurants was also explored by Hjalager (1999) employing theoretical perspectives from organizational ecology (see Baum, 1996). Like Muller and
Inman (1994) before her, she placed specific emphasis upon spatial variation, accounting for metropolitan areas, large cities, towns, villages and rural areas. Her findings suggested lower levels of rural survival related to increased levels of rapid change in a relatively homogenous regional business environment. Recently, Kalnins and Mayer (2004) investigated the survival of pizza restaurants in Texas. They found that local knowledge (gained from congenital experience) was more related to firm survival than was distantly gained experience. Their findings argue for the increased consideration of the importance of local knowledge at lower levels of analysis (i.e. towns and villages). Finally, Parsa, Self, Njite and King (2005) used a mixed-method approach developed a model of restaurant viability from their study’s findings. The model is derived from their identification of 12 elements of success and 21 elements of failure. Importantly, they could not pin point restaurant success or failure to any specific factor/s.
3.6.1 Summary and postulate development
Overall, this review of the literature related to firm survival in the restaurant and fast food industry has revealed some emerging underlying trends (e.g. the incorporation of spatial analysis, different theoretical perspectives and the use of various research method), but has failed to identify any common specific (or dominant) factors related to firm survival. Much of the past findings reported in the studies noted above are drawn from the identification of correlations of various independent variables and survival outcome as a dependent variable. This study differs in that the focus is not upon the relationship between any predetermined number of independent variables and firm survival as a dependent variable. The focus is upon a generative mechanism (i.e. the invisible force)
that alters the probability of independent firm survival accounting for spatial and temporal heterogeneity, therefore;
Postulate 15: The degree to which an invisible force capable of influencing independent
firm survival the pizza industry will be directly related to (or explainable by an understanding of) the selective and ecological environments experienced by individual firms.
Accordingly, evidence of resource partitioning and/or facilitation as a response by independent firms should form a central element of any explanation of Transferred Demand, therefore;
Postulate 16: Differential independent firm survival in the pizza industry will therefore
be related to differences observed in firm type and location.
Any alternative explanation should be comparable to existing explanations for comparison. The relationship between specialists and generalists is well accepted within the literature (vis-à-vis survival outcomes) and therefore serves as an appropriate accepted explanation against which to compare the findings of this study, therefore;
Postulate 17: Collapsing firms into specialists and generalists will not give rise to as
satisfactory explanation of the differential survival outcomes of similar types of firms operating in the restaurant and fast food guild in the North Yorkshire / East Riding region as compared to that developed to explain the assumed presence of Transferred Demand.