Evaluating the Performance and Scale Characteristics of the Australian Restaurant Industry

Abstract

This article adopts a data envelopment analysis (DEA) bootstrap approach to measure the technical efficiency and scale properties of Australian restaurant operations. Four inputs and two outputs are used in the analysis, covering 105 restaurants. The results show that Australian restaurants incorporated in this study are operating at a low level of efficiency, with an average of around 46.17%. Inferences from the returns to scale are also in line with the efficiency results and indicate that most restaurants need to expand their production outputs in order to reach an optimum level of production. The article highlights and tests the important impact of factors such as restaurant size and management experience on the efficiency results. Other potential factors related to the external environment, as well as policy implications of the study, are also discussed.