Sustainable Operations of Online and Offline Restaurants: Focusing on Multi-Brand Restaurants

Abstract

This study investigates the sustainable operations of a multi-brand restaurant that adopts multiple brands in a store, unlike a typical restaurant that operates only a single brand. We introduce five restaurant operation models, including three traditional single-brand ones (offline, online, and multi-channel) and two recent multi-brand restaurants with a single fixed franchise fee and multiple franchise fees proportional to the number of brands. We then investigate the performance of the models in the changing market and cost environments. Through analytical and numerical analyses, we reveal that adopting a multi-brand restaurant does not always guarantee superior profit performance. Such an adoption is recommended under certain conditions, such as when the potential market base is large, consumers are not very price-sensitive, food and delivery costs are low, an increase in food items does not significantly impact process inefficiency, franchise fees are low, or the relative market power of multiple brands is strong. Otherwise, adopting the traditional single-brand restaurant would guarantee better profit performance. Therefore, for a sustainable multi-brand restaurant adoption, it is important to create a business environment that can lower food prices, and a thorough understanding of the decision dynamics related to the number of brands is required.