THE RESTAURANT AND FAST-FOOD RACE - WHOS WINNING

Over the past decade people have begun to eat out more, and their revealed preferences on where to eat have altered the structure of the food service sector. In 1977, there were 118 896 restaurant and lunchroom establishments in the US and only 92 357 fast food establishments. By 1986, restaurants and lunchrooms grew to 126 514 but fast food establishments increased to 126 125. Today, there are undoubtedly more fast food establishments than restaurants. In this paper we analyze recent trends in the restaurant and lunchroom and fast food sector. We specify and empirically test (utility-maximizing) supply and demand models, respectively, for both sectors using a pooled 1977 and 1982 cross-section of state data. The empirical results allow us to explain the overall success of this industry, as well as the differential behavior of restaurants and fast food businesses. -from Author