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Recession and Tax Impacts On the U.S. Restaurant Industry

Purdue University

Steven T. Kosiba

Chili's Grill & Bar

Recent sales of the U. S. eating and drinking place industry have been lackluster. It is difficult to pinpoint the exact reasons for this sluggishness, but the recent U. S. recession as well as 1986 modifications to U. S. tax law have to be considered factors. This studyattempts to identify the mostimportant factors associated with changes overtime in demand for sales of the eating and drinking place industry. The intent was to measure the extent to which recent eating and drinking place industry sales were due to a structural decline in demand for foodservice or due to the decline in prices and income due to the recession, changes in tax law affecting the industry, or other causes. Findings indicated the latter; that is, the decline in demand could be largely explained by changes in prices, income, and the drop in deductibility of restaurant meals as a business expense.

Key Words: Key Words: demand for foodservice • elasticity of demand • eating and drinking places.

Journal of Hospitality & Tourism Research, Vol. 17, No. 2, 17-23 (1994)
DOI: 10.1177/109634809401700203


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