Econometric modeling of the U.S. restaurant industry

Predicting future sales in the restaurant industry and its subsegments is a critical activity for companies who seek to plan and control for what lies ahead. In this study, an econometric model was used to demonstrate its potential for such forecasting. Using aggregated data from the past 41 years, the model appears to have reasonable utility in terms of forecasting accuracy. Moreover, the fit across subsegments is consistent, except in the case of limited-service restaurants. As such, an underlying discussion regarding the limited service segment is offered and a rationale explaining why an alternative model should be used for this subsegment is presented.