Impact of brand diversification on firm performance: a study of restaurant firms

Abstract

In spite of varying brand portfolio strategies employed by restaurant firms in response to the constant growth of the restaurant industry, research on the effect of brand diversification on the performance of restaurant firms has been rare. This study examines the impact of the degree of brand diversification among sampled publicly traded US restaurants. The results show a consistent, significant and negative effect from the degree of brand diversification on the performance of the sampled restaurant firms. The authors' investigation suggests that restaurant managers, when implementing a brand diversification strategy, should consider the firm's scale, sales efficiency, general and administrative expenses, franchising strategy and positioning of brands.