Journal of Hospitality Financial Management Journal of Hospitality Financial Management

Abstract

The purpose of this article is to study the factors that impact capital expenditures in the quick-service restaurant industry. The authors hypothesize that growth opportunities, free cash flow, size, corporate earnings, economic conditions, and franchising status will have impact on the capital expenditures of quick-service restaurants. This study analyzed capital expenditure and other financial data on quick service restaurants for the period 2006 – 2016. Results suggest that corporate earnings, size, cash flow, economic conditions, and franchising have a significant relationship with capital expenditures, while growth opportunities are not associated with capital expenditures. Specifically, a high degree of corporate earnings, large size, and a high degree of cash flow tend to be associated with a high degree of capital expenditures; while favorable economic conditions and franchising tend to be associated with a low level of capital expenditures.