Measuring the Operating Efficiency and Its Determinants on Efficiency of Small Foodservice Business: Focused on the HOPE Return Package

Purpose: The aim of this study was to evaluate the operating efficiency of 48 restaurants in Gyeonggi Province that are supported by the Ministry of SMEs and Startups’ HOPE return package, as well as to analyze the impact of external environmental factors on this efficiency. Research design, data, and methodology: This study explored the input and output variables based on existing literature and conducted necessary condition analysis (NCA) to examine the relationships between these variables. Subsequently, we employed data envelopment analysis (DEA) to measure the relative efficiency of small foodservice businesses. Finally, we conducted a two-stage bootstrapped truncated regression, as proposed by Simar and Wilson, to analyze the environmental factors affecting the efficiency of small businesses. Results: The DEA analysis revealed that a significant number of DMUs were situated in areas of diseconomies of scale and pure technology inefficiency. Furthermore, the results of the double bootstrapped truncated regression indicated that increased support for small businesses and higher average income levels in the neighborhoods of the restaurants had a statistically significant positive effect on restaurant efficiency. Implications: This study represented the first attempt to analyze the relative efficiency of small foodservice businesses by simultaneously employing NCA and DEA approaches. Additionally, we examined the efficiency determinants of each small foodservice business using a truncated regression with double bootstrapping. These insights offered significant practical implications for operators responsible for small business policy and assisted in developing tailored operational initiatives to maximize efficiency.