An Empirical Study on the Cost-Revenue Structure of Food Service Businesses

Objective: This study aims to empirically analyze the effects of prime costs(food, labor, and rental costs) on business income in food service businesses and explore changes in cost-revenue structures over time and across income levels. The study seeks to provide insights into structural issues in the food service industry. Methods: This study analyzed the data from 14,950 food service businesses, collected by the Korea Rural Economic Institute from 2019 to 2023, by using hierarchical regression and quantile regression analyses. These methods were used to examine the relationship between cost structures and profitability and to compare differences across time periods and income levels. Results: The negative effects of cost increases on business income were greater for labor and rental costs than for food costs. These effects were more pronounced in lower-income groups. Additionally, during the COVID-19 pandemic(2020-2021), the impact of prime costs on business income decreased. Implications: This study diagnoses structural issues in the profitability of food service businesses and provides practical implications for addressing changes in cost-revenue structures and differences across income levels. Furthermore, it highlights the need for further academic and policy-oriented research to guide future improvements and solutions.