AAWE, Economics Dept, New York University, 19 W 4th St, 6Fl., New York NY 10012aawe@wine-economics.org

AAWE Working Paper No. 120 – Economics


Restaurant Strategy and Restaurant Performance:
Evidence from the Mediterranean Sea

Bernd Frick, Olivier Gergaud and Petra Matic


The ultimate goal of strategic decision‐making is to realize sustainable profits. To achieve this objective, managers must devise ways to create and capture value. Apart from actions to reduce production costs, to lower consumer transaction costs or to devise new products or services, the most promising strategy is to in‐ crease product demand by horizontal differentiation, i.e. by making the product sufficiently different from similar products offered by the competition. Using a large sample of restaurants from Croatia, a popular holiday destination in South‐ ern Europe, we show that adoption of either a “celebrity strategy” or a “wine strat‐ egy” is associated with significantly higher revenues. Since they require substantial investment in social capital or access to financial capital both strategies are diffi‐ cult, if not impossible to imitate.

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