Profitability in rural restaurants and owners' motivation to agritourism: A case from Nepal

Abstract

AbstractRural Restaurants (RR) are located in rural areas primarily to serve the owner's business interests. However, they also play a crucial role in providing economic opportunities for rural communities and are regarded as a center for rural economy. Rural areas often face challenges such as depopulation due to limited access to public services, inadequate infrastructure, geographical remoteness, economic hardships, educational barriers, and other factors. Thus, this study aims to investigate the profitability of RRs and owners' motivations for agritourism development, as profitability and business expansion are typically positively correlated. Data from 105 samples collected in rural Nepal in 2022 and 2023 were analyzed using Tobit and Ordered Logit regression models, respectively. The study conceptualizes and confirms various contributors to RR profitability, including factors related to the supply side, demand appeal, and those influenced by pandemic‐related factors. Additionally, we explored how owners' motivations for agritourism are influenced by the restaurant's characteristics, quality‐related factors, and other attributes. Policymakers need to support RR owners in developing agritourism initiatives and contribute to quality control through effective enforcement of consumer laws by a responsible and robust quality control team.