Abstract
This study investigated the effect of digital transformation on firm productivity in the restaurant industry. Based on the notion that digital transformation enables streamlined operations, this study hypothesized that digital transformation positively influences restaurant productivity in both front-of-house and back-of-house areas. Using text analysis, the annual reports of restaurant firms were analyzed to measure the level of digital transformation. The empirical findings revealed that digital transformation in both front-of-house and back-of-house areas has a positive effect on overall firm-level productivity in the restaurant industry. This suggests that using front-of-house technologies to assist customer processes and back-of-house technologies to streamline administrative and kitchen tasks can help overcome low productivity issues within restaurant firms. This study also demonstrated that digital transformation in front-of-house areas could maximize productivity for geographically diversified restaurant firms, while the positive effect of digital transformation on firm productivity was not significantly greater in quick-service restaurants than full-service restaurants.
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