The multifaceted role of digital transformation in restaurant resilience

Abstract

Purpose - This study aims to investigate the impact of digital transformation (DT) on organizational resilience in the restaurant industry. By examining DT across front-of-house (FoH) and back-of-house (BoH) operations, this study analyzes how DT shapes resilience in terms of revenue, profitability and firm value. Design/methodology/approach - DT is measured using text analysis of firm’s 10-K reports, combined with financial data from COMPUSTAT. Difference-in-differences and two-way panel regressions are used to examine resilience in terms of stability and flexibility. Findings - FoH DT significantly enhances both revenue stability and flexibility. BoH DT has a significant impact on profitability stability, and overall DT adoption enhances firm value stability during the pandemic. Practical implications - Managers should leverage FoH DT to stabilize and accelerate revenue recovery during demand shocks and use BoH DT to reinforce cost-based stability, while clearly communicating DT initiatives to investors to enhance recognition of resilience value. Originality/value - This study conceptualizes DT as a dual-function capability that simultaneously supports operational stability and adaptive flexibility, revealing differentiated DT effects across financial outcomes in the restaurant industry.