Modeling competition between restaurants: Effects of actual and perceived food quality and seating capacity

Abstract

We propose a model that describes the dynamics of competition between two restaurants in a community with fixed population size. The rate at which a restaurant gains customers depends on its seating capacity and perceived food quality, while the rate at which it loses patrons solely depends on its actual food quality. Using stability analysis, we have shown how bankruptcy of a restaurant can be determined by the interplay of factors such as food quality, both actual and perceived, and seating capacities of the restaurant and its competitor.