Abstract
Purpose
This study analyzes the mediating effect of purchasing efficiency on the relationship between purchasing analytical skills and restaurant performance.
Design/methodology/approach
A structured questionnaire was used to collect data from 169 restaurant managers in Dodoma, Tanzania. The collected data were analyzed by using partial least squares structural equation modeling (PLS-SEM).
Findings
The results established the direct and indirect effects of purchasing analytical skills on restaurant performance. Specifically, purchasing analytical skills have positive and significant effects on restaurant performance and purchasing efficiency. Also, purchasing efficiency significantly mediates the effect of purchasing analytical skills on restaurant performance. Since purchasing analytical skills significantly influence restaurant performance, and the mediating effect of purchasing efficiency is significant, the study establishes and confirms the partial mediation effect of purchasing efficiency.
Research limitations/implications
The current study solely focused on purchasing analytical skills. Future studies may examine other types of purchasing skills (technical and managerial skills) to expand the study's findings. Furthermore, different mediating variables can be used to study the indirect effect of purchasing analytical skills on restaurant performance.
Originality/value
This study presents empirical evidence from Tanzania, an emerging economy, on the link between purchasing analytical skills and restaurant performance. It also contributes to the body of knowledge by studying the mediating effect of purchasing efficiency in the hypothesized relationship.
Keywords
Citation
Changalima, I.A. and Elias, R. (2024), "Mediating effect of purchasing efficiency on the relationship between purchasing analytical skills and restaurant performance: a PLS-SEM approach", Journal of Money and Business, Vol. 4 No. 2, pp. 138-149. https://doi.org/10.1108/JMB-11-2022-0058
Publisher
:Emerald Publishing Limited
Copyright © 2024, Ismail Abdi Changalima and Ruth Elias
License
Published in Journal of Money and Business. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
Introduction
Most researchers continue to investigate the performance of restaurants in both developed and developing countries (Cho et al., 2021; Elias and Mwakujonga, 2019; Kim and Lee, 2022). This is because restaurants and other related businesses are thought to provide both direct and indirect benefits to communities (Elias and Changalima, 2024). Literature identifies restaurants as among the attractions in the tourism and hospitality industry (Jena and Jog, 2017; Kumar and Dar, 2017). Also, a full-service restaurant employs the majority of local and unskilled workers because it requires various individuals to work in different restaurant operations. A successful restaurant increases income, provides opportunities for growth and raises the living standards of its employees (Elias and Mwakujonga, 2019). Income tax and other legal revenues paid to the government act as sources of income to the government. In the new global economy and social interaction, the restaurant business has gone far beyond the basic purpose of providing food and services to most urban dwellers; it also meets a human need for connection and shapes social relations (Amani and Ismail, 2022). In this regard, restaurant performance remains critical for facilitating these economic and social benefits.
Purchasing is still an important activity for boosting restaurant operations because it involves the daily process of determining the description, quality, quantity, price and storage of perishable food materials (Cho et al., 2019a; Feinstein et al., 2017). Also, arranges procedures for purchasing, as well as ensuring timely delivery for the daily provision of restaurant service, because timely provision of service is as important in the restaurant business as food itself. Furthermore, the resource-based view (RBV) contends that skills may be regarded as important intangible resources that enable organizations to perform and gain a competitive advantage (Barney, 1991; Wernerfelt, 1984). In this regard, purchasing skills are required for improving performance outcomes at work in various contexts (Changalima and Ismail, 2019; Omoruyi and Ntshingila, 2021; Stek and Schiele, 2021; Changalima and Mdee, 2023). The purchasing analytical skills emphasize the ability to recognize and solve purchasing problems, as well as the ability to make decisions quickly (Cho et al., 2019a). These skills are required in dealing with market trends and difficulties in responding to rapid changes in customer demands and updated strategies that bit competitors. From this vantage point, analytical skills in restaurants may remain important determinants of performance.
Our study is based on the premise that purchasing analytical skills can lead to increased purchasing efficiency, thereby improving the overall performance of restaurants. Purchasing efficiency is associated with lower order processing costs, lower storage costs and more timely deliveries from suppliers (Janda and Seshadri, 2001). These aspects are important in the restaurant business; thus, efficient purchasing may be a critical factor in the restaurant business, as more restaurant managers are interested in ensuring that costs are kept to a minimum and that required materials for restaurant operations are not delayed. Thus, efficient restaurant purchasing and purchasing analytical skills are important for enhancing successful restaurant operations. The generalizability of most previous research on purchasing skills is impeded by differences in the business environment in terms of consumer demands, supplier types and business environment among countries. That is why the current study responds to call for further research on the role of purchasing analytical skills in the restaurant context (Cho et al., 2019a).
Therefore, questions have been raised about the functional ability of the same skills in a restaurant business in developing countries like Tanzania. Our study focuses on analyzing the influence of purchasing analytical skills on the performance of restaurants and further analyzing the mediating role of purchasing efficiency in the relationship between these skills and performance. This investigation is likely to offer a contribution in the available streams of literature on empirical evidence from developing countries like Tanzania on the direct and indirect effects of purchasing analytical skills on restaurant performance. Also, the study provides important contributions to restaurant managers in enhancing purchasing analytical skills for determining purchasing efficiency and hence improvement of restaurant performance.
Literature review
Resource-based view (RBV)
The RBV, contended by Barney (1991), is probably the best-known theory to explain how resources within an organization improve performance. The theory states that organizations with better resources and capabilities will overcome their competitors in intense industrial competition (Wernerfelt, 1984). Meanwhile, it has been determined that human resources with the relevant skills are the most important resources for performance (Guersola et al., 2018; Jena and Ghadge, 2021). Most of the available literature confirms that intangible assets such as purchasing skills have a great impact on firm performance (Cho et al., 2019a; Karttunen, 2018). Furthermore, the resources available in the organization may remain latent until the firm deploys its capability. So purchasing analytical skills become useful when it produces purchasing efficiency. Therefore, restaurants are required to develop distinctive intangible purchasing skills that are able to reduce costs and set an affordable price in order to sustain high-competitive advantages and achieve sustainable performance (Barney, 1991; Carr and Pearson, 2002). The theory is relevant to the current study in the sense that intangible purchasing analytical skills may lead to increased purchasing efficiency and, as a result, contribute to restaurant performance.
Purchasing analytical skills and purchasing efficiency
Skills in procurement undertakings have been regarded as tools for cost reduction (Changalima and Ismail, 2019). Also, it requires necessary purchasing skills to enhance organizational operations, especially when buying activities are involved in the particular nature of business (Tassabehji and Moorhouse, 2008). Purchasing analytical skills enable purchasers to identify and solve purchasing problems and make quick purchasing decisions with their impact to the business (Cho et al., 2019a). Thus, purchasing analytical skills are among the most important traits that a purchaser in the organization should have, because purchasing entails balancing suppliers' capabilities, customers' needs and the organization's priorities. Based on this discussion, the study hypothesizes the following:
Purchasing analytical skills influence purchasing efficiency.
Purchasing analytical skills and restaurant performance
Purchasing as a function plays a significant role in enhancing an organization’s profitability (Janda and Seshadri, 2001). Purchasing skills are necessary mechanisms for organizations to survive in competitive business environments (Tassabehji and Moorhouse, 2008), as some skills enable buying organizations to communicate well with their potential suppliers (Mwagike and Changalima, 2022) and meet customers’ requirements (Stek and Schiele, 2021; Mushi et al., 2024). Thus, purchasing skills are necessary for enhancing positive outcomes in business enterprises. Similarly, there is a strand of literature on purchasing skills in restaurant contexts (Belo et al., 2020; Cho et al., 2019a). Purchasing analytical skills enable practitioners to be able to focus on their intended customers and be able to analyze their potential purchasing problems. Even though analytical skills are important in business undertakings, the study conducted by Cho et al. (2019a) did not support substantially findings on the importance of analytical skills in the restaurant purchasing context. Therefore, with limited empirical evidence of purchasing analytical skills in restaurant business in developing countries like Tanzania, we propose the following:
Purchasing analytical skills influence restaurant performance.
Purchasing efficiency and restaurant performance
Literature has reported that purchasing efficiency includes a clear reduction of order processing costs, timely delivery of supplier items and clear storage systems (Janda and Seshadri, 2001). Researchers such as Ghoddoosi-Nezhad et al. (2017) and Rodríguez-Escobar and González-Benito (2017) demonstrated empirically that having the ability to archive the lowest price from suppliers without compromising product quality can positively affect an organization's service delivery. Successively, the service delivery of a restaurant has been declared to increase sales volume and market share. Additionally, timely delivery from suppliers has a positive influence on the timely delivery of service and products to be offered to the customers. Carr and Pearson (2002) found that timely delivery helps the company achieve its objectives. It makes the production process more comfortable. Clear inventory storage in an organization can result in money and stock savings. Belo et al. (2020) showed that organizations aiming to achieve affordable prices and cost reduction, extended better market share and achieved business performance compared to their rivals. Furthermore, efficient storage of the food stuff reduces health and safety risks, further improving restaurant performance. With the fact that Cichy and Elsworth (2007) posit that purchases in food service organizations generally account for over 30% of all gross sales, it is worth hypothesizing that:
Purchasing efficiency influences restaurant performance.
Mediating role of purchasing efficiency
The idea that purchasing analytical skills may indirectly increase restaurant performance through purchasing efficiency in restaurants relies on the fact that analytical skills are important in the restaurant business. The relevance of purchasing analytical skills may contribute to increased purchasing efficiency. Purchasing efficiency is associated with improvement of suppliers’ timeliness for deliveries, minimal storage costs and order processing costs (Janda and Seshadri, 2001). Most of these indicators are linked to the actions of purchasers, particularly their ability to make quick decisions related to purchasing, including solving purchasing problems such as inadequate numbers of suppliers resulting in delays, purchasing decisions and their impact on the organizations such as the purchase of storage equipment such as fridges, energy equipment such as gas for cooking and daily cooking materials, which have an impact on restaurant business operations. These purchasers’ actions are done effectively with the presence of purchasing analytical skills (Cho et al., 2019a). Thus, the premise of the study is on testing whether purchasing analytical skills indirectly affect restaurant performance through purchasing efficiency. Regardless of previous efforts in the literature, little is known about the mechanism through which purchasing analytical skills influence restaurant performance. Hence, the last hypothesis of the study is proposed as follows:
Purchasing efficiency mediates the influence of purchasing analytical skills on restaurant performance.
Methodology
Research design, sampling and data collection
A cross-sectional survey design was employed, under which data were only collected once to get the snapshot for making inferences on the study variables. The design is considered to be suitable for capturing information to analyze relationships between variables (Saunders et al., 2019). The sample size for the study was determined using recommendations from Soper (2020). The recommended minimum sample size for structural equation modeling (SEM) using three latent variables, ten observed variables, p = 0.05, desired statistical power = 0.8 and anticipated effect size = 0.5 is 156, according to an a priori sample size calculator. In this case, a sample of 169 restaurants for final analysis was deemed sufficient for estimating effects in the structural model. Therefore, the study surveyed a random sample of 169 restaurants in Dodoma City, Tanzania. The area was chosen as it is the fastest-growing city, which has recently experienced increases in population and business opportunities including restaurant business after the shift of main government offices from Dar es Salaam (Changalima et al., 2021; Ismail, 2022; Mashenene and Kumburu, 2020). The respondents in this study were managers who are responsible for purchasing functions in most small and medium-sized restaurants (Cho et al., 2019a, 2021), and data were collected from them using a self-administered structured questionnaire using a drop-pick technique to increase response rate and reduce bias (Allred and Ross-Davis, 2011).
Measurements of variables
The study adapted measurements that are already available and validated by previous studies. Four items for measuring purchasing analytical skills were adapted from Cho et al. (2019a), items for measuring purchasing efficiency were adapted from Janda and Seshadri (2001) and those for restaurant performance were obtained from Cho et al. (2019b). These measurements are presented in Table 1.
Data analysis
The study used partial least squares structural equation modeling (PLS-SEM) with SmartPLS 4 to analyze the direct and indirect relationships. This technique is considered to be more robust for analyzing complex relationships. This approach, unlike covariance-based SEM, makes it easier to analyze relationships between latent variables and is a non-parametric technique because it does not have pre-conditions related to normal distribution of data. Furthermore, even with a small sample size, this approach may be useful for prediction purposes (Hair et al., 2011, 2013, 2014). As a result, reflective indicators were used to analyze the data in two steps. To begin, a reflective measurement model analysis was performed to determine the validity and reliability of measurements in meeting model criteria. The final step involved an analysis of a structural model to test hypotheses and evaluate direct and indirect (mediation) relationships.
Common method bias (CMB)
Because the data were self-reported, the researchers used a Harman's single factor test to assess the likelihood of bias. The findings for the common method bias (CMB) show that 46.32% is explained by a single factor. Since the value is less than 50%, the CMB was not a problem in this study (Podsakoff et al., 2003).
Results and discussion
Reflective measurement model
The assessment of reflective measurement model was conducted to confirm the reliability and validity of measurement instrument. Table 1 presents values of outer loadings, internal consistency reliability through Cronbach’s alpha (α) and composite reliability (CR). Based on the results, all values of α and CR are within the recommended values, i.e. 0.7 and above for achieving the internal consistency reliability. Furthermore, the results in Table 1 show that AVE values are above 0.5, outer loadings are significantly greater than 0.7 and CR values are above 0.7, and hence, no issue of reliability and validity as all values meet the minimum threshold criteria (Hair et al., 2019). The heterotrait-monotrait (HTMT) approach and Fornell–Larcker criterion were used to check for discriminant validity. The values in Table 2 show that HTMT is lower than 0.85 (Hair et al., 2019), indicating that discriminant validity is achieved, and the square root of average variance extracted (AVE) values (italicized) in Table 3 are greater than the corresponding correlations between constructs (Fornell and Larcker, 1981). This further supports the achievement of discriminant validity.
Structural model analysis
The structural model results for hypothesis testing are presented in Table 4. The inner model values of variance inflation factor (VIF) were well below common thresholds (less than 5) as they ranged from 1.000 to 1.185, indicating that multicollinearity is not a concern in this model (Hair et al., 2019). Regarding the presented values of R2 in Figure 1, the R² value of 0.156 means that 15.6% of the variance in purchasing efficiency is explained by the purchasing analytical skills in the model. This suggests that the model has a relatively low explanatory power for this particular outcome, meaning that other factors not included in the model may account for much of the variation in purchasing efficiency. Furthermore, for restaurant performance, the R² value of 0.367 indicates that 36.7% of the variance in restaurant performance is explained by the model. This represents a reasonably level of explanatory power, suggesting that the purchasing analytical skills and purchasing efficiency have a meaningful influence on restaurant performance but that a significant portion of the variation remains unexplained by the current model. It should be noted that, the model predictive relevance was achieved as all values of Q2 which are 0.136 and 0.193 for purchasing efficiency and restaurant performance, respectively were above 0 (Hair et al., 2019).
As presented in Table 4, purchasing analytical skills also contribute significantly and positively to purchasing efficiency (β = 0.395, p < 0.001). This relationship has f-square value of 0.185. In this regard, purchasing analytical skills of managers result in an increase in restaurant performance of surveyed restaurants. These results imply that purchasing efficiency in terms of improvement in order processing costs, storage costs and suppliers’ timely deliveries is enhanced through purchasing analytical skills. The main factor is the ability to solve purchasing problems, as presented in Figure 1), which contributes to explaining purchasing efficiency. Thus, being able to ensure problems related to purchasing functions contributes to purchasing efficiency in restaurants. A study conducted by Janda and Seshadri (2001) employed purchasing efficiency as a procurement performance dimension, which was associated with several purchasing strategies. The current study emphasizes on the fact that analytical skills are vital for enhancing purchasing efficiency in restaurant business. Also, purchasing managers need analytical skills for making evaluations and judgments (Karttunen, 2018), the evaluations and judgments during the course of purchasing are vital for restaurant managers to enhance purchasing efficiency.
The results show that purchasing analytical skills positively influence restaurant performance (β = 0.288, p < 0.001). This relationship has f-square value of 0.110. The finding implies that purchasing analytical skills are important determinants of restaurant performance, and hence, they increase restaurant performance. Based on the close examination of individual items, “being able to solve purchasing problems” was found to significantly contributing in explaining the restaurant performance, as presented in Figure 1. Therefore, managers of restaurants are able to enhance restaurant performance by enhancing their analytical skills and more on their abilities to solving purchasing problems. The plausible reason for this relationship to exist is on the fact that analytical skills enables restaurant managers to be able to identify and solve purchasing problems, making decisions quickly and analyzing purchasing options and their impact (Cho et al., 2019a). Also, through analytical skills, these managers are able to evaluate and judge matters related to purchasing function (Karttunen, 2018), which in turn facilitate positively their restaurant business operations.
Furthermore, the results show that purchasing efficiency significantly and positively influence restaurant performance (β = 0.432, p < 0.001) as presented in Table 4. The relationship has f-square value of 0.249. Based on this, purchasing efficiency increases restaurant performance through improvement of order processing costs, storage costs and timely deliveries. The results in Figure 1 show that the most contributing factor for purchasing efficiency on explaining the restaurant performance is “order processing costs,” with an outer loading of 0.883. Therefore, through effective lowering of order processing costs, restaurant managers are able to ensure improvement in restaurant performance. Based on our study’s results, purchasing efficiency in terms of ensuring suppliers’ timely deliveries, lower storage and order processing costs determines restaurant performance. These results are supported by previous studies that established the important role of purchasing function in organizational performance (Kakwezi and Nyeko, 2019; Luzzini and Ronchi, 2016).
Lastly, the study’s results in Table 4 show that purchasing efficiency significantly mediates the relationship between purchasing analytical skills and restaurant performance (β = 0.170, confidence interval (CI) = 0.085, 0.260 and p < 0.001). These results imply that purchasing analytical skills indirectly influence restaurant performance through purchasing efficiency. However, the variable partially mediates the relationship between purchasing analytical skills and restaurant performance. Therefore, the study establishes that purchasing analytical skills influence purchasing efficiency and hence results in an increase in restaurant performance. This relationship is expected to exist as purchasing analytical skills that enable managers to solve purchasing problems related to delivery schedules and supplier selections, thereby facilitating purchasing efficiency by reducing costs associated in purchasing activities. In turn, these outcomes are more likely to enhance improvement in restaurant performance. These findings imply that restaurant manager with their analytical skills is able to enhance purchasing efficiency in restaurant business, which in turn results into improvement of restaurant performance. Therefore, analytical skills indirectly affect restaurant performance through purchasing efficiency. As suggested by Karttunen (2018), evaluations and judgments related to purchasing are easily made with purchasers with analytical skills. These aspect bring about efficiency in terms of improvement of suppliers’ deliveries time and costs related to order processing and storage (Janda and Seshadri, 2001), which in turn bring positive performance to the restaurant business.
Conclusions and research implications
Conclusions
In support with the RBV, purchasing analytical skills are important determinants of restaurant performance, and in a similar manner, purchasing analytical skills are positive linked to the purchasing efficiency in restaurants. Also, purchasing efficiency contributes significantly to improving restaurant performance, and thus, purchasing analytical skills indirectly influence restaurant performance through purchasing efficiency. In this regard, restaurants are more expected to enhance their performance through utilizing purchasing analytical skills and improvement in purchasing efficiency. Similarly, the indirect contribution of purchasing analytical skills can be well established on restaurant performance through improved procurement efficiency.
Theoretical implications
The study extends the literature on purchasing skills and restaurant performance by examining the direct and indirect effects (Belo et al., 2020; Cho et al., 2019a). Therefore, empirical evidence is provided from Tanzania to supplement literature that is already established in other contexts. This study extends to the body of literature by examining the role of purchasing analytical skills in enhancing restaurant performance with a mediating role of purchasing efficiency from a developing country. Also, the study provides conclusions based on the study’s theoretical contribution. Thus, the study supports the perspectives of the RBV, as it establishes the role of purchasing analytical skills as important intangible resources for restaurant performance. In this regard, apart from the tangible resources that restaurant managers have for their operations, purchasing analytical skills are also important as well as in facilitating restaurant performance directly and indirectly through enhancing purchasing efficiency.
Practical implications
Restaurants can improve their performance both directly and indirectly by improving purchasing analytical skills and purchasing efficiency. Based on the main findings, restaurant managers should improve their procurement analytical skills in order to increase purchasing efficiency in their businesses, which may lead to an improvement in restaurant performance. In this regard, training relating to purchasing strategies and practices in restaurant business is an important means of improving restaurant managers’ purchasing analytical skills and establishing purchasing efficiency. These skills may enable them to solve purchasing problems and be able to analyze purchasing decisions and their impact on restaurant business to enhance purchase efficiency and improve performance. Therefore, it is recommended that restaurant managers participate in purchasing-related training courses to improve their abilities in handling purchasing functions in their restaurants. Most of these courses are provided by higher learning institutions in the form of short courses and other stakeholders in the form of entrepreneurship short courses and training.
Research limitations and future direction
Despite the fact that the current investigation may make a useful contribution to the existing body of knowledge concerning purchasing skills and the restaurant business, a number of limitations have been identified that leave room for additional investigation. Firstly, the current study focused only on purchasing analytical skills, and hence, future studies may consider other relevant purchasing skills such as purchasing managerial skills and purchasing technical skills to extend the current study’s results. Secondly, the indirect effect of purchasing analytical skills on restaurant performance can be further researched through other relevant mediating variables.
Figures
Figure 1
The structural path model
Reflective measurement model analysis
| Variables | Outer loadings | α | CR | AVE |
|---|---|---|---|---|
| Purchasing analytical skills (PAS) | 0.836 | 0.890 | 0.670 | |
| PAS1: Being able to identify purchasing problems | 0.825 | |||
| PAS2: Being able to solve purchasing problems | 0.842 | |||
| PAS3: Making purchasing decisions quickly | 0.817 | |||
| PAS4: Being able to analyze purchasing options and their impact on our company | 0.789 | |||
| Purchasing efficiency (PEF) | 0.811 | 0.888 | 0.725 | |
| PEF1: Order processing costsa | 0.883 | |||
| PEF2: Suppliers’ timely deliveries | 0.832 | |||
| PEF3: Storage costsa | 0.838 | |||
| Restaurant performance (REP) | 0.867 | 0.918 | 0.789 | |
| REP1: Improvement of sales volume | 0.875 | |||
| REP2: Improvement of market share | 0.899 | |||
| REP3: Improvement of profit | 0.892 |
Note(s): aReverse coded items for analysis
Source(s): Authors' own work
HTMT
| PAS | PEF | REP | |
|---|---|---|---|
| PAS | |||
| PEF | 0.474 | ||
| REP | 0.529 | 0.645 |
Source(s): Authors' own work
Fornell–Larcker criterion for discriminant validity
| PAS | PEF | REP | |
|---|---|---|---|
| PAS | 0.819 | ||
| PEF | 0.395 | 0.851 | |
| REP | 0.458 | 0.545 | 0.888 |
Source(s): Authors' own work
Structural model assessment
| Hypothesis | β | T-statistics (|O/STDEV|) | CI | p-values | Decision |
|---|---|---|---|---|---|
| PAS → PEF | 0.395 | 4.722 | (0.231, 0556) | **** | Accepted |
| PAS → REP | 0.288 | 3.625 | (0.147, 0457) | **** | Accepted |
| PEF → REP | 0.432 | 4.706 | (0.228, 0.589) | **** | Accepted |
| PAS → PEF → REP | 0.170 | 3.838 | (0.085, 0.260) | **** | Accepted |
Note(s): **** denotes p < 0.001
Source(s): Authors' own work
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