A Study of Relational Variables of Restaurants in Cincinnati

A Market study report by James Bax

Submitted to Dr. Ganesh B. Malla Department of Mathematics and CS Xavier University, Cincinnati, OH

Date: October 10, 2013

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Purpose: The purpose of this study is to identify and analyze the potential relationship between Quality Rating, Meal Price, and Yearly Income variables. Procedure: A sample of 300 Cincinnati area restaurants was selected at random. Information on price of a typical meal, quality rating of said meal, and the consumers yearly income has all been surveyed in order to gain a better understanding of the population of interest: all restaurants in Cincinnati. Table 1. Frequency table of the dispersion of Quality Ratings among the sample. Quality Frequency Relative Frequency Cum. Rel. Freq. Good 84 28% 28% Very Good 150 50% 78% Excellent 66 22% 100% 300 100% TOTAL Table 2. Frequency table of the dispersion of Price Ranges among the sample. Price Range Frequency Relative Frequency Cum. Rel. Freq. Cheap ($10-19) 78 26% 26% Medium ($20-29) 118 39.33% 65.3% Expensive ($30-39) 76 25.33% 90.67% Very Expensive ($40-49) 28 9.33% 100% 300 99.99% TOTAL Figure 1. A graphical representation of the relationship between Price Range and Quality Rating

Distrubution of Quality Rating per Price

70 Quantity of Restaurants 60 50 40 30 20 10 0 10-19 20-29 30-39 40-49 Price Range ($) 2 14 2 6 42 34 28 22 46 40 Good Very Good Excellent 64

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Interpretation: Graphical evidence suggests a mild correlation between increased price and increased quality rating. As the price range increases Good ratings decrease while Very Good and Excellent ratings follow an upward trend that mirrors the increased price. However, ratings of Excellent appear to peak at the $30-39 range while Very Good ratings reach their peak at a price between $20-29. Restaurateurs should consider pricing their menus between the Medium and Expensive Price Ranges in order to maximize Quality Rating while keeping prices reasonable. Figure 2. A graphical representation of the relationship between Yearly Income and Meal Price

140 Yearly Income (in $,000) 120 100 80 60 40 20 0 0

Relationship between Yearly Income and Meal Price

Patrons

10

20

30 Meal Price ($)

40

50

60

Note: Correlation Coefficient is .82. Interpretation: There is clear evidence of a trend the correlates increased yearly income with increased meal pricing. The Correlation Coefficient between the two variables is .82 indicating a strong positive relationship between yearly income and meal price. Restaurateurs should consider the target demographic and their corresponding yearly income when determining meal pricing. Table 3. Key figures for Figure 3. 5-Number Summary of Yearly Income (in $,000) Minimum 25 First Quartile 60 Median 70 Third Quartile 82.5 Maximum 130

Table 4. Additional figures to aid in analysis. Additional Figures of Yearly Income (in $,000) Mean Inner Quartile Range Standard Deviation 69.94 22.5 20.24

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Figure 3. Graphical representation of the Yearly Income variable.

Yearly Income Box-Plot

140 120 Yearly Income (in $,000) 100 80 Upper Quartile Range 60 40 20 0 Group Sample Lower Quartile Range

Table 5. Determination of the Presence of Outliers Mean +/- 3(Stand. Dev.) Potential Outlier Incomes 69.94 + 3(20.24) = 130 130 or Greater 69.94 3(20.24) = 9 9 or Less

Presence in Population Yes (1) No

Total Outliers 1

Interpretation: The Box-Plot provides graphical representation of the range, median, maximum and minimum of Yearly Incomes. The top whisker indicates the maximum as $130,000 which, based on Table 5, is in fact an outlier. The Upper and Lower Quartile Ranges represent the largest population of diners. In consideration of Figures 1, 2, and 3, restaurateurs who wish to reach the largest population (based on the sample evidence) and achieve Quality Ratings of Very Good should market meals costing between the Medium and Expensive price ranges to people earning between $60,000 and $82,500 a year in income.

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