The importance of environmental analysis in the strategic management process and the effects of economic value drivers on firm or industry performance have been discussed conceptually and empirically by researchers in corporate failure, and in the areas of finance, accounting, strategic management, and the hospitality industry in the past. The belief is that the more systematic and frequent the scanning performed by managers the higher the chances of improving the firm's or industry's performance. The present study is an attempt to identify economic value drivers that impact the casual theme sector of the restaurant industry and to ascertain the degree of the impact during the period 1994-2003.

The statistical analysis was based on time series data, using Cross Correlation, Granger Causality, and Multivariate Regression. An exhaustive range of economic value drivers within ten categories were tested: commodity market; foreign currency market; labor market; inflation; stock market; national income and output; interest rate; government revenue, spending, debt, and taxes; money supply; and consumer spending. The unit of analysis was done at the industry level, and an index of operational cash flows of the casual theme sector of the restaurant industry was developed.

Economic value drivers within the categories of commodity markets, labor markets, inflation, stock market, national input/output, government revenue/spending/debt/taxes, money markets, and consumer spending indicated co-movements with and causality to the index of operational cash flows per unit in the casual theme restaurant industry. A high variance in the operational cash flows in the casual theme restaurant industry was explained by a set of economic value drivers within commodity markets, inflation, and labor markets.

In broad, practical terms, the study intends to support the importance of assessing the economic environment for better performance of the restaurant industry and to provide food service managers with a conceptual model to understand the unanticipated effects on the performance of existing or new strategies. In real terms, the model and set of economic value drivers in the model would help them decide what kinds of action or investment in a firm or industry's weakness should be taken to buffer future operational risks against value drivers within economic environment.