Horizontal vs Vertical Quality: the Case of Russian Cuisine Restaurants

In this work, we examine the vertical and horizontal qualities on the example of Russian cuisine restaurants in Moscow and Saint Petersburg. For the catering industry, the horizontal quality of dishes and drinks compares their weight, which reflects the calorie content of dishes when controlling the type of dish. At the same time, the vertical quality is compared with such characteristics as the quality of ingredients, the level of service, the interior of the restaurant, its location, etc. Restaurants can choose different levels of vertical and horizontal qualities, as well as different price levels in order to maximize their profit, in view of the possible differences in their production function. This reflects the variability of quality and prices observed in the market. The aim of this work is to study the choice of restaurants of horizontal and vertical quality, their relationship with each other, as well as their relationship with the prices of dishes and drinks. The econometric analysis showed a positive relationship between vertical and horizontal qualities. An increase in both vertical and horizontal qualities leads to an increase in prices, while an increase in vertical quality has a stronger effect on prices.