Pecking order puzzle: Restaurant firms’ unique financing behaviors

•Pecking order puzzle is confirmed in the restaurant industry.•Restaurants with financial deficits rely more on equity financing than restaurants with financial surplus.•Franchise funds alleviate financial deficits in the restaurant industry.•Franchise restaurants used less equity financing than non-franchise restaurants in cases of financial deficits.•Franchise and non-franchise restaurant firms with a financial surplus did not significantly rely on equity financing.