Customer Satisfaction in the Restaurant Industry
Research Proposal Customer Satisfaction in the Restaurant Industry Part I: Research Proposal I-1. Research Background In today’s competitive dynamic environment it is crucial to maintain existing customers and gain new ones. This goes for the restaurant industry as well, where not only the quality of the food plays a major role, but also the quality of the service itself. This has been recognized by the restaurant X which offers traditional Greek food.
Due to increasing competition and decreased disposable income during recent year, the restaurant management decided to focus more on increasing the quality of their food and service in order to ensure high customer flow. Delivering quality at the constant pace guarantees competitive advantage, which leads to customer satisfaction and positive word of mouth, as well as repeated sales and customer loyalty. It is important to mention that every fourth purchase results in customer dissatisfaction but only 5% of those customers complain (Kotler et al. ,1999).
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As a result restaurants needlessly loose customers without getting a real feedback from them. This is why it is necessary to do customer satisfaction survey to motivate the customers to share their opinion about the restaurant which will later be used to improve quality in areas of the restaurant management process that need it the most. I-2. Problem Definition Restaurant industry is becoming more and more competitive which makes it hard on single restaurants to stay in the business. Economic crisis during recent years has just made things worse by affecting disposable income and the ability for people to afford a meal outside of their home.
In addition, people’s life-styles are changing, with people having less time for entertainment and leisure. In order to ensure customer loyalty and consequently increasing profits, many restaurants turned to understanding what causes customer satisfaction in their particular case and what can they do to improve it. Constant measurement of food and service quality provides management and rest of the staff with valuable information which can be used to maintain or improve the ways in which they meet and exceed customer expectations.
Encouraging constant feedback from customers and carrying out regular surveys motivates restaurant staff to stay customer-oriented and ensures that the whole organization works toward the same goal which is, ultimately, customer satisfaction. I-3. Purpose of the Research The purpose of this research is to determine how satisfied customers are with the Restaurant X overall experience. The restaurant has been operating successfully for long period of time, but it decided to find out which areas of the business can be improved and how.
This is why a research should be conducted in order to find out the level of satisfaction of existing customers and provide restaurant’s management with the solution how to develop the ineffective areas of the business which cause customer dissatisfaction. Since Serbian people do not have a habit of complaining when the food and service quality does not meet their expectations, this research will ensure that customers give the necessary feedback which will serve as a guide for improving the product, in terms of food quality and price, and service, in terms of people, process, and physical environment.
Customer feedback is the best tool to ensure that a restaurant stays on track with delivering high quality experience. I-4. Research Questions and Research Hypotheses 1. Which factors cause customer satisfaction? 2. What is the correlation between food quality and customer satisfaction? 3. What is the correlation between the physical environment element (atmosphere, design, layout, cleanliness, accessibility of the restaurant) and customer satisfaction? 4. What is the correlation between people element (staff friendliness, approachability etc. ) and customer satisfaction? 5. What is the correlation between process element (support efore, during and after visiting the restaurant) and customer satisfaction? 6. What is the correlation between price paid and customer satisfaction? 7. What can be done to improve customer satisfaction? I-5. Research Objectives 1. To determine the factors that cause customer satisfaction. 2. To identify if there is a significant correlation between food quality and customer satisfaction. 3. To find out if the correlation between service quality (people, process, and physical evidence) and customer satisfaction is significant. 4. To identify if price affects customer satisfaction. 5.
To determine in which ways can customer satisfaction be improved. I-6. Research Design I-6. 1. Research Sample The suggested sampling technique is non-random convenience quota sample. The quotas are 30% and 70%; 30% of questionnaires to be distributed during lunch time (12pm-5pm) and 70% to be distributed during dinner time (5pm-11pm). These quotas are based on the fact that more customers visit the restaurant after work, during the dinner time. It is planned that waiters distribute questionnaires and ensure that sample size is 100 people above the age of 18 regardless of the gender.
The sample questionnaire, in the Appendix A, mainly uses the 5-point Likert scale and it covers areas such as food quality, menu options, price, staff, service process, restaurant atmosphere, location and appearance. The questionnaire starts with generic questions such as gender, age, etc. and ends with open ended questions which give the respondent the opportunity to give more detailed feedback regarding food and service improvement. It is important that questionnaires are not distributed and collected in the period less than two weeks in order to ensure that the sample is representative enough. I-6. 2. Data Design |Primary |Secondary | |Quantitat|Correlation coefficient between food quality and customer |Multiple correlation coefficient between three independent variables | |ive |satisfaction |(food, service, physical environment quality) and customer | | |Correlation coefficient between people element and customer |satisfaction | | |satisfaction; process element and customer satisfaction; physical |Multiple correlation coefficient between the three variables including| | |evidence element and customer satisfaction |fourth, perceived price, and customer satisfaction | | |Multiple correlation between service quality and customer |Multiple correlation coefficient between the three variables, | | |satisfaction |perceived price, and interaction term and customer satisfaction | | |Correlation coefficient between price and customer satisfaction |Percentage of people who do not complain | | |Multiple correlation between overall, food and service, quality and |Percentage of people who spread positive and negative word of mouth | | |customer satisfaction |Percentage of people who become satisfied after quick service recovery| | |Descriptive statistics on age, overall attitude toward food, service,| | | |and experience | | |Qualitati|Factors that influence customer satisfaction |Benefits of customer satisfaction | |ve |Ways to improve levels of service, food, and physical environment |Costs of customer dissatisfaction | | |quality |The importance of creating customer-oriented culture in the restaurant| | |Ways to improve customer satisfaction |industry | | |The importance of additional three P’s (people, process, physical | | | |environment) | | | |The significance of measuring customer satisfaction | I-6. 3. Data Processing and Analysis After collecting the data, different types of analysis will be used. First of all, measures of central tendency such as mean, median and mode will be used to analyze customer gender and overall attitude of customers regarding food and service quality, price, and physical environment.
Since the majority of questions were formulated in the 5-point Likert scale, running descriptive measures, as well as variation measures such as range, standard deviation and coefficient of variation will be achievable. All descriptive statistics will be run in the Excel program. When it comes to independent variables such as quality of food, quality of staff, physical environment, and price, will be compared to the dependent variable customer satisfaction in terms of correlation. Both single and multiple coefficients of correlation will be computed and analyzed in order to gain a full picture about which variables influence significantly the customer satisfaction.
These findings will be later used to suggest which areas of restaurant business need the most improvement and which component of each area needs the most attention. For example, if it is determined that customers are least satisfied with staff, specifically taking time to answer questions regarding the menu, this issue will be addressed to the management of the restaurant. I-7. The Research Follow-up It is important that Restaurant X continues with measuring the customer satisfaction in terms of similar factors and to keep track of performance improvements over time. Improving quality of food and service can sometimes take time because the training and changing the already adopted system can be time consuming.
This is why customer surveys should be done not too close to one another to give time to the staff to improve their effectiveness in different areas. On the other hand, the surveys should be done often enough to serve as a motivation for constant improvement. In the future, it may be suggested to the restaurant to open their own website which will provide customers with the possibility to give feedback, suggestions, comments at any point of time, not only while surveys last. These comments should be reviewed on a regular basis and if possible there should be a follow up to the most significant suggestions or complains. Part II: Literature Review II-1. Introduction In Serbia people are not used to going out to eat at restaurants very often.
This is not just a matter of habit but also ability to afford a meal, from time to time, outside of home. With economic crisis affecting people’s disposable income during recent years, it is even rarer that one can reward him/herself with a lunch or dinner in a restaurant. People in Serbia lately are starting to open up to other international cuisines such as Chinese, Japanese, and Mexican etc. This being said, offering type of cuisine that Serbian market is not very familiar with makes it harder for that restaurant to attract new customers. Furthermore, lately people’s life-styles are changing, with individuals having less free time for leisure and entertainment. This caused restaurant industry to adjust to changes that took place.
Nowadays, besides fast food places and casual dining, there are fast-casual dining services, offering fast food in a casual, sit down setting. Factors such as, decreased disposable income, offering less known international cuisine, and changing life-styles, intensify the competing process even more. This in return, makes even harder, for a restaurant like Burrito Bar, to compete for limited number of customers. Since for now, it only operates at one location in Belgrade, it is crucial to find out customers’ attitudes toward the restaurant in order to retain current and attract potential customers. Everything begins with customer needs and ends with customer (dis)satisfaction.
The new technology including Internet and media made customers better informed, more price conscious, more demanding, and less forgiving (Kotler and Keller,2006,p. 254). This means that customers are becoming harder to please; thus, if restaurant X does not successfully manage to do it, their competition will. The intense competition for decreasing number of customers made it even more vital to satisfy customers’ needs in order to create customer loyalty and motivate customers to repeat purchase. In order to do this, all activities, including all business functions and actions of all employees within the restaurant, must become customer-oriented. In other words, the whole organization must adopt marketing orientation (Lancaster and Massingham,2011,p. 9).
Henry Ford once said that “it is not the employer who pays the wages, employers only handle the money, it is the customer who pays the wages. ” Thus, it is crucial to create a customer-centric culture within the organization and make everyone realize that customer satisfaction leads to long-term relationships which drives profit and pays wages to the employees. According to Lancaster and Massingham (2011), this can be only done when senior management is committed to customer-orientation and encourages all the employees to adopt the same attitude. II-2. The Three New P’s (Process, Physical Evidence, People) Traditional marketing mix consisted of four P’s, product, price, place, and promotion.
However, the notion that these P’s do not play a major role in service industry and pressure to go “an extra mile” caused by intense competition led to a creation of additional three P’s: people, process, and physical evidence. People – this element includes anyone who directly interfaces with customers, in this case managers and waiters. In the restaurant industry this element plays a major role because waiters are the one who leave the first and biggest impression on customers, also called “the moment of truth” (Lancaster and Massingham,2011,p. 509). Waiters must be aware of the role they play in making or breaking the customer experience. II-3. Customer Satisfaction and Why Measure It In order to measure customer satisfaction it is important to define its meaning. According to Kotler et al. (1999,p. 2) it is “ the extent to which a product’s perceived performance matches a buyers expectations. If the product’s performance falls short of expectations, the buyer is dissatisfied. If performance matches or exceeds expectations the buyer is satisfied, or delighted. When it comes to satisfaction, Nirmalya et al. (2012), there are two paradigms: the confirmation/disconfirmation and the post purchase interaction. The first one, relates to the expected standard as the essential determinant of satisfaction which is viewed as a mental state, while the latter one states that satisfaction is a post purchase process rather than a mental state. II-4. Customer Dissatisfaction
As mentioned before, not meeting customer expectations will result in customer dissatisfaction. Displeased customers are more likely to talk about their dissatisfaction to other customers or potential customers; in fact, customers with bad experience are twice as likely to tell others about it as those with good experience (Lancaster and Massingham,2011,p. 305). Along these lines, research mentioned by Gerson and Machosky (1993), showed that dissatisfied customers express their dissatisfaction to nine other potential customers. These statistics show that poor customer care will have a harmful effect, not only on those involved in the process, but many others.
If an organization could manage to reduce the customer defection rate by 5%, it could lead to increase profits by 25-85%, depending on the industry (Kotler and Keller,2006). The way of calculating a cost of offering poor service and not offering a proper service recovery afterwards is explained by Gerson and Machosky (1993) and it includes three factors: 1. Lost Customer Revenue – the money lost when customers begins doing business with your competitors because you gave them poor service. 2. Lost Opportunity Revenue – the potential money lost when customers are dissatisfied, or when former customers spread negative word of mouth. 3. Customer Replacement Costs – the cost of acquiring new customers to replace the ones you lost. II-6. Conclusion Today’s restaurant industry is very competitive.
Decreased disposable income caused by the economic crisis and lack of time due to fast life-styles limits the number of existing and potential customers for a casual dining restaurant like Restaurant X. In order to achieve customer satisfaction, the restaurant must create a customer-oriented culture where everyone works toward making customers happy, which will in return bring benefits to the entire restaurant staff as well. Work Cited: ALIC, MIRKO, MIRELA MARICIC, and IVAN KOVAC. “Impact Of Personal Service On Customer Satisfaction In Fmcg Retail In Croatia. ” International Journal Of Management Cases 13. 3 (2011): 8-17. Business Source Premier. Web. 21 Apr. 2012. Chandrashekaran, Murali, Kristin Rotte, Stephen S Tax, and Rajdeep Grewal. Satisfaction Strength And Customer Loyalty. ” Journal Of Marketing Research (JMR) 44. 1 (2007): 153-163. Business Source Premier. Web. 21 Apr. 2012. Dru, Scott. Customer Satisfaction. Menlo Park: Course Technology Crisp, 2000. Ebrary. Web. 15 Apr. 2012. . “Employee Satisfaction, Responsiveness, And Customer Satisfaction: Linkages And Boundary Conditions. ” Academy Of Management Annual Meeting Proceedings (2011): 1-6. Business Source Premier. Web. 21 Apr. 2012. Gerson, Richard F. , and Brenda Machosky. Measuring Customer Satisfaction : A Guide to Managing Quality Service. Menlo Park: Course Technology Crisp, 1993. Ebrary. Web. 15 Apr. 2012. . Han, Heesup, and Kisang Ryu. Key Factors Driving Customers’ Word-Of-Mouth Intentions in Full-Service Restaurants: The Moderating Role of Switching Costs. ” Cornell Hospitality Quarterly 53. 2 (2012): 96-109. Business Source Premier. Web. 25 Apr. 2012. Kotler, Philip, and Kevin L. Keller. Marketing Management. 12th ed. Upper Saddle River, New Jersey: Pearson Prentice Hall, 2006. Print. Kotler, Philip, Gary Armstrong, John Saunders, and Veronica Wong. “Brands, Product, Packaging, and Service. ” Principles of Marketing. Second European ed. (Cambridge): Prentice Hall Europe, 1999. Print. Lancaster, Geoff, and Lester Massingham. Essentials of Marketing. Oxon: Routledge, 2011. Print. Bibliography:
Consumer Insights Survey: Restaurant Brand Loyalty Remains High Despite Declining Visits. Rep. Emphatica, 2010. EMPATHICA CONSUMER INSIGHTS PANEL. Web. 25 Apr. 2012.. Kotler, Philip, and Kevin L. Keller. Marketing Management. 12th ed. Upper Saddle River, New Jersey: Pearson Prentice Hall, 2006. Print. Kotler, Philip, Gary Armstrong, John Saunders, and Veronica Wong. “Brands, Product, Packaging, and Service. ” Principles of Marketing. Second European ed. (Cambridge): Prentice Hall Europe, 1999. Print. Lancaster, Geoff, and Lester Massingham. Essentials of Marketing. Oxon: Routledge, 2011. Print. III-1. Appendix 1 – Customer Satisfaction Questionnaire Dear Customer,
Our objective is to give our customers, the best service and experience possible. We shall be grateful to you if you take a few minutes to fill out following customer service questionnaire. Your feedback will allow us to see whether or not we are doing everything to exceed your expectations. Please mark the appropriate box. |1. Gender |Male | |Female | | | |6. Staff were available in a timely manner. | | | | | | |7. Staff greeted you and offered to help you. | | | | | |8. Staff were friendly and approachable throughout. | | | | | | |9. Staff answered all of your questions. | | | | | | |10. Staff showed sufficient knowledge of our meal choices. | | | | | | |11. Staff offered pertinent advice. | | | | | | |12. The menu had wide variety of appetizers. | | | | | | |13.
The menu had wide variety of drinks. | | | | | | |14. The menu had wide variety of main course meals. | | | | | | |15. The menu had wide variety of deserts. | | | | | | |16. Food was delivered in a timely manner. | | | | | | |17. Food was visually attractive. | | | | | | |18. Food quality exceeded my expectations. | | | | | |19. The restaurant is easy to find and access. | | | | | | |20. The restaurant had attractive interior design. | | | | | | |21. The sitting area is spacious and comfortable. | | | | | | |22. The cleanliness of the restaurant is appropriate. | | | | | | |23. The price reflects the quality of meals. | | | | | |24. The price reflects the quality of drinks. | | | | | | |25. The price reflects the quality of deserts. | | | | | | |26. The price reflects the overall service quality. | | | | | | |27. Overall, the prices were reasonable. | | | | | | |28. I am very satisfied with the overall experience. | | | | | | |29.
I will recommend you to a friend/colleague. | | | | | | |30. I will certainly come back. | | | | | | |31. What did you like best about our restaurant? | | |32. How could we improve our customer service? | | |33. Is there a staff person you would like to comment? Please| | |state the name and the reason. | |