Restaurant marketing: selection and segmentation in Hong Kong

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International Journal of Contemporary Hospitality Management9/3 [1997] 116–123

© MCB University Press [ISSN 0959-6119]

Restaurant marketing: selection and segmentation inHong Kong

Jaks̆a Jack KivelaAssistant Professor, Department of Hotel and Tourism Management, The HongKong Polytechnic University, Hong Kong

Determinant attribute analy-sis technique that isolatescritical product attributes,can be a useful marketingtool for organizations hopingto penetrate new markets,and re-examine their currentmarket needs. Uses restau-rants in Hong Kong as anexample. While consumerssay that food quality and foodtype are the critical variablesfor restaurant selection orrejection, other “lesser”choice variables may be thedeciding factors in the finalrestaurants selection orreflection. The four restauranttypes which emerged from the study are: fine dining/gourmet; theme/atmosphere;family/popular; and convenience/fast-food restau-rants. The results indicatethat customers’ perceptionsand therefore their prefer-ences of choice variables,varied considerably by restau-rant type, dining-out occa-sion, age, and occupation.Suggests that the importanceof perceivably unimportantattributes, can determinecustomers’ final restaurantchoice. It is suggested, there-fore, that the quality of foodand type of food should notbe the only attributes under-pinning the restaurateurs’marketing strategies in HongKong.

Introdution

In pilot study interviews in various restau-rants in Hong Kong, restaurateurs revealedthat their restaurant’s marketing strategiesdepend not only on the quality and style offood, but also on other attributes such asambience or atmosphere created by therestaurant. Is it then plausible to suggest thatrestaurateurs should seek to differentiatetheir operations by attributes other than foodquality and food type? Almanza et al. (1994),Barsky (1992), Bojanic and Rosen (1994), Dubeet al. (1994), Finkelstein (1989), Johns et al.(1996), and Lowenstein (1995), think that thismight be so. Finkelstein (1989) argues that therestaurateur has long accepted atmosphereas a feature of dining out, equal in impor-tance and sometimes more important thanthe food itself [and that] the ambience of therestaurant has little to do with the consump-tion of foods but a great deal to do with thepreparation of the diner’s expectations andexperiences and his/her subsequent respon-siveness to the transactions of dining out…This argument is also strongly supported byBitner’s (1992) postulation of “servicescapes”and how these impact on customers’ percep-tions and dining satisfactions.

For restaurant marketers, this means thatthe business of providing and selling goodfood, may no longer be the most importantpart of the marketing strategy by which toattract potential customers, and keep regularcustomers returning. Furthermore, if mar-keting strategies of restaurants are to beunderpinned by “style” type benefits, ratherthan the quality or type of food, a number ofquestions arise which need answering. Forexample:1 do customers actually select restaurants

on the basis of their unique ambience orstyle?

2 what choice variables for dining out dothey consider when making a selection?

3 does the order of importance of these vari-ables change according to the dining occa-sion, age, and income segment? Do thesechoice variables differ for different diningoccasions and different restaurant types?and

4 does the order of importance of choicevariable change once a choice set has beenevoked by the customer?

Research findings as suggested by Bitner(1992), Finkelstein (1989) and Auty (1992)indicate that a restaurant’s style could be avery important benefit to customers. In partthis can be explained by the growth of“theme” or “atmosphere” restaurants, wherediners are seeking exclusive atmosphere,rather than simply a good meal. The morerecent branded “theme” restaurants such asPlanet Hollywood, and Fashions, in additionto established concepts like the Hard RockCafe, have become attractive to investorsbecause their “formula” or their style isreplicable from one location to the next, butmore importantly, their unique style is “inter-nationalized”. This replication of “theme” isa very powerful attraction to customersworldwide, who are searching for expecta-tions and experience in transforming ambi-ence (1992); Kotler et al. (1996).

This study of restaurant segmentation wasundertaken in Hong Kong where there areapproximately 2,000 restaurants of varioustypes, excluding food stalls, noodle shops, anddai pai dongs. Fifty-two restaurateurs wereinterviewed, 18 on Hong Kong Island – 12 inthe Lan Kwai Fong district, which is a“trendy” restaurant area, and six in interna-tional hotels; 25 in the Tsim Sha Tsui area onKowloon side, eight of which were in interna-tional hotels, and nine in Sha Tin area of theNew Territories which is a “newtown” middle-income residential area. Four distinct restau-rant groups emerged from the interviews:1 fine dining/gourmet;2 theme/atmosphere;3 family/popular; and4 convenience/fast-food.

Of the 52 restaurants, 32 were Chinese (food)restaurants and 20 were Western (food)restaurants.

The main finding of relevance to the pre-sent study is that restaurateurs are acutelyaware of the competition in their immediatearea. If their restaurant style did not suit aregular set of diners, they went about makingchanges to their operations, and/or have soldout to someone else. Importantly however,

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Jaks̆a Jack KivelaRestaurant marketing: selection and segmentation in Hong Kong

International Journal ofContemporary HospitalityManagement9/3 [1997] 116–123

these changes tend to be dramatic in terms offood type and decor. Restaurateurs are con-vinced that they are competitive, and haveopenly admitted to scrutinizing their opposi-tion and what other restaurants (similar ornot) are doing. They are also secretive abouttheir future marketing plans as they fearbeing “copied” by the opposition or a newrestaurant. The respondents were insistentthat their restaurant alone, had a unique andwinning style that appealed to theircustomers. It could be argued then, that theserestaurateurs were selling the style of theirrestaurant as well as “good” food, althoughChinese food restaurateurs were quick topoint out that for the average Hong Kongdiner, food quality and food type, in this order,was by far the most important choice variable– much more so than ambience or theme.

The study

Following the exploratory interviews withrestaurateurs a follow-up survey was con-ducted to determine customers’ perceptionsof these restaurants and to assess:• how they choose restaurants; and• whether their decision processes and

judgements about restaurants, support therestaurant groupings identified by therestaurateurs.

A customer for this study was defined assomeone who had eaten an evening meal in arestaurant in Hong Kong in the areas cited,during the past month.

A pilot questionnaire was administered to 60people, (20 on Hong Kong Island, 20 in TsimSha Tsui, and 20 in Sha Tin), to elicit fromthem their main choice factors in the restau-rant selection process. Open-ended answerswere collapsed into 14 categories. The follow-ing attributes were considered to be the mainvariables of choice in all restaurant purchasebehaviour: (not in any order)• location;• type of food;• ambience;• competent waiting staff;• quality of food;• cost of food;• comfort level;• menu item variety;• cleanliness;

• speed of service;• prestige;• friendliness of waiting staff;• new experience;• prompt handling of complaint(s).

In a study about restaurant segmentation inthe UK, Auty (1992) considered the followingattributes; food type, food quality, value formoney, image and atmosphere, location,speed of service, recommended, new experi-ence, opening hours, and facilities for chil-dren. Image and atmosphere were found to bethe most critical factors in the final choicebetween restaurants which were similar, andfood quality and food type were the mostimportant variables of restaurant choice. Inan earlier study Lewis (1981) considered fiveattributes; food quality, menu variety, price,atmosphere, convenience factors. Food qual-ity was found to be the most important factoraffecting intention to visit any given restau-rant. Lewis also found that the importance ofthe attributes varied according to the type ofrestaurant. His study was based on threerestaurant types: family/popular, atmos-phere, gourmet. Hence the occasion for din-ing out was substituted for the restauranttype. This study gives due prominence to theoccasion for dining out in order to establish ifthe restaurant choice varied by this factor.The dining out occasions arising from thepilot interviews were:• a place to meet someone;• hungry;• for fun;• for quick meal/convenience;• for enjoyment;• a social occasion;• because of business necessity;• family outing;• for celebration (birthday or anniversary).

These were then collapsed into:• quick meal/convenience;• a social occasion;• business necessity;• celebration (birthday, anniversary, and

such).

After the pilot interviews, 120 house-to-houseinterviews were conducted. A random sampleof three Hong Kong districts were selected; 40households from middle-levels on Hong KongIsland; 40 from Tsim Sha Tsui, and 40 fromSha Tin. Interviews were conducted in theevening and on weekends. The male to femaledistribution was 53 per cent female and 47 percent male. The respondents’ demographicdata shown in Tables I-III.

The majority of respondents were between25 and 34, and 45 and 54 years of age and mostworked in some kind of business/commerce

“…Image and atmosphere were found to be the most criticalfactors in the final choice between restaurants which were similar,and food quality and food type were the most important variablesof restaurant choice…”

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related employment with 21 per cent in thelow income group; 59 per cent in the middleincome group; and 20 per cent in the highincome group. A structured questionnairewas developed to elicit from the respondentsinformation about the restaurants they hadselected to visit in the past month, whichincluded who made the decision, what choicevariables were considered for that selection,and the occasion for dining out, if any.The study was concerned with identifying themain choice variables and analysing if theperceived importance of these variables dif-fers by dining occasion, age, and incomesegments. In addition, the study attempted toidentify if selection or rejection behaviour isdetermined by lower order choice variablesonce a choice group based on occasion andsegment has been evoked.

The initial results of customer choice vari-ables are shown in Table IV and they indicatethat ambience or atmosphere is not in the topfour (overall choice variables) for restaurantselection. However, the importance of thesevariables changes according to the type ofrestaurant selected. The results of determi-nant choice analysis show that restauranttype influences the order of choice variables,as illustrated in Table V. The variables high-lighted (the top four only) are deemed to bethe determinant variables for each restauranttype. It is interesting to note here how, thequality of food, type of food, cost of food, andambience choice factors change according torestaurant type. On the other hand, an appar-ently unimportant factor, such as location, isan important choice variable.

By cross-tabulating the choice variableswith the occasion for dining-out, the rankingof determinant choice variables changes (asillustrated in Table V). The top four determi-nant choice variables are shaded for each

occasion and the analysis reveals a closerelationship between the “restaurant-type” –fine dining-gourmet and theme-ambience and“occasion” – celebration – business, for qual-ity of food; and type of food. Here, location isclosely related to convenience-fast-food –“restaurant type” and convenience-quickmeal – “occasion” and so the image of

Table IIRespondent socio-economic profile

Percentage ofOccupation sample population

Business/commerce/finance 27Government/administration 18Engineering/technology 14Self-employed 11Retired 7Clerical/technical 14Unskilled (other in the category) 9

Table IIIRespondent income and demographic profile

Total household Percentage of income per month sample population Aggregate

Less than 10,000 4 Low10,000-14,999 515,000-19,999 12 21

20,000-24,999 15 Med25,000-29,999 2730,000-34,999 17 59

35,000-39,999 9 High40,000-44,999 645,000 and over 5 20

Rate: £1 = HK$12.96

Table IVTop four overall importance percentage rankingvariables

Top four overall importanceChoice variables percentage ranking variables

Quality of food 82Type of food 63Cost of food 62New experience 55Location 51Menu item variety 43Speed of service 41Ambience factors 24Comfort level 19Cleanliness 15Prestige 9Competent waiting staff 7Prompt handling of complaint(s) 7Friendliness of waiting staff 3

Table IRespondents age profile

Age Percentage of sample population

Under 25 525-34 2835-44 1945-54 3655 and over 12

“…location is closely related to convenience-fast-food – “restauranttype” and convenience-quick meal – “occasion” and so the image of restaurants providing specific attributes to suit the dining occasion, seems to be a very powerful factor in the customer’sevoked set…”

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restaurants providing specific attributes tosuit the dining occasion, seems to be a verypowerful factor in the customer’s evoked set.Note that only the business “occasion” isperceived to include ambience as one of theimportant choice variables.

If atmosphere or ambience were not impor-tant choice variables for most dining out occasions, excepting business occasions, doesdining out and restaurant preference vary bydifferent demographic segments? If particu-lar segments place greater emphasis on styleand atmosphere or other attributes apartfrom quality of food and type of food, such afinding would explain restaurateurs’ compet-itive strategies. Tables VI-IX highlight deter-minant choice differences by occupation, age,and income. The respondents’ ranking ofdeterminant choice variables also changes

according to occupation, age, and incomesegments.

Business, commerce, and finance respon-dents make their final restaurant choice onthe basis of:1 prestige; 2 location; 3 quality of food; and 4 speed of service.

Whereas, at the other end of the respondentspectrum, students make their restaurantchoices on the basis of:1 cost of food – limited budget; 2 location – convenience; 3 speed of service; and 4 quality of food.

Only engineering/ technical group respon-dents selected ambience as the first choicevariable for restaurant selection.

Table VIII shows that the quality of foodseems to be the determinant choice variableacross all age groups, excepting 35-44 year-olds.On the other hand, ambience factors seem tobe the important determining choice for 25-34and 35-44 year olds. Auty (1992), Bitner (1992),and Finkelstein (1989) suggest that this mightbe because these groups tend to look for ambi-ence or atmosphere type restaurants becausethey provide a suitable social environment for25-34 year olds, and theme for 35-44 year olds.The 45-54 year olds select, as their determinantchoice variables:1 quality of food;2 ambience factors;3 comfort level;4 both prestige and prompt handling of com-

plaints.

This seems to reflect the status, income, andmore sophisticated expectations of these cus-tomers when dining-out (Finkelstein, 1989).

While all income groups have identified thequality of food as one of their top determinantchoice variables, only the middle and highincome groups have selected ambience andcomfort level as their other determinantchoice varaiable (Table IX). It seems that thelower income groups are more concernedwith the thriftiness of dining out, i.e. cost,variety, and location than any other choicevariable, excepting quality of food.

To summarize, the likely impact of choicevariables by “occasion” and “restauranttype”, a diagrammatic presentation of resultsis given, in Figures 1 and 2. It should be notedthat “occasion” is a stronger influencing fac-tor on respondents’ perceptions of the deter-minant choice variables, as indicated by the“bunching” or uniformity of agreements(excepting “convenience-quick meal”) withthe top four variables (the L variables are the

Table VImportance of choice variables for selection by restaurant type

Fine dining/ Theme/ Family/ Convenience/Choice variables gourmet atmosphere popular fast-food

Quality of food 76 67 47 21Type of food 70 51 37 15Cost of food 19 21 56 24New experience 38 57 15 7Location 64 65 79 84Menu item variety 73 56 35 10Speed of service 13 18 49 72Ambience factors 75 81 30 23Comfort level 60 57 39 11Cleanliness 75 53 67 58Prestige 87 69 9 4Competent waiting staff 50 63 15 9Prompt handling of complaint(s) 30 9 4 6Friendliness of waiting staff 87 45 30 46

Table VIImportance of choice variables for dining-out by occasion

Social Convenience/Choice variables Celebration Business occasion quick meal

Quality of food 91 96 55 11Type of food 87 90 61 3Cost of food 10 4 45 32New experience 25 11 39 6Location 5 57 42 85Menu item variety 85 47 56 15Speed of service 54 85 63 71Ambience factors 35 91 43 7Comfort level 41 81 22 19Cleanliness 31 73 66 53Prestige 80 95 34 3Competent waiting staff 57 63 51 11Prompt handling of complaint(s) 8 47 36 9Friendliness of waiting staff 29 78 46 41

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ones having the lowest value). “Restauranttype” (Figure 2) on the other hand, highlightsreasonably strong uniformity of agreement ofthe top four variables for the “fine dining” and“theme-atmosphere” restaurant types only.

Influence on the customers’ selection process

Alpert (1971) suggests that establishing theimportance of an attribute may not be a goodpredictor of restaurant choice because theremay be several competing restaurants thatoffer equally attractive “bundles” of attrib-utes that are regarded as equally important.Rather, it is the importance of an attributecoupled with the perceived difference amongcompeting restaurants that determineschoice criteria and provides the basis forpredicting post-dining behaviour intention,(see Boulding et al. (1993), Myers and Alpert,(1968), Sinclair and Stalling, (1990)). Ambi-ence or atmosphere, as well as the quality offood, therefore, may have a decisive role inthe final selection or rejection from theevoked set.

Restaurant segmentation by ambience or atmosphere

In the evoked set for restaurants, those thatare similar with regard to food type, qualityand price, may become the critical discrimi-nators for making distinctions between alter-natives for each restaurant in the set (Um,1987). Some of these can be quite low in theinitial order of importance. The analysis hasshown that some restaurant groups will notappear in some customers’ evoked sets

Table VIIIImportance of choice variables for restaurant selection by age

Choice variables Under 25 25-44 35-44 45-54 55 and over

Quality of food 58 60 72 90 78Type of food 31 75 50 45 15Cost of food 86 47 32 50 69New experience 52 80 40 37 30Location 70 30 33 60 77Menu item variety 34 59 50 60 49Speed of service 14 20 39 38 36Ambience factors 9 75 80 85 25Comfort level 19 70 79 80 79Cleanliness 29 55 60 53 19Prestige – 27 73 75 36Competent waiting staff – 40 70 40 –Prompt handling of complaint(s) – – 30 75 –Friendliness of waiting staff 5 – 75 62 41

Table IXImportance of choice variables for restaurantselection by income segment

Choice variables Low Medium High

Quality of food 65 73 80Type of food 44 50 64Cost of food 79 63 46New experience 30 54 40Location 50 42 60Menu item variety 57 47 38Speed of service 45 29 40Ambience factors 42 69 74Comfort level 39 60 80Cleanliness 17 37 50Prestige 7 40 78Competent waiting staff – 11 45Prompt handling of complaint(s) – 17 20Friendliness of waiting staff 9 25 65

Table VIIImportance of choice variables for restaurant selection by occupation

Business/ Government English/ Self Clerical/Choice variables commercial administration technical employed Retired technical Student

Quality of food 85 71 62 59 40 62 36Type of food 73 54 30 34 57 37 8Cost of food 67 74 59 75 88 79 90New experience 42 32 68 30 5 20 2Location 87 65 12 81 95 82 70Menu item variety 41 49 25 47 42 – 15Speed of service 81 50 74 73 – 85 69Ambience factors 75 37 80 15 31 37 –Comfort level 62 11 73 20 74 20 11Cleanliness 52 26 61 9 – 16 27Prestige 92 41 60 41 – – –Competent waiting staff 32 15 26 – – – –Prompt handling of complaint(s) 55 7 13 – – 5 –Friendliness of waiting staff 72 28 54 6 17 19 –

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Figure 1Importance of choice attributes by restaurant type

Figure 2Importance of choice attributes by occasion

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because they are somehow inappropriate tothe dining-out occasion of these customers.At the extremes, that is, restaurants whichcater for very specific groups – a combinationof food quality and ambience, (one extreme)and cost of food and location (other extreme)maintains the segmentation. Age thereforeappears to be an important discriminator ofambience, leading to selection or rejection ofrestaurant choice. Two distinct segmentsemerged from the analysis: the 25- 34 and 35-44 year-olds, who seek the restaurant’s ambi-ence to create the dining mood.

Personal income also affects choice. Thehigh income groups are more inclined to dineout – seeking quality, comfort and prestige,and personalized service, above any other.However, low income groups also seek qualityof food, but are more concerned about thecost of dining out, which is obviously relatedto their low income. Location, presumablyfrom place of residence, with lower travellingcost, is also an important factor. It could bethat, in Hong Kong where lower incomegroups work long hours and over a six-dayweek, the convenience of location (close towhere they live) is very important to thissegment.

Conclusion

Food type and food quality are the most fre-quent cited choice variables for most diningout occasions. The dining occcasion however,appears to be the key determinant of therestaurant choice set. There are identifiableage and income segments that form a specificcustomer base.

This is because age and income profiles ofdiners correlate to a certain extent withyoung people with low incomes, middle-agedwith middle to high incomes, and older peo-ple with restricted incomes. Hence it is diffi-cult to distinguish which is the more influen-tial factor; age or income? However, both ageand occasion appear to be important discrim-inators for selection or rejection. Hence,while food type and food quality appear to bethe most important variables for restaurantselection, ambience or atmosphere, prestige,location, and cost of food, are neverthelesscritical in the final selection or rejection

process. In addition, ambience, comfort level,and prestige are also differentiated by a com-bination of the age, occasion, and incomesegment.

These findings suggest that restaurants inHong Kong should not only compete on thebasis of food quality and type of food, but alsoon other variables identified by the study.While the dining occasion and ambience aswell as income segment, determine theevoked set, it is the appeal of the overallrestaurant “package” to a particular segmentthat influences final restaurant selection orrejection, in the evoked set. These findingsalso suggest that determinant choice analysis,a measure of importance together with per-ceived differences among competing restau-rants, could be a useful marketing tool as away of identifying which choice variables aremost important in the selection process, mar-ket segment, and the dining occasion. Deter-minant choice variables therefore, would bethose which are perceived as facilitatingchoice, and differentiate among other restau-rants. Restaurateurs’ marketing strategies inHong Kong, should therefore focus on therestaurant attributes that positively affect thedeterminant choice process.

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“…while food type and food quality appear to be the most important variables for restaurant selection, ambience or atmosphere, prestige, location, and cost of food, are neverthelesscritical in the final selection or rejection process…ambience, comfort level, and prestige are also differentiated by a combination of the age, occasion, and income segment…”

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Restaurant marketing: selection and segmentation in Hong Kong