The Relationship between Services and Customer Loyalty in Self-Service Food Establishment in Davao City

An Undergraduate Thesis Presented to the Faculty of School of Business and Management of Brokenshire College

Madapo Hills, Davao City

In Partial Fulfillment of the Requirements to the Degree of Bachelor of Science in Hotel and Restaurants Management

Marissa Agno

Ailyn Aspilla

Jordan Asdali

Annabelle Torrefiel

Michelle Arellano

Lucky Aton

October 2012

Table of Contents

Chapter 1 Introduction..........................................................................1

1.1 Background of Study........................................................................1

1.2Statement of Problem........................................................................2

1.3Hypothesis..........................................................................................2

1.4Conceptual Framework....................................................................2

1.5Significant of the Study.....................................................................4

1.6Scope and Limitation........................................................................4

2 Chapter 2 Review of Related Literature...........................................7

2.1Conceptual Literature.......................................................................7

2.2 Related Study....................................................................................11

2.3Synthesis.............................................................................................13

3 Chapter 3 Methodology......................................................................14

3.1 Research Design...............................................................................14

3.2 Respondents......................................................................................14

3.3 Instrument........................................................................................14

3.4Procedure...........................................................................................15

3.5 Data Analysis....................................................................................15

3.5 Questionare.......................................................................................16

Chapter 1

Introduction

The Relationship between Services

And Customer Loyalty in Self-Service Food Establishment in Davao City

Background of the Study

In the hospitality business world, the true measure of success lies in a organization’s

ability to satisfy customers continually though service delivery( Gabbie & O’Niel,1996 ).In other

words, the services experience provided to customers has an impact on organizational profits as

it is directly related with customers satisfaction, customer has an impact on organizational profits

as it is directly related with customers satisfaction, customer retention and thereby developing

customer loyalty (Baker Crompton,2000;Zeithnal & Britner,2000).Business gurus state it costs a

lot more to attract new customers than to retain current customers(Oliver,1999;Resonberg &

Czepiel, 1983) There is a strong likelihood that repeat customer satisfaction and a feeling of

delight through quality product and delivery of the services experience.

On an international level, the hospitality industry is easily a multitrillion dollar one. In the

two decades, the industry has witnessed exponential growth and industry is easily a multitrillion

dollar one. In the last two decades, the industry has witnessed exponential growth and increased

competition ( Lee, Barker & Kandampully,2003 ).Superior quality of service is the one factor

within the control of the hospitality industry that can crucially add value to its product and lead

to customer delight and loyalty(Lee et al,2003).A desired objective of all service marketers

should be to provide a ‘zero-defect’ service to win customer loyalty, but due to the unique

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,intangible characteristics of services this becomes difficult (Berry &

Parasuraman,1991).However, Soriano(2002)suggest that while there is no guarantee of a

satisfied customer’s repeat visit, it is almost certain that a dissatisfied customer will not return.

Perhaps ‘total satisfaction’ is not sufficient for a customer to return, and only ‘customer delight’

will make it more likely. The notion of ‘service’ can mean different customers and it is an

experience and therefore more difficult to define or measure.

Like every other country, the food industry food industry has flourished very well in the

Philippines. Filipinos love to eat and that’s the reason why you will see a lot of restaurants and

fast foods restaurants scattered in the cities. The success of the food establishments in the

Philippines can be attributed to the factors of standardized procedure, limited menus, placing

emphasis on value, speed and efficient service and franchising. Customer satisfaction is the key

to customer loyalty (Robert Bacal, 2012).

In putting up and operating a restaurant especially in Davao City, there are problems that

might be encountered on the process. However, since eating is very basic for all human beings to

survive, restaurant seems to be an interesting venture to undertake. The food to be served should

be nutritious or restaurant should be clean and sanitary, the ambiance should be pleasant, and the

cost of the food is commensurate to the quality and serving (Bermudez, March 2012).

This study will determine customer’s loyalty among selected restaurants in terms of their

services as related to their food quality and food service. The result of this study will contribute

more idea to others establishment on how services affects the loyalty of customers.

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Statement of the problem

1.) What is the extent of services among restaurants in terms of:

1.1 Food Service;

1.2 Quality Service;

1.3 Cleanliness/Sanitation;

1.4 Ambiance;

1.5 Cost/Affordability?

2.) What is the level of loyalty among restaurant customers?

3.) Is there any significant relationship between Restaurant services and the level of

loyalty of customers?

4.) Does Restaurant services significantly influence customer loyalty?

Hypothesis

Ho1. There is no significant relationship between Restaurant services and customer loyalty.

Ho2. Restaurant Services does not significantly influence customer loyalty.

Conceptual Framework

Independent Variables Dependent Variable

Figure 1

3 3

Services offered by Restaurants:

Variety of food &drinksManpowerTiming (on time)Good tasteHand washingAccessibleProcessing cost

Level of customer loyalty in terms of:

Food Service

Quality Service

Cost/Affordability

Ambiance

Figure 1 presents the variables used in the study. The independent variables are the

services offered by selected restaurants such as variety of food, Manpower, Timing (on time),

Good Taste, Hand washing, Accessible and Processing cost. The dependent variable presents the

level of customer’s loyalty focusing on the criteria of Food Service, Quality Service,

Cost/Affordability, Ambiance and Cleanliness/Sanitation.

Significance of the study

This study will be of great importance to the following:

Manager. This study will give an idea on how to get loyalty of the customers

especially to those who had already tried the services they offer .Getting the loyalty of the

customer will results to a big improvement for their Restaurant.

Customers. This study will provide awareness to the extent of services given by a Self-

Service Restaurant in order to earn their Loyalty.

Researchers. This study will give information and knowledge in terms of the

customer’s loyalty among selected Restaurants in Davao City.

Scope and limitation.This study will cover the selected Restaurants in Davao City. In

particular, only those food establishments offering Self-Services to the customers will be part of

the study. Though there are many other variables that predict customer loyalty, this study only

focus on the influence of customer services on customer loyalty. Meanwhile, the duration of this

research will be on August to October 2012.

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Definition of terms

The following terminologies are defined coneptually and operationally:

Restaurant Services refers to the services of a restaurant such as food service, quality service,

the ambiance of the establishment, and the affordability of the food offered.(Mattilla,1998). In

this study, it defines as the extent of services offered by the restaurant to their customers.

Customer Loyalty is one of the most important achievements of the restaurant

establishments rather than anything else. In this study, it is used to measures customers’ loyalty

to a restaurant.

Food Service The industry which deals with preparing food items/products. In this study, it

is used to define the quality of the food served.

Quality Service is one thing that will be considered dinning at a certain restaurants. In this

study, it is define as the quality of service among the workers of a restaurant.

Price A value that will purchase a definite quantity, weight, or other measure of a good

or service. In this study, it is used as the given prices by restaurants whether it is affordable or

not.

Ambiance A particular environment or surrounding influence. In this study, it is define as

the environment of a restaurant.

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Cleanliness/Sanitation is both the abstract state of being clean and free from dirt, and the

process of achieving and maintaining that state. In this study, it refers to the cleanliness of the

restaurant.

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Chapter 2

Review of Related Literature

Conceptual Literature

Restaurant services.

A restaurant is a commercial establishment committed to the sale of food and

beverage.  A restaurant may be a licensed part of a hotel operation, whereby the sales of the

restaurant contribute to the sales performance of the hotel as a whole (agoda.com/Berlin Hotels).

Restaurants may also be independent business entities under individual ownership and

management .Restaurant dining is not just about the food, at least from the customer's

perspective (William-Sonoma 2012). A restaurant's managers and its employees all share the

responsibility for ensuring the customers are treated well and left with an overall positive

impression of their dining experience (Molly Thompson).

In modern times, efficient and professional catering and restaurant services are must

for every event, celebration or party. Whether it is a birthday celebration, wedding catering,

anniversary party, social, traditional, corporate or political event – quality and delicious food

serving is a must to complete the event. Restaurant and catering can be demanding work that will

require a lot of stamina and inner strength. Business/ employees should also possess the ability to

work under stress. Firm success depends solely on its reputation; it is good to be daringly careful

with the jobs it takes up. Strive to provide a high quality, superior service at all times. Never let

qualities be diminished maintain the standards for repute and references promise (Jones, 2009)

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Restaurant Service is an abstract and elusive construct because of three features unique to

services: intangibility, heterogeneity, and inseparability of production and consumption

(Parasuraman, Zeithaml, and Berry 1985). Zeithaml (1987) defines perceived quality as “the

consumer's judgment about an entity's overall excellence or superiority". Stevensand et al (1995)

describe it as, "perceived service quality is a function of the interaction among three independent

variables: normative expectations, predictive expectations, and actual service quality. The lower

the expectations the consumers have their perceptions of the actual service. And the higher their

expectations about what will happen, the better their perceptions of the actual service". Whereas,

Oliver (1981) gives the definition of satisfaction as," it is the summary psychological state

resulting when the emotion surrounding disconfirmed expectations is coupled with the

consumer's prior feelings about the consumption experience"

Types of Restaurant Services

Food Service. Food is a basic necessity. The industry which deals with preparing food

items/products refers to the food service industry. The food service industry is and will always

remain in high demand because of its genre. These industries include restaurants, fast foods,

school and hospital cafeterias, catering operations, food carts and food trucks etc. Restaurants

and fast foods mainly contribute to the food service industry (Ginger Arboleda, 2010).

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Quality Service. Restaurants are in the business of serving food to their customers. In other

words, they are providing a product (food) and a service (waiting on the customer). The quality

of the food and service is defined as meeting or exceeding the expectations of the customer as if

promised by the restaurant. The food should be properly prepared and the service

should be prompt and courteous. The benefit of quality food and service is that customers will

come back and will recommend the restaurant to friends. Not only are people buying a meal in a

restaurant, but they are also paying for a certain level of service. Quality service is typically that

which is prompt and courteous. That is what customers expect. Exceeding those expectations

with extra service is a plus and can overshadow mediocre food (William-Sanoma 2012)

Cleanliness/Sanitation. Cleanliness in a restaurant is more important than most people realize.

Aside from the obvious health codes and issues, the cleanliness perception of the customers is

formed in areas not usually considered. Increase your customer satisfaction and loyalty of your

patrons by paying close attention to the cleanliness of your establishment each and every day.

When one area of the establishment is not perceived as clean, then the mind starts to wonder as

to if the kitchen is as clean as it should be. Once the patrons starts questioning how clean the

kitchen is, no amount of good customer service or good tasting food is going to make up for the

mental images of dirty kitchens, utensils, and poor hygiene. Ingrain cleanliness and neatness into

your staff training whenever possible (Kristina evey, 2009).

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Ambiance. Ambiance is another important part of restaurant management and is necessary to

attract more and more customers. Air conditioning is also a part of necessities in a restaurant as

people come there to chill for some time and want to be at ease. Always maintain cleanliness and

hygiene as it is necessary for a restaurant. A restaurant is a public place where you will find all

types of people walking in. We have to ensure the happiness of the guests or customers that

come in the restaurant. The best way to make them happy is to ensure satisfaction of the staff. If

the staff is motivated enough to go out of their way to make the guests happy, the restaurant is

said to be managed effectively (Ryan Fyfe, 2005).

Cost/Affordability. Although it's inaccurate to say that chain restaurants always are more

expensive than their local or independent counterparts, one thing of which you can be certain is

that prices at these establishments will be fixed. While you might be able to bargain with street

vendors and servers at local restaurants -- or, if you appear vulnerable, they might raise your

price without you knowing -- menus at places like the aforementioned Jollibee, Shakey's Pizza

and Western-owned establishments will display set prices, which you may not negotiate((Ryan

Fyfe, 2005).

Customer Loyalty

Customer loyalty has become the key strategic goal for many enterprises, including

hospitality businesses. Restaurant owners and managers realize that loyal customers are worth a

great deal more than just casual customers-even if those once-in-awhile customers (Mattila,

1998). Customer loyalty is a measure of how likely a customer is to repurchase and engage in

relationship activities. Customer loyalty is all about attracting the right customer.

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Getting them to buy, buy often, buy higher quantities and bring you even more customers

(Mcllroy and Barnett, 2000). As most restaurants are mature and competition is fierce, customer

loyalty and

Retention is vital for success. Customer loyalty is a prime determinant of long-term financial

Performance of the restaurant operators. Increased loyalty can substantially increase profits in

The service industry restaurants, in particular (Reichheld 1996, Gremler and Brown 1999,

Tsaur et al. 2002). Loyal customers provide predictability, security and prosperity for those

involved in the business.  Customer loyalty is determined by three factors: relationship strength,

perceived alternatives and critical episodes. The relationship can terminate if: 1) the customer

moves away from the company's service area, 2) the customer no longer has a need for the

company's products or services, 3) more suitable alternative providers become available, 4) the

relationship strength has weakened, 5) the company handles a critical episode poorly, 6)

unexplainable change of price of the service provided (Kaj Storbacka, Tore Strandvik, and

Christian Grönroos, 1994).

Related Studies

Relationship between Restaurant Services and Customer Loyalty:

A 2011 Gallup study found that when customers eat out, they seek an experience

that leaves them feeling good. The study also showed that customers are more likely to spend

more money and patronize a specific restaurant more often when they feel engaged -- if they're

greeted warmly and treated with care and respect by the staff, for example. In restaurant

business, many kinds of menu offered with many kinds of design interior. Besides the menu and

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the place, the quality of human resources is a term of service and in processing is an important

aspect. Most of restaurant owner are not focus on the importance of quality of foods and the

Service (Diana 2000). Many researchers have conducted studies in measuring service quality in

the past twenty years. In 1992, McCleary and Weaver indicated that good service is defined on

the basis of identification of measurement behaviors that are important to customers. Zemke and

Albrecht (1995) suggested that service plays an important role in defining a restaurant’s

competitive strategies and identified systems and strategies for managing service. In 1988,

Parasuraman, Zeithaml and Berry developed a multiple-item scale for measuring service quality

called SERVQUAL. SERVQUAL is a generic instrument for measuring perceived service

quality that is viewed as the degree and direction of discrepancy between consumers’ perceptions

and expectations. Thus, service quality, as perceived by consumers, stems from a comparison of

what they feel service providers should offer with their perceptions of the performance of service

provided by service providers (Parasuraman, Zeithaml and Berry, 1998). The researchers also

identified that there are five dimensions to service quality. 

Customer Loyalty- According to Lowenstein (1997), every business gains advantage by adopting

the development of customer loyalty as its strategic purpose. It has a constructive effect on

company culture, development and bottom line because all action serves the purpose of gaining

loyal customers. This makes it important for business firms to understand customer loyalty and

the factors that support the achievement of this strategic purpose. Chow and Holden (1997)

explain the concept of customer loyalty as about establishing and maintaining behavior

influencing and long-term relationship with customers.

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Synthesis

Restaurant Services is one of the very important things an establishment should

consider to gain loyalty from their customers. Employees and Manager must ensure that their

customers are treated very well for them to be satisfied with the service. Food Service/Quality of

a Restaurant must presentable and fresh in the eyes of the customers together with the quality of

service given by the employees the way they treat the customers and how they serve the foods to

them in order that customers will come back because they were satisfied with their service. The

cleanliness of the establishment must also be consider, Customers always paying attention with

the way an establishment maintain the cleanliness of the Restaurant especially to the kitchens,

utensils they use and to their employee who face the customers, they must keep their selves neat

and clean. Ambiance is also important in gaining customers loyalty, where they must feel safe

with the environment of the restaurant. Customers also paying attention with the prices of the

foods in a Restaurant. Whether it is affordable or not. Some customers prefer to find a Restaurant

where they offer low prices to their food.

Gaining loyalty from the customers is a big help for a Restaurant to improve.

Once a Customer gives their loyalty to a Restaurant and keep on coming back just to eat and

taste the food, the possibility of telling others the services and quality of food she/he had

experience in a restaurant, it could be a positive result on paying close attention the things that an

establishment must consider especially in putting up a Restaurants.

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Chapter 3

Methodology

This chapter presents the research design, respondent’s procedure, instrument and

statistical treatment. These are significant in providing data to be analyzed to answer to the

research objectives.

Research Design

The Descriptive method was used in this research. This method is used when data are

collected to describe persons, organization, settings, or phenomena (ECS&MCREL, 2004) such

method and way of conducting this technique allows different observations from customer and

clients of three( 3) selected restaurants local restaurants in Davao City. Furthermore this

compares the relationship between services and customer loyalty in self service food

establishment in Davao City.

Respondents

The respondents included in the study were fifty (50) guests selected through

convenient quota sampling technique in (3) different local restaurants in Davao City.

Instrument

A Questionnaire will be use in conducting the survey of this study. The questionnaire

contains questions that provide freedom to the customers in expressing their observation, with

service of the restaurants where we conducted the survey. Services offered by the selected

restaurant will be rated according to the level of loyalty of their customers.

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RATE LEVEL OF LOYALTY DESCRIPTIONS

3 High level of loyalty Service is very satisfying

2 Low level of loyalty Service is not that satisfying

1 Poor loyalty Service needs improvement

Procedure

To conduct the survey of this study, the questionnaire is presented to our adviser Mr. Felix

C. Chavez, to the program head Mr. Rizaldy Solarte, and to Mr. Ramon Crisostomo, the Dean of

the Hotel and Restaurant Management course for their approval. By then, the questionnaire will

be distributed and will be answered by the customers while they are waiting for their order or

while they are in the restaurants.

Data Analysis

Data collected in the survey on services offered by restaurants were analyzed through the

rates given by the customers. The customers level of loyalty was statistically treated using mean

and standard deviation T-test and Analysis of Variance (ANOVA) will be use on the differences

of the level of loyalty when grouped according to services.

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QUESTIONNAIRE

This questionnaire will be presented and be answered honestly by the costumers. It will

then determine the level of loyalty of the costumers by checking high level, low level, and poor

level in the given questions.

QUESTIONS HIGH LEVEL LOW LEVEL POOR LEVEL

1. What level of service did you receive in terms of their food?

2. What level of service did you receive in terms of the quality service of the restaurant including the way they serve and accommodate you?

3. What level of loyalty a restaurant must receive in giving their costumer the right price knowing that it will fit their budget?

4. What level of loyalty a costumer must give in appreciating the ambiance or environment of an establishment to where it is located?

5. In overall observation, what level of loyalty would you give to the establishment that satisfy you while receiving their services, paying the price they offer and staying while observing the environment of the restaurant?

References

Gabbie & O’Niel, 1996, Yahoo.com

Molly Thompson, Jones, 2009, Yahoo.com

Oliver, 1999; Resonberg & Czepiel, 1983, Yahoo.com

Lee, Barker & Kandampully, 2003, Yahoo.com

Baker Crompton, 2000; Zeithnal & Britner, 2000, Yahoo.com

Berry & Parasuraman, 1991, Soriano 2002, Yahoo.com

Ryan Fyfe, 2005, Google.com

Mcllroy and Barnett, 2000, Yahoo.com

Robert Bacal, 2012, Yahoo.com

Bermudez, March 2012, Sample Thesis Book (2012)

.Mattilla, 1998, Yahoo.com

Agoda.com/Berlin Hotels, William-Sonoma 2012, Yahoo.com

Reichheld 1996, Gremler and Brown 1999, Tsaur et al. 2002, Google.com

Oliver 1981, Ginger Arboleda, 2010, Yahoo.com

Chow and Holden 1997, Yahoo.com

Kristina evey, 2009, ECS&MCREL, 2004, (Yahoo.com)

Kaj Storbacka, Tore Strandvik, and Christian Grönroos, 1994, (Yahoo.com)

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