The Influence of Service Quality Dimensions on Customer Satisfaction and Customer Loyalty in the Chain Restaurant Context: A Thai Case

ABSTRACT This study examines how each dimension of service quality may exhibit different impacts on customer satisfaction and customer loyalty in the chain restaurant context. A survey research with judgmental sampling was conducted with 395 Thai undergraduate students. The results reveal that the service quality dimensions of tangibles and empathy have significant influences on customer satisfaction and customer loyalty while the other three dimensions (reliabilities, responsiveness and assurance) do not. In addition, customer satisfaction appears to mediate the influence of service quality dimensions on customer loyalty. Research implications and future research directions conclude the study report. INTRODUCTION Customer loyalty is an important aspect of stability and growth for a chain restaurant because maintaining an existing customer provides several economic benefits. Indeed, customer loyalty has become a key goal for most businesses because retaining existing or repeat customers is more profitable than continually seeking new ones (Berry and Parasuraman 1991; Bowen and Chen 2001). Research has found, for example, that loyal customers purchase more, incur lower marketing costs and spread more positive word-of-mouth (Dwyer, Schurr and Oh 1987; Reicheld and Sasser 1990; Berry and Parasuraman 1991; Bowen and Chen 2001). A recent study (Zhang, Ye, Law and Li 2010) found that word-of-mouth has a great impact on the popularity of restaurants. Over the past twenty years in particular, there have been a number of studies on the improvement of service quality in many restaurant contexts including fast-food restaurants (Lee and Ulgado 1997), airport restaurants (Heung, Wong and Qu 2000), full service restaurants (Chow, Lau, Lo, Cha and Yun 2007) and ethnic restaurants (Ha and Jang 2010). A meta-analysis of service quality studies by Carrillat, Jaramillo and Mulki (2009) reveals that service quality is a major determinant of customer satisfaction which, in rum, plays an important role in eliciting customer loyalty. However, it is noteworthy that influences of service quality on customer satisfaction and loyalty can vary from one industry to another (Fornell 1992) and the perceived importance of each service quality dimension can also vary across cultures (Lee and Ulgado 1997). The chain restaurant (such as Pizza Hut, Sizzler and Subway) is one of the fastest growing sectors in the food service industry (Roh 2002). In Thailand, chain restaurants are considered to cater for customers who are willing to pay more for a better service. In fact, chain restaurants in Thailand often offer a nicer decor, a cleaner environment or even a better service compared with those in the United States (Murase and Bojanic 2004). Since the chain restaurant commonly uses service quality to distinguish itself from the competitors, providing a high level of service quality has become an ultimate goal for many chain restaurant owners. An extended review of literature indicates that there have been no previous studies concerning the perception of service quality neither in the chain restaurant context nor in any other types of restaurants located in Thailand. Therefore, the present research attempts to contribute to the literature in food service marketing by examining the perception of service quality at the chain restaurant in Thailand. In particular, it aims to investigate relationships among service quality, customer satisfaction and customer loyalty in this context. The research results will provide some useful information on which dimension of service quality the chain restaurant should attend to because each dimension may differently influence customer satisfaction and customer loyalty. In addition, the present study will examine the mechanism by which the perception of service quality dimension influences customer loyalty. Specifically, this study will examine whether or not customer satisfaction mediates this relationship. …