(Luận văn) factors affecting customer satisfaction and behavioral intention in the fast food industry in vietnam

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

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INTERNATIONAL SCHOOL OF BUSINESS
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PHAN THI KIM SUONG

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FACTORS AFFECTING CUSTOMER SATISFACTION AND
BEHAVIORAL INTENTION IN THE FAST FOOD
INDUSTRY IN VIETNAM

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MASTER OF BUSINESS

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Ho Chi Minh City – Year 2014

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

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INTERNATIONAL SCHOOL OF BUSINESS
-----------------------

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ip

uy
an
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PHAN THI KIM SUONG
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m
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FACTORS AFFECTING CUSTOMER SATISFACTION AND
BEHAVIORAL INTENTION IN THE FAST FOOD
INDUSTRY IN VIETNAM

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ID: 22120070

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SUPERVISORS: PROF. NGUYEN DONG PHONG

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DR. NGUYEN PHONG NGUYEN

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Ho Chi Minh City – Year 2014

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Table of Contents

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

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1.1: Research background .......................................................................................................... 1

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1.2: Research problem ............................................................................................................... 4

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1.3: Research objectives............................................................................................................. 5

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1.4: Research scope .................................................................................................................... 6
1.5: The structure of the proposal .............................................................................................. 6

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Chapter 2: Literature review and hypothesis .............................................................................

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2.1: Service quality .................................................................................................................... 8

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2.2: Food quality ...................................................................................................................... 10

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2.3: Hedonic value ................................................................................................................... 11

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2.4: Utilitarian value ................................................................................................................ 12

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2.5: Customer satisfaction ........................................................................................................ 12

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2.6: Behavioral purchase intention .......................................................................................... 13

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2.7: Hypothesis development ................................................................................................... 13

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2.8: The proposal model .......................................................................................................... 17

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Chapter 3: Research Methodology ..............................................................................................
3.1: Research design ................................................................................................................ 18

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3.2: Measurement scale ............................................................................................................ 19

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3.4: Data analysis method ........................................................................................................ 23

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3.3: Data collection .................................................................................................................. 21

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Chapter 4: Data analysis and result ............................................................................................

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4.1: Description statistic........................................................................................................... 24

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4.2: The reliability test – Cronbach’s alpha ............................................................................. 25

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4.3: Exploratory factor analysis ............................................................................................... 31

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4.4: Confirmatory factor analysis ............................................................................................ 36

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4.5: The structural equation modelling .................................................................................... 41
4.6: Bootstrap ........................................................................................................................... 43

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Chapter 5: Conclusion, implication and limitation ....................................................................

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5.1: Conclusion ........................................................................................................................ 45

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5.2: Managerial implication ..................................................................................................... 46
5.3: Limitation .......................................................................................................................... 48

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References .................................................................................................................................. 49

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Appendix .................................................................................................................................... 53

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(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam

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service quality, food quality, hedonic value, and utilitarian value. The research tests the factors
the relationship between customer satisfaction and behavioral purchase intention.

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CHAPTER 1

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INTRODUCTION

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This chapter provides the general pictures of this study. This study has two objectives:

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first, to identify factors affecting customer satisfaction in the fast food industry in Vietnam,

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secondly, to test the effect of these factors on customer satisfaction and purchasing intention

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behavior. The research background section presents the overall situation of the fast food

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industry in Vietnam. Then the research problem is identified and research objective is

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determined, which in turns provide a ground for developing the research methodology and
setting scope of this study

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1.1 RESEARCH BACKGROUND

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get their food without getting out of their cars. The fast food industry started its first step to

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quickly. In American, most fast food restaurant have drive-thru service that allows people to

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The fast food restaurant caters to people who want to buy food that is fresh and served

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(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam

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growth when McDonalds became popular in the late 1940s and early 1950s (What is the Fast

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food industry, n.d.). Fast food restaurants design menus focus on being able to cook the food

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quickly and easily. They strive for absolute consistency so customers can be assured that

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everything they buy will always taste the same regardless which location they visit.

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McDonald's has outlets in 126 countries on six continents and operates over 31,000

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restaurants worldwide. On January 31, 1990, McDonald's opened a restaurant in Moscow and

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broke opening-day records for customers served. The Moscow restaurant is the busiest in the

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world. The largest McDonald's in the world, with 25,000 feet of play tubes, an arcade and play
center, is located in Orlando, Florida, USA.

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There are numerous other fast food restaurants located all over the world. Burger King

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has more than 11,100 restaurants in more than 65 countries. KFC is located in 25 countries.
Subway is one of the fastest growing franchises in the world with approximately 39,129

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restaurants in 90 countries as of May 2009, the first non-US location opening in December

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1984 in Bahrain. Wienerwald has spread from Germany into Asia and Africa. Pizza Hut is

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located in 97 countries, with 100 locations in China. Taco Bell has 278 restaurants located in 14

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countries besides the United States.

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In Thailand, chain restaurants are considered to cater for customer who is willing to pay

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more for better service. In fact, chain restaurants in Thailand often offer a nicer décor, a cleaner

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environment or even a better service compared with those in the United States (Polyorate &

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Sophonsiri, 2010). Since the chain restaurant commonly uses service quality to distinguish

goal for many chain restaurants. (Polyorat & Sophonsiri, 2010)

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itself from the competitors, providing a high level of service quality has become an ultimate

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The fast food industry is a large and diverse industry with plenty of opportunities. Fast

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back in. Consumers want new ways to have a fast and healthy food, so the fast food industry

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food franchises are responding with new offerings, pricing and strategies to lure consumers

(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam

(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam

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continues to evolve when the economy strengthens, and the fast food franchise profitability is

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expected to be promising.

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Tenth biggest fast food in the world is Subway, Mc Donalds, Starbuck, KFC, Burger

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King, Pizza Hut, Dunkin’s Donut, Domino Pizza, Dairy Queen, Papa John’s. Most of them join
Vietnam market.

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Foods in fast food restaurants are standardized and customer gets familiar meals in every

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location of one chain. For example, customers can enjoy the same taste of pizza in Pizza Hut
restaurants in Ho Chi Minh City or Pizza Hut branches in Hanoi. Fast food restaurant usually

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(as KFC, Lotteria ...) uses the same format for all restaurants in all regions.

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With over 65% of 90 million people in Vietnam is less than 35 years old, the fast food

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industry in Vietnam has an annual grow rate of 26% during the economic downturn while other

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industries experienced a decline in terms of sales. According to data provided by Business

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Monitor International in 2011, Vietnam was ranked 8th in the Asia Pacific region in terms of
food and beverage business environment (Vietnam fast food market see bright future, 2013)

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Vietnam fast food market is rising with many giant names such as Lotteria with 162

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restaurants, KFC with 130 restaurants and Jollibee with 30 restaurants. Some more chain which

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has joined the Vietnam fast food market in the recent years includes Pizza Hut, Burger King,

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Popeyes and McDonald’s. It could be seen that young people in Vietnam will help to develop

food development compared with other markets in Asia (Hoang Phi, 2013).

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the fast food industry. According to foreign players, Vietnam is an emerging market for fast-

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Fast food industry in Vietnam get a big boom in 2014 when KFC gains 180 stores in

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after 17 years join the market while Lotteria has 187 stores in Vietnam after 16 years. Pizza

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Hut opens the 50th restaurant in Vietnam in 2014. IPP group is owner of Burger King, Domino

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and Popeyes with total 41 stores in nationwide.

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(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam

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This can be concluded that while Vietnam is potential market for fast food industry, this

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is the time for player to understand clearly the key factors effect to customers and how to build

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customer loyalty to be success in Vietnam market to choose the best way to make customer

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satisfaction.

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1.2 RESEARCH PROBLEM

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With the high rate of young adult in Vietnam, 65% as mention above, the fast food

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industry has experienced a fast growing stage. Beside the chance, there are threats of new
entrants to the industry which increase the level of industry competition and thus each industry

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players have to find ways to enhance their competitive advance to stay away from the fierce

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competition. To survive, fast food restaurant needs to follow their market-oriented strategy that

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focuses on enhancing customer satisfaction and purchasing intention. Fast food restaurants

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have to learn and change their menus to enhance customer satisfaction.
These stores of Jollibee, numerous corners in Ho Chi Minh City are increasingly

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frequented by young people, especially children who will insist on having easy-going meals

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localize ingredients as a way to attract more patrons.

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treated by their fond parents. To better cater to these customers, many stores have managed to

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According to Truong Ham Liem, the marketing manager of Lotteria Vietnam, “Lotteria

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focuses on developing products and services continuously to serve customers, especially fastfood rice”. “We mainly target local teenagers, but it is a fact that in past years our main

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customers were young people and white-collar workers.” Liem says the fast-food business is

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thriving in Vietnam regardless of the global economic crisis, adding rice now is an important

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the most popular choice at Jollibee’s is rice with chicken, which brings 60% of Jollibee’s total

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ingredient in the menu to attract locals. Also, Demis Flore, vice president of Jollibee says that

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turnover (When fast food is localized, 2009)

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(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam(Luáºn.vÄƒn).factors.affecting.customer.satisfaction.and.behavioral.intention.in.the.fast.food.industry.in.vietnam

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The two biggest fast chains in Vietnam set a plan to open more and more restaurants in

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Vietnam. KFC own 116 restaurant at the end of 2012 and plan to have 200 restaurants at the

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end of 2015. In 2011, Lotteria had 100 restaurants in Vietnam and will reach 200 stores in

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2016. In the recent years, more and more foreigner fast food player join Vietnam market and

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expand quickly as Pizza Hut, Jollibee, Burger King, Domino, Popeyes, Mc Donalt’s, Subway

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…Burger King invests 1 store/160,000 people (Nguyên Hưng, 2012)

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“A report in 2012 by W&S Group, an online market research group in the Asia Pacific

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region, with 272 people aged above 16, showed that young people come to fast-food restaurant
at least once every three months.” (Vietnam fast-food market sees bright future, 2013)

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With many famous players of fast food industry in Vietnam, players have to learn how

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to survive and develop in Vietnam. As Vietnam is a potential and challenge market, fast food
restaurants in Vietnam have to understand the key factors affecting customer satisfaction and

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how to build customer loyalty, and how to improve customer purchasing intention and

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recommending to others because word of mouth are very effective in Vietnam.

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1.3 RESEARCH OBJECTIVES

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There are two objectives of the study:

Identifying factors affecting customer satisfaction in the fast food

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The relationship between customer satisfaction and customer purchase

intention behavior in the fast food restaurant industry in Vietnam.

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2.

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restaurant industry in Vietnam.

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1.4 RESEARCH SCOPE

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This study focuses on fast food consumers living in Ho Chi Minh City, the largest

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economic center of Viet Nam with the population of ten million people. This city gathers

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people from many provinces, and cities in Vietnam. Most player choose

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Firstly, the author builds model and questionnaire based on previous researches.

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Secondly, the author collects data by some ways. Thirdly, the researcher uses Cronbatch’s

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alpha to test scales availability and factors analysis to determine which of fairly large set of
items are most answered most similar by the respondents. Then, the researcher uses CFA to test

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the relationship of six construct of factor service quality. Finally, the author uses SEM to test

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the relationship between four factors: service quality, food quality, hedonic value, utilitarian

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value with customer satisfaction and between customer satisfaction and behavioral purchase
intention.

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1.5 THE STRUCTURE OF THE STUDY

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The study includes five chapters as following:

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 Chapter 1: Introduction

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The chapter includes the following contents: the background of the research, research
problems, research objectives, research scopes, and the research structure.

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 Chapter 2: Literature review and hypothesis

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The chapter presents the fundamental theories and definition of each factors, construct,
proposed hypothesis and theoretical modeling. In this chapter, the author presents the

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conceptual model of the study.

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 Chapter 3: research methodology

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conducting the research in this chapter.

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The author presents the research design, research methodology, and the process of

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 Chapter 4: Data analysis and result

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The characteristics of collected samples, method to collect data, and the result of the

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research analysis are presents in the chapter. Based on the result, the author tests the

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hypothesis.

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 Chapter 5: Conclusion, implications and limitations

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This chapter performs the main result of the research, the contribution of the study in

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direction.

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management theory and practice as well as the limitations of the study for future research

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CHAPTER 2

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LITERATURE REVIEW AND HYPOTHESIS

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The chapter identifies key factors effect to customer satisfaction and customer purchase

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behavior intention. There are many research to survey and find out which factors influence to

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customer satisfaction and build behavioral purchase intention in many market as in Thailand,

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Chinese … The studies indicate factors effect to customer satisfaction in fast food restaurant.

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Qin and Prybotuk (2010) defines service quality, food quality, perceived value are key factors
affect to customer satisfaction. Namkung and Jang (2007) tested the effect of food quality in

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customer satisfaction. Ryu (2010) proved that hedonic value and utilitarian value effect to

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customer satisfaction.

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Quality is known as the performance of product or service (Churchill & Surprenant,

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1982; Johnson & Formell, 1991). In fast food industry we will concern on food quality and
service quality.

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2.1 SERVICE QUALITY

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The importance of service quality is substantially addressed in the fast food
management literature. Superior service leads to satisfied and loyal customers whose continued

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patronage is essential to the success of fast food restaurant. On the otherwise, poor service

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quality increase customer dissatisfaction and the likelihood that customer dine at a competitor’s
fast food restaurant and become an active champion in persuading others to go elsewhere

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(Gilbert et al., 2004). Hence, it is crucial for supervisor, management team to understand how

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of the perceived service quality in fast food restaurant.

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customers perceive the service they provide, and what components might determine the nature

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Service quality is “the delivery of excellent or superior service relative to customer

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expectation” (Zeithaml and Bitner 1996, p.117). There are two dimensions of service quality:

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technical and functional. Technical quality relates to meal provision and functional quality

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relates to how to provide a meal (Polyorat and Sophonsiri, 2010). In restaurant industry, there

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are many researcher test SERVQUAL instrument (Parasurama et al, 1985). The dimensions of

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SERVQUAL include reliability, tangibles, responsibility, assurance, and empathy. Berry and

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Tangibles: the appearance of physical facilities, equipment, personnel, and

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communications materials.

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2.

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accurately.

Reliability: the ability to perform the promised service dependably and

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Parasuraman (1991, p.16) define the dimension as:

Responsiveness: the willingness to help customers and to provide prompt

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service.

Assurance: the knowledge and courtesy of employees and their ability to

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convey trust and confidence.

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Empathy: the provision of caring, individualized attention to customers.

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5.

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SERVQUAL has been widely used by service quality researchers for some considerable

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period of time. The five components of the model become the most popular strategy for
competing in a service environment, especially where a high level of competition is evident

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(Albaba, 2006). Consequently, the introduction of SERVQUAL changes the face of service

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industry. Since the items defines in the SERVQUAL instrument are thought to be too general

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(Akbaba, 2006).

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SERVQUAL scales measures service quality by the degree of discrepancy between

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attributes of service quality across a variety of services.

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performances (Parasuraman et al., 1985, 1988). Five dimensions are unsheathed as the main

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customer’s normative expectation for the service and their perceptions of the provider’s actual

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Beside the five components, the way of employee in restaurant faced with their failure of

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their mistake is very important. How employer explain, apologize, solve mistake with make

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customer happy or unhappy with the restaurant. Qin and Prybutok (2007) show the necessary

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of recovery and put one more dimension in service quality is recovery. Most customers can

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accept that service is not flawless and mistakes are tolerated if they believe that the restaurant is

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concerned about resolution of the service problem.

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Failure itself does not necessarily lead to customer dissatisfaction; however, failure to

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handle recoveries effectively can lead to lost customers and negative word of mouth (Heskett et
al.,; McColl et al., 2005). Moreover, the complete resolution of critical service failure can even

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provide positive word of mouth endorsements and future repeat patronage (Leong & Kim,

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2.2 FOOD QUALITY

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2002).

Food quality is viewed related to satisfaction within fast food restaurants (Kivela et al.,

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1999; Law et al., 2004, Johns and Howard, 1998). Food quality is a necessary condition to

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satisfy the needs and expectation of customers. Suled and Hensley (2004) investigate that food

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quality appeared to be the most significant predictor of customer satisfaction although food

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quality explain only 17% of repeat – patronage intentions and lump all food attributes into only

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one variable, food quality.

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Food quality is one of the key constructs in the model for the restaurant experience

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because it is developed on the aspect of technical quality. Food quality includes the factors:
presentation, variety, healthy options, taste, freshness, temperature (Namkung and Jang, 2007).

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Kivela et al. (1994) indicate many attribute of food quality: presentation, tastiness, menu

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attribute in a modeling dining satisfaction and return patronage (Namkung and Jang, 2007).

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as a tangible cue for customer perception of quality. The presentation of food is the key food

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item variety, and temperature. Presentation is how attractive the food looked like and decorated

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(Luận văn) factors affecting customer satisfaction and behavioral intention in the fast food industry in vietnam

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