Luận văn thạc sỹ - FACTORS IMPACTING ON CUSTOMER SATISFACTION TOWARDS LA VONG’S RESTAURANT CHAIN

NATIONAL ECONOMICS UNIVERSITY
NEU BUSINESS SCHOOL

NGUYEN THI BICH NGOC

FACTORS IMPACTING ON CUSTOMER
SATISFACTION TOWARDS LA VONG’S
RESTAURANT CHAIN

MASTER OF BUSINESS ADMINISTRATION THESIS

SUPERVISOR: ASSOC.PROF.DR. TRAN THI VAN HOA

HANOI - 2018


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ACKNOWLEDGEMENT
I cannot accomplish this thesis without valuable supports of my supervisor,
customers and managers of La Vong restaurant chain.
First, I would like to send my grateful expression and sincere thanks to my
supervisor – Assoc. Prof. Dr. Tran Thi Van Hoa, who is very patient and supportive
while I am completing the thesis by giving me a lot of guidance and contributive
comments.
Second, I would love to express my warm thanks to customers and managers
of La Vong restaurant chain, who spent their value time on discussing with me and
providing me a lot of useful information.
Third, I want to spend my thanks and gratitude to my family who supported
me a lot during my master course.

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TABLES OF CONTENTS
ACKNOWLEDGEMENT.......................................................................................i
TABLES OF CONTENTS......................................................................................ii
ABBREVIATION...................................................................................................iv
LIST OF TABLES...................................................................................................v
LIST OF FIGURES................................................................................................vi
EXECUTIVE SUMMARY.....................................................................................1
CHAPTER 1: INTRODUCTION..........................................................................3
1.1. Rationale............................................................................................................. 3
1.2. Research objectives............................................................................................4
1.3. Research questions.............................................................................................4
1.4. Scope of the thesis..............................................................................................4
1.5. Research methodology.......................................................................................5
1.5.1. Research process........................................................................................5
1.5.2. Data collection...........................................................................................5
1.5.3. Data analysis techniques............................................................................6
1.6. Structure of the thesis.........................................................................................7
CHAPTER

2:

THEORETICAL

BACKGROUND

ON

CUSTOMER

SATISFACTION.......................................................................................................8
2.1. Nature of customer satisfaction..........................................................................8
2.2. Models to analyze factors impacting customer satisfaction................................9
2.3. Factors impacting customer satisfaction in La Vong’s restaurant chain............14
2.3.1. Location (Transportation/accessibility)....................................................14
2.3.2. Employees’ behaviors..............................................................................15
2.3.3. Product quality.........................................................................................16
2.3.4. Restaurant’s decoration............................................................................17
2.3.5. Price.........................................................................................................20


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CHAPTER 3. ANALYZING FACTORS IMPACTING ON CUSTOMER
SATISFACTION TOWARDS LA VONG’S RESTAURANT CHAIN...............23
3.1. Overview of restaurant business and restaurant business in Vietnam...............23
3.2. Overview of La Vong Group.............................................................................27
3.2.1. Introduction of La Vong Group...............................................................27
3.2.2. Development of La Vong Group.............................................................30
3.3. Analyzing factors impacting on customer satisfaction towards La Vong’s
restaurant chain........................................................................................................32
3.3.1. Demographic data of the respondents......................................................32
3.3.2. Data testing..............................................................................................36
3.3.3. Analyzing customer satisfaction at La Vong’s restaurant chain................38
3.3.4. Relationship between 05 dimensions with La Vong’s restaurant chain....47
3.4. General assessment about satisfaction and dissatisfaction factors....................49
CHAPTER

4:

RECOMMENDATION

TO

IMPROVE

CUSTOMER

SATISFACTION....................................................................................................52
CONCLUSION......................................................................................................56
REFERENCES
APPENDIX 1: SURVEY OF QUESTIONAIRE
APPENDIX 2: RESEARCH RESULTS


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ABBREVIATION
CRM
EB
EFA
F&B
FQ
KMO
L
P
RD
VND

VNDm

Customer Relationship Management
Employee’s behavior
Exploratory factor analysis
Food and Beverage Service
Food quality
Kaiser-Meyer-Olkin
Location
Price
Restaurant decoration
Vietnam Dong
Vietnam Dong million


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LIST OF TABLES
Table 3.1: Business performance of La Vong 2014 – 2017......................................31
Table 3.2: Gender description..................................................................................32
Table 2.3: Age description.......................................................................................33
Table 3.4: Monthly income description...................................................................33
Table 3.5: Level of education description................................................................34
Table 3.6: Frequency of dinning out description.....................................................35
Table 3.7: Reason of dinning out description..........................................................35
Table 3.8: KMO and Bartlett's Test..........................................................................36
Table 3.9: EFA for all dimensiosn............................................................................37
Table 3.10: EFA for each dimension........................................................................37
Table 3.11: Respondents’ assessment towards food quality of La Vong’s restaurant
chain........................................................................................................................ 38

Table 3.12: Respondents’ assessment towards employee’s behavior of La Vong’s
restaurant chain........................................................................................................40
Table 3.13: Respondents’ assessment towards resraurant decoration of La Vong’s
restaurant chain........................................................................................................42
Table 3.14 Respondents’ assessment towards location of La Vong’s restaurant chain
................................................................................................................................. 45
Table 3.15: Respondents’ assessment towards price of La Vong’s restaurant chain.46
Table 3.16: Relationship amongst dimensions.........................................................48


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LIST OF FIGURES
Figure 1.1: Research process.....................................................................................5
Figure 2.1: Conceptual research model to measure customer satisfaction in La
Vong’s restaurant chain............................................................................................14
Figure 3.1: Reason for dining-out in Vietnam.........................................................26


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EXECUTIVE SUMMARY
Nowadays, restaurants are cropping up like swarms of locusts everywhere,
and the number of establishments is growing rapidly over the years. The impact of
globalization leads to the increase in number of tourists and expatriates, and
restaurants have become a popular destination for dining as well as discussing
business. However, the restaurant industry is becoming highly competitive.
Therefore, the author decided to choose topic “Factors impacting on customer
satisfaction towards La Vong’s restaurant chain” for research in this thesis.
The purpose of conducting this research is to achieve 3 objectives: (1) to find

out the factors impacting on customer satisfaction towards La Vong’s restaurant chain;
(2) to analyze the impacts of these factors on customer satisfaction; (3) to provide
recommendations to improve customer satisfaction and revisit. To obtain these
objectives, the author used both quantitative, and qualitative methods. In quantitative
method, survey questionnaires were distributed to over 200 customers

who used

serviced at La Vong’s restaurants. Through the survey, factors impacting customer’s
satisfaction were identified. In the qualitative method, in-depth interviews were
conducted to better understand restaurants condition and customer insight.
After the research, some main findings were figured out: Target consumers
are (1) female, (2) over 21 years old, (3) with salary over VND 10 millions/month,
(4) have high level of education, (5) prefer eating-out because of entertainment or
no need to cook, and (6) usually go out to eat one to three times per month.
Essential elements that make customers feel satisfied are: (1) The dishes are
tasty and delicious (2) Staffs are kind, courteous (3) The location of restaurants
offers easy access and convenient parking (4) The price is correct as announced, not
higher than that offered by competitors and is more attractive because of added
incentives.
However, there are some factors that customers have not satisfied, namely
(1) Architecture is not unique and impressive (2) The food has not been presented


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well and the dishes have not been served hot in big party (3) In special holiday or
crowded party, customers’ orders have not been processed quickly and error-free,
and (4) The restaurant has not focused more on decorating and investing in the
ambiance and decoration.

Based on these findings, author proposed relatived recommendations for La Vong
to: (1) Improve restaurants design, (2) Keep food warm for big party, (3) Improve
professional performance of staffs, and finally (4) Improving the ambiance of the
restaurants.
The author sincerely hopes that the results of this research will help managers
have better understanding of restaurant’s customers. Furthermore, they can use this
helpful information to adjust the business to fit customers’ needs more accurately.


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CHAPTER 1: INTRODUCTION
1.1. Rationale
Nowadays, the restaurant business in Vietnam has shown dramatically
growth, driven by not only famous foreign brands, but also local brands. In the last
decade, Vietnamese people have invested heavily in the market and are predicted to
continue to do so, mainly driven by increased spending, rapid urbanization and
growth of the middle-class population. According to Decision Lab (a market
research firm that based in Ho Chi Minh City), the out-of-home consumption for
F&B, are divided into a number of segments, of which full-service restaurants and
quick service restaurants lead the group at 36%. Local brands offering Vietnamese
cuisine are also a tough competitor to the global food chain. In recent years, foreign
fast food chains have underperformed and slowed down expansion plans due to the
consumer preferring the local dishes and affordable prices.
La Vong is one of the biggest Vietnamese restaurant chains. In 2013, the
company simultaneously opened its chain of 7 restaurants in Hanoi and since then it
has become a famous destination for eating out and party catering services. With
relentless efforts, La Vong has achieved remarkable results in terms of revenues.
Specifically, the total revenues in 2014, 2015, 2016, 2017 were VND 16.8 billion,
VND 17.4 billion, VND 15.1 billion and VND 18.3 billion respectively.

In this situation of restaurant business in Vietnam, the author identified
several rationales for conducting the thesis as below:
Firstly, the author has responsibility as F&B Marketing Manager of La Vong
Group. So, a thorough understanding of factors that have significant impact on
customer satisfaction is very useful in guiding manager to design strategies and
deliver the right offering.
Secondly, La Vong has not officially conducted customer satisfaction
research. Understanding the role of customer satisfaction and its impact on
customer loyalty, the company shall have evidences that help make right decisions
to increase the market share of La Vong in the F&B industry.


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Thirdly, though best known for its good dishes, it can be a struggle for
La Vong to attract value-seeking customers whenever a new restaurant opens in
the vicinity. Because people like new things and restaurants are no exception.
The restaurant business is highly competitive. New competitors enter the
market fairly regularly to steal existing establishment’s clients. Therefore,
managers need to find appropriate marketing plan to increase customer
satisfaction, build customer loyalty and adopt strategies to beat the restaurant
competition without lowering profits.

1.2. Research objectives
The research aims to obtain the following objectives:
 To find out the factors impacting on customer satisfaction who used
services of La Vong’s restaurant chain.
 To analyze the impacts of these factors on customer satisfaction.
 To provide recommendations to improve customer satisfaction and revisit.

1.3. Research questions
The research is supposed to answer the following questions:
 What are the factors that have impact on customer satisfaction who used
services at La Vong’s restaurant chain?
 What are the impacts of each factor on customer satisfaction?
 What are the recommendations to improve customer satisfaction and revisit?

1.4. Scope of the thesis
 Research object: To focus on satisfaction and food quality at La Vong’s
restaurants.
 Location of the research: La Vong’s restaurants in Hanoi.
 Time of data collection:
- Primary data: survey will be implemented in quarter II of 2018.
- Secondary data: from 2015 to 2017.

1.5. Research methodology
1.5.1. Research process


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Figure 1.1: Research process

Source: Author’s design
The research process is a multiple step process that illustrated in Figure 1.1.
Firstly, the author chooses research area based on professional and personal
interests. Secondly, the author identifies research objectives. Thirdly, the author
determines factors that have significant impacts on customer satisfaction by
conducting literature review and secondary sources. Then, the author collects
primary data from two sources; including survey and in-depth interviews, in order

to analyze the effects that each of the aforementioned factors has on La Vong’s
customers. Finally, recommendations will be produced to improve La Vong
marketing plan.

1.5.2. Data collection
1.5.2.1. Secondary data
This research will be studied by using secondary data, which was collected
by others. Regarding the external sources, the research will refer to some published
reports, articles and journals that published on the Internet or newspapers to have
the literature review and frameworks. For the internal sources, we use La Vong’s
marketing reports and reports of CRM department from 2015 to 2017 to have the
total number of customers.


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1.5.2.2. Primary data
The research will also be studied using primary data by both qualitative and
quantitative method. To be specified, data will be collected through in-depth
interviewing and distributing questionnaires.
In-depth interview:
 The respondents: F&B director, sale manager and marketing manager.
 Sample size: 3 people.
 Question design: 5 main questions:
- Individual opinion about customer satisfaction?
- What are current policies or programs that applied regarding to customer
satisfaction?
- How do they affect to customer satisfaction? ( base on customer’s feedbacks,
customer retention rate…)
- How do managers intend to improve factors?

Survey:
 The respondents: customers who used services at La Vong’s restaurant chain.
 Sample size: 200 customers.
Questionnaire design: 15 - 20 close ended questions cover all 5 independent
variables. They would be multiple-choice-questions, including agreement scale,
ordinal scale and interval scale.
 Distribution questionnaire: sending to customers by face to face meeting or
via E-mail.
1.5.3. Data analysis techniques
Data analysis is conducted with the application of SPSS 16. In this research,
there are 4 key data analysis techniques that are adopted, includes Descriptive
statistics, Reliability test analysis, Exploratory factor analysis (EFA) and Multiple
linear regressions.
Descriptive statistics are used to describe the basic features of data in the
study. They provide summaries about the sample, and the measures. This analysis is
the basis for recognizing data trends and patterns.
Reliability analysis allows the researcher to study the properties of


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measurement scales, and the items that compose the scales. Its procedure calculates
a number of commonly used measures of scale reliability, and it also provides
information about the relationships between individual items in the scale.
Cronbach’s Alpha is one of the most common assessments of reliability. The higher
the alpha, the more internal consistency among survey questions and the more
reliable the results.
Exploratory factor analysis (commonly is abbreviated as EFA) is a statistical
technique that is used to reduce data to a smaller set of summary variables, and to
explore the underlying theoretical structure of phenomena. The analysis is used to

identify the structure of the relationship between the variable and the respondent.
Multiple Linear Regression (MLR) attempts to model the relationship
between the explanatory and response variables by fitting a linear equation to
observed data.

1.6. Structure of the thesis
The thesis includes 5 following chapters:
Chapter 1: Introduction
Chapter 2: Theoretical background on customer satisfaction
Chapter 3: Analyzing factors on customer satisfaction who used services at
La Vong’s restaurant chain
Chapter 4: Recommendation to improve customer satisfaction.

CHAPTER 2: THEORETICAL BACKGROUND ON
CUSTOMER SATISFACTION
2.1. Nature of customer satisfaction


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According to Reizenstein (2004) and Kendall (2007), a customer is defined as the
recipient of good, product, service… that obtained from a supplier, seller, vendor… via a
financial transaction or exchange for money, or some other valuable consideration.
Mark Hunter (2017) suggested that there are five main types of customers:
loyal customers, discount customers, impulse customers, need-based customers
and wandering customers. Loyal customers are less in numbers, but make up
more sales and profit as compared with other types of customer. Discount
customers tend to buy low cost products or regular products that offered with
discounts. Impulsive customers usually urge to buy what they find good at that
point of time. Need-based customers tend to buy items that have a specific need

for them. Finally, wandering customers have no desire or specific need in mind
when they go shopping. They normally visit supplier to confirm their needs or
just want a sense of experience.
According to Malik and Ghaffor (2012), customer satisfaction can be defined
in terms of meeting the expectations of customers in terms of parameters associated
with satisfaction.
Zeithaml and Bitner (2003) define satisfaction as a judgment that products or
services provide a pleasurable level of consumption-related fulfillment. Meanwhile,
Choi and Chu (2001) consider satisfaction as an evaluation by consumers that foods
or services they have received are at least as good as it is supposed to be. Cronin &
Taylor (1992) emphasized that customer satisfaction is critically important as it
reflects subjective customer evaluations of the attribute performance associated with
the consumption experience. It is also found that customers who perceive their
experiences in terms of value, either hardness or utilitarian, tend to express their
opinion by recommending the same experience to other people (usually their
acquaintances). Regarding to restaurant business, when customers perceive the value of
the eating experience highly in terms of cognitive aspects and affective, they are more
likely to recommend the restaurant to their friends.
In the context of marketing, Lin and Wu (2011) affirmed that customer


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satisfaction is the way that leads to long term customer retention because unsatisfied
customers have very high switching rate. Previously, Thorsten and Alexander
(1997) found customer satisfaction toward company’s products or services as the
strategic factor for competitive advantage. Oliver (1993) suggested that customer
satisfaction is the core philosophy of marketing strategy and plays an important role
in company’s success. In fact, customer’s satisfaction is the core principle of CRM,
that being used to attract and retain potential customers.

On the other hand, customer satisfaction has important impact on customer
loyalty (Mittal & Lassar, 1998). If products or services fulfill the needs of customer,
they will be satisfied and converted to loyal customer. Company profitability is not
only depicted in its financial report, but it is also measured on basis of its customer
base and life-time value that customers deliver to the company.
In conclusion, customer satisfaction is a measurement used to quantify the
degree to which a client is happy with products, services or experience. It could be
related to various business aspects such as: quality of products and services,
marketing strategies, responses to customer’s problems and queries, delivery
services, complaint management etc. It is considered as a key element to indicate
consumer purchase intention and loyalty.

2.2. Models to analyze factors impacting customer satisfaction
Several models have been identified in the literature for measuring service
quality. Among the approaches or models are: expectancy-disconfirmation
approach, performance-only approach, technical and functional dichotomy
approach, service quality versus service satisfaction approach and attribute
importance approach.
The expectancy-disconfirmation model focuses on identifying customer
expectation versus what they actually experienced. It compares the service
performance with the expectations of the customers, which is assessed after the
service encounters (Oliver, 1980).
The performance-only approach assesses service quality by enquiring from
the customers about their level of satisfaction with the various features following a


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service encounter (Babakus and Boller, 1992; Cronin & Taylor, 1994).
The technical and functional dichotomy approach identifies two service

components that lead to customer satisfaction: technical quality of the product
which is based on product characteristics such as durability, security, physical
features; and functional quality which is concerned with the relationships between
service provider and the customer such as courtesy, speed of delivery and
helpfulness (Gronroos, 1984). Customers usually lack information on the technical
aspects of a service; therefore, rely on functional quality to form perceptions of
service quality (Donabedian, 1980).
Service quality versus service satisfaction model mainly focuses on two
service components that are interrelated; the transition-specific assessment, which
evaluates specific features of quality and the overall assessment, which evaluates
overall quality. This approach links perceived quality at the time of the service
encounter or immediately after it and overall satisfaction with the service. The
attribute importance model focuses on the relative weight on the importance the
consumer places on attributes found to be linked with service satisfaction (Gilbert et
al., 2004).
Cronin and Taylor (1992) developed SERVPERF (service performance),
which disregards the expectation and measured service quality perceptions by
evaluating the customer’s overall feeling towards the service.
Among the models for measuring service quality, the most acknowledged
and applied model in variety of industries is the SERVQUAL (service quality)
model developed by Parasuraman et al. The model originally provided a list of ten
determinants of service quality: access, communication, competence, courtesy,
credibility, reliability, responsiveness, security, understanding and tangibles. Further
studies merged correlated variables and reduced the determinants into five
consolidated dimensions: tangibles, reliability, responsiveness, assurance and
empathy as the instruments for measuring service quality (Parasuramanet al., 1988;
Zeithamlet al., 1990). The SERVQUAL model assesses customer expectation and
perceptions of service quality by capturing the gap between expectation and
experience.

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Besides, the factors affecting customer satisfaction have been already studied
in many academic researches, at both macro and micro levels. Previous studies on
this topic in the restaurant context have identified a number of factors that
customers consider very important in their choice of restaurant.
Zeithaml (1981) suggested that consumers' restaurant selection is influenced
by both intangible and tangible factors. The intangible quality of services, that
cannot be felt, tasted, seen or touched like physical goods, are very difficult to
evaluate. Services are experience. As opposed to physical products that can be
stored and sold later, services cannot be stored and cease to exist if they are not sold
when available (Hoffman & Bateson, 2001). Given the unpredictable nature of
customer’s demand for services, the providers often find it difficult to balance the
supply and demand of their services (Hoffman & Bateson, 2001). Customers pay
money to get access to and experience services, but they do not get a tangible
ownership of those services (Clemes, Mollenkopf, & Burn, 2000). Thereupon,
customers feel a lack of ownership in the purchase of services (Cowell, 1989).
Accordingly, restaurant customers often rely on tangible clues such as food,
appearance of facilities and personnel to guide them in forming expectations about
the restaurants (Bitner, 1990; Wall & Berry, 2007).
In 1992, Auty provided a set of factors that influence customer satisfaction
and their selection of the restaurants, including food type, food quality, value for
money, image and atmosphere of the restaurants. Hokanson (1995) later also
confirmed that customer satisfaction is affected by many factors. These factors
include different customer related issues such as polite and helpful staffs, quality of
service, competitive price, marketing accuracy, etc. Customer’s experience and
involvement with the product and service also influence their perception, belief,
attitude and value. Recently, hospitality companies focus more on issues related
with customer satisfaction, perception and loyalty of the customers. An

establishment which focuses and makes progress in these factors will certainly
improve its performance and increase profits. Customer satisfaction plays an
important role in success of the company as it helps to achieve customer’s trust, and
thus lead to customer loyalty which is a key factor in the long-term of business.


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Other researchers also make a recommendation about factors that have
significant impact on satisfaction of consumers. According to study done in
restaurant business, important factors that influence customer experience are
employees who interact with customers, core services, the food that is served to the
customers and physical environment of establishment (Walter, Edvardsson, &
Öström, 2010).
Food quality is rated as the most important factor that plays a key role on
consumers’ restaurant selection behavior (e.g., Lewis, 1981; Auty, 1992; Soriano,
2002; Sulek & Hensley, 2004). Food quality is the quality characteristics of dishes
that is acceptable to the consumer. This includes external elements (size, appearance
and presentation) and internal elements, such as unique tastes, high-quality
ingredients. Furthermore, menu variety, healthy food options or familiar food are
also considered as criteria when evaluating food quality in restaurants.
According to Zeithaml and Bitner (2003), the production and consumption of
a service experience is a simultaneous process. Because most services are not
produced and consumed until they are sold. Therefore, customer satisfaction is
affected by quality of services that delivered to them. Accordingly, the attitude,
skills and performance of employees are vital to consumers’ experience and their
perception of the restaurant (Kotler et al., 1998).
From the consumer’s perspective, price is what they have to pay for
obtaining the products or services. Fairness of price is a psychological factor that
plays an important role in customer’s reaction to the paid price (Kim et al., 2006).

Additionally, the perception of a fair or affordable price has a positive impact on
customers’ brand associations (Beristain & Zorrilla, 2011).
Besides, Sabherwal (2011) confirmed that customers have to get a proper
compensation for the price that they are willing to pay for dining-out and the best
way to provide them, besides food and service, is through restaurant’s appearance
that will seduce them, and make them want to come back. Furthermore, the location
is an important feature of the restaurant that affects customer satisfaction and their
behavior (Hyun, 2010).
In 2009, Kim conducted a study which the objectives were to investigate the


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importance of institutional DINESERV factors that affect customer satisfaction in
the dining facilities of a public university in Midwest. The factors included
atmosphere, food quality, convenience, service quality, price and value. To analyze
the data, some methods were used (i.e., factor analysis, ANOVA, correlation
analysis, and multiple regression analyses). The findings showed that all
institutional DINESERV Dimensions had an impact on customer satisfaction. This
model provided a customer insight, and help enhances the operational efficiency of
restaurant. Moreover, the model also helps food-service managers to determine the
importance of DINESERV dimensions and focus on those factors to increase
customer satisfaction.
Through the study of previous researches, the dimensions of factors that
affect customer satisfaction towards restaurants are summaries and reformulated in
order to suit into this study. The proposed conceptual framework shows 5 main
independent variables which include location, employee’s behavior, food quality,
restaurant decoration and price. The following figure shows the relationship of such
dependent variable and independent variables:

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Figure 2.1: Conceptual research model to measure customer satisfaction in La
Vong’s restaurant chain

Source: Author’s design

2.3. Factors impacting customer satisfaction in La Vong’s restaurant
chain
Learning from previous studies and researches, the author summarized and
proposed five main factors that have impact on customer satisfaction and behavioral
intentions, namely location, employee’s behavior, food quality, restaurant
decoration and price.

2.3.1. Location (Transportation/accessibility)
According to Rares and Jorie (2015) the location is strategically located
from the reach of consumers that includes the availability of transportation and
location of product sales. Meanwhile, Suwarman (2004) affirmed that location is
a place of business that greatly affects consumers' desire to come and shop. Hyun
(2010) also confirmed that restaurant’s location is an important factor that
influences customer satisfaction and their behavior. Suprianto et al. (2014)
proves that location can be a consumer consideration in making purchasing
decisions. Spaeder (2014) also agreed that choosing the right business location is


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critical for most consumer service businesses (Spaeder, 2014). Furthermore,
Rares and Jorie et al. (2015) suggested that product location may encourage

consumers' intentions in purchasing products.

2.3.2. Employees’ behaviors
King (2004) stated that negative employees' behavior has ruined many
businesses and costs employers millions of dollars every day. It also has the
consequences of driving away customers; damaging employees' morality and
increasing their turnover rates. Employees' behaviors are important in a service
company as they connect the organization with its customers and they are a critical
factor in developing effective working relationships with customers (Grönroos,
1990; Gwinner, et al., 1998). They can also maintain customer satisfaction by
fulfilling the promises made to the customer. In 2007, Saad and Amy suggested that
the three most important variables that explain customer satisfaction include staff
behavior, service quality, and price. Therefore, employees' behaviors have
influences on customer perception of service quality and on customer satisfaction.
Desired emotions and good attitude of employees during service transaction
is key role to increase customer satisfaction, as well as enhance their positive
emotion (Brown & Sulzer-Azaroff, 1994; Pugh, 2001). Many researchers tried to
identify specific employee’s behaviors that have impact on customer’s mood and
behavior intention. For instance, Tsai and Huang (2002) found that employee’s
friendliness was related to consumers' positive emotion following a service
experience. In 2005, Luong had done a research, in which volunteers were required
to watch videos of a service interaction whereby staffs displayed either positive or
neutral affect toward customers. Volunteers' emotion before and after watching the
video was assessed. Their mood was found to be higher after watching a friendly
service encounter than after viewing a neutral one. This study proved that the
display of staffs has a great impact on clients’ mood.
Regarding to hospitality industry, tip money can be used as a measure of
customer satisfaction toward employee’s attitude. Lynn (2001) theorized that better
evaluations of the service will result in higher tips. In the research, customers'

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perception of services is manipulated by requiring staffs to display either openmouthed smile or close-mouthed smile. The author after found that, clients tips
more in the open-mouthed smile condition. This result proved that employee
behaviour significantly influence customer satisfaction. This theory is supported by
Howard and Gengler (2001), who indicated that smiling improves other people
moods. So, it is understandable to assume that customer in a good mood will
perceive service to be better and give more tip than people in a worse mood.
Gardner (1985) also found that customer’s emotion influences their behaviors and
perception toward a service they received.

2.3.3. Product quality
Food quality plays a crucial role in the operation of a restaurant; thus, it has a
great impact on customer satisfaction and their behavioral intent (Namkung & Jang,
2007). A lot of scholars confirmed that food quality significantly influences
customer loyalty and their perception of brand image. Furthermore, superior food
quality is also used as a key marketing tool that can be employed to entice, satisfy
and retain customers.
Before visiting a restaurant, customers tend to consider food quality, as it
plays a key role in reflecting the core value of the restaurant (Sulek and Hensley,
2004). Similarly, Vangvanitchyakorn (2000) confirmed that food quality is the
foremost important criteria in the consumer's overall perception of excellence.
Additionally, food quality also is an important component that directly affects
customer’s satisfaction and determines consumers' attitudes toward the restaurant
(Peri, 2006). Therefore, it has been considered as an essential aspect in the success
of restaurant business (Liu & Jang, 2009). An extensive review of past literature
indicates that, food quality comprises a group of elements, such as: taste, food
decoration, food diversity, healthy options and high-quality ingredients resources.
A number of scholars also indicated that food quality directly affects

customer satisfaction (Canny, 2014; Namkung & Jang, 2007; Nasir et al., 2014).
Food quality is one of the key determinants of customers’ evaluations toward a
restaurant (Susskind and Chan, 2000). Similarly, Gagić et al. (2013) found that food


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quality was a key contributor to customer satisfaction and behavioral intention.
Furthermore, Peri (2006) considered food quality as an essential condition to fulfill
customers’ expectations and their needs. Besides, Kivela et al. (2000) also
emphasized the significance of providing nutritious foods in restaurant business,
and suggested to put sufficient healthy food as one of the fundamental aspects to
improve customer satisfaction and loyalty.

2.3.4. Restaurant’s decoration
According to Darley & Gilbert (1985), actual physical layout of the
organization can also influence the accomplishment consumers attain. Although
physical environment is not significant in the customer perceived value, restaurant
architecture and interior design has a great influence on the image of the restaurant.
This factor has affected positively or negatively on customer’s perception of the
restaurant image (Ryu, Lee, & Kim, 2010).
As Kotler (1973) cited, a restaurant where the product is being bought and
consumed, has to be able to provide good atmosphere for the customer satisfaction.
The word “atmospherics” was used to describe design of space, that create some
certain effects on clients and affect their behavior. People choose to go to a specific
restaurant either because the food is delicious, or because the atmosphere is
pleasant. The design of a restaurant sets the stage for customer’s dining experience,
it can help customers feel comfortable and enjoy their meals. Nowadays, restaurants
have become one of the best impeccably designed facilities, because customers
expect to have memorable dining experiences (Sabherwal, 2011). Furthermore,

Bitner (1992) also emphasized that the services cape plays an important role on
restaurant business and other industries whose customers spend relatively long time
in the facility, whereas other services where customers stay at facility in a short time
have a lower importance of the services cape. Services cape is considered as one of
the key factors that influence customer satisfaction, including the facility's exterior
environment, interior design and ambient conditions (such as lighting and
temperature, air quality).


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Regarding to physical environment, both exterior and interior environment of
the restaurant has significant impact on customer’s satisfaction. Exterior
environment is important because it creates the first impression customers have of
restaurant, and also the last contact when they are leaving, but the more frequent
driver was interior décor both in favorable and unfavorable experiences (Walter &
Edvardsson, 2012). Customers expect to get a proper compensation for the price
that he is willing to pay, and the best way to provide them, besides good food and
professional services, is through restaurant décor that will attract them and want to
return (Sabherwal, 2011).
The design of a restaurant should create memorable experience for
consumers, as for restaurant’s design can be oriented to enhance the purchase
probability. There are a lot of elements that constitute impeccable design.
Layout: Layout refers to the way in which objects are arranged. A logical
layout has a great impact on customer perception, their excitement, and indirectly
affects on their desire to come back (Wakefield KL & Blodgett JG, 1994). The
arrangement of tables/ chairs/ salad bars/ wine bars… in a restaurant has a
tremendous effect on customer emotion, and their overall experience. Table
arrangement operates as a boundary for customers, as it relates to personal space
and privacy (Lin IY, 2004).

Restaurant aesthetics: According to Wakefield KL & Blodgett JG (1994), the
philosophy of aesthetics refers to architecture and interior design that contribute to
the attractiveness of the restaurant. Berman B & Evans JR (1995) and Barbas S
(2002) agreed that aesthetics have a great impact on the revenue of restaurants, thus
a lot of dining places try to create specific themes connected with aesthetics. Ryu K
& Jang S (2008b) also claimed that restaurant aesthetics affect customer’s
excitement and their behavioral intention. Restaurant’s architectural style and
interior decor play a critical role in attracting customers, and increase retention rate
(Cobe P, 2007). Other aspects of interior design (furniture, wall decorations,
flooring/carpeting, plants or paintings) also affect customer’s emotions, and help to