The current issue and full text archive of this journal is available at www.emeraldinsight.com/1463-5771.htmBIJ18,2 Benchmarking the service quality of fast-food restaurant franchises in the USA282 A longitudinal study Hokey Min Department of Management, College of Business Administration, Bowling Green State University, Bowling Green, Ohio, USA, and Hyesung Min Department of Tourism Management, Yuhan University, Bucheon, South Korea Abstract Purpose – To help fast-food restaurants enhance their competitiveness and then increase their market share, the purpose of this paper is to measure the service performances of fast-food restaurant franchises in the USA and identify salient factors inﬂuencing the service performances of fast-food restaurants over time. Design/methodology/approach – This paper develops a set of benchmarks that helps fast-food restaurants monitor their service-delivery process, identify relative weaknesses, and take corrective actions for continuous service improvements using analytic hierarchy process and competitive gap analysis. Findings – This study reveals that a service attribute considered most important to the fast-food restaurant customers’ impressions of service quality is taste of food. This preference has not been changed over time. Also, we found a pattern of the correlation between the overall level of customer satisfaction with the fast-food restaurant and its word-of-mouth reputation. Furthermore, we discovered that the customers tended to be more favorable to easily accessible and national fast-food restaurant franchises than less accessible, relatively new, and regional counterparts. Research limitations/implications – The current study is limited to the evaluation of comparative service quality in the USA. Thus, this study may not capture the national differences in the restaurant customers’ perceived service quality. Practical implications – For the last four decades, Americans’ obsession with fast serving, cheap meals has made the fast-food restaurant a mainstay in their daily life. As the appetite for fast food grows, every corner of the American Society has been inﬁltrated by fast-food restaurants. With the increasing number of fast-food restaurants competing in the market, their survival often rests on their ability to sustain high-quality services and meet changing needs/preferences of customers. This paper provides practical guidelines for enhancing the competitiveness of the fast-food restaurant franchise. Originality/value – This paper is one of the ﬁrst to compare the service quality of fast-food franchises in the USA and develop dynamic service quality standards for fast-food restaurant franchises using a longitudinal study.Benchmarking: An International Keywords Benchmarking, Fast-foods, Restaurants, Customer services quality,Journal Analytical hierarchy process, United States of AmericaVol. 18 No. 2, 2011pp. 282-300 Paper type Research paperq Emerald Group Publishing Limited1463-5771DOI 10.1108/14635771111121711
1. Introduction Fast-foodOwing to gradual changes in American life styles, Americans now spend more money on restaurantfast food than they do on higher education, personal computers, new cars, movies, books,magazines, newspapers, videos, and recorded music (Schlosser, 1998). In 2004, America franchisesspent $148.6 billion on fast food and accounted for 64.8 percent of the fast-food sales ofthe ten countries that consumed fast food most in the world. In other words, the averageAmerican spends $492 per year on fast food (Workman, 2007). Despite the popularity of 283fast food, fast-food restaurants have historically operated on slim-proﬁt marginsranging from 4 to 7 percent (Nessel, 2010). The low-proﬁt margin of the fast-foodrestaurant industry stemmed from the continuous wholesale-food price inﬂation. Forexample, the wholesale-food price rose 7.6 percent in 2007 and 8.5 percent in 2008(Wiki Analysis, 2009). To make it worse, the revenue of the US fast-food restaurantindustry declined by 4.7 percent in 2009, according to the IBIS World Industry Report(2009). As such, fast-food restaurants have experienced intense competition in the recentyears due in part to the saturation of a fast-food restaurant market and the worldwideeconomic downturn. With tighter proﬁt margins and increasing competition, thefast-food restaurant’s success depends heavily on its ability to retain customers(i.e. restaurant patrons) by enhancing customer value or innovating service offerings.Indeed, the longer customers remained with a particular fast-food restaurant, the moreproﬁtable they became to the fast-food restaurant (Reichheld and Sasser, 1990; Lovelockand Wright, 2002). According to Kotelikov (2008), a 2 percent increase in customerretention has the same effect on proﬁts as cutting costs by 10 percent. Similarly,a 5 percent reduction in customer defection rate can increase proﬁts by 25-125 percent. Considering the signiﬁcance of customer retention to the fast-food restaurant’sproﬁtability, the fast-food restaurant should adapt to the changing needs and preferences(e.g. removal of trans-fats) of customers. For example, the recent hike in gasolineprices may force some customers to dine at the nearby fast-food restaurant or makefewer trips to the fast-food restaurant that is a greater distance from their neighborhood.Also, those needs and preferences may represent various service attributes such as thegreater selection of healthy foods, value meals, fast drive-in services, better amenities,24/7 access, and courteous/friendly employees. Once these service attributes arerevealed, the fast-food restaurant should identify what service attributes customersconsider most important and how well the fast-food restaurant is performing relative toits competitors with respect to each of those salient service attributes. In an effort to helpthe fast-food restaurant enhance its competitiveness that relies on the customerperception of its overall service quality in comparison to other competitors, this paperconducts a competitive benchmarking study that aims to translate customer servicerequirements into comparative quality measures. Neely et al. (2005) noted that the mostbeneﬁcial form of benchmarking was competitive benchmarking because it focused onthe direct measurement of competitor performance and provided information on whatcustomers really wanted and what competitors were doing to meet customer needs. Competitive benchmarking in the service sector is known to improve serviceperformance by as much as 60 percent in less than a year (Harrington and Harrington,1996). Even though the application of competitive benchmarking to the service sector ischallenging due to the intangible nature of service quality and the subsequent lack ofuniversal service standards, competitive benchmarking has been successfully applied tovarious service organizations such as hotels and restaurants (Morey and Dittman, 1995;
BIJ Min and Galle, 1996; Min and Min, 1996, 1997, 2002; Phillips and Appiah-Adu, 1998).18,2 However, no prior literature but Min and Galle (1996) to date has reported any benchmarking studies on fast-food restaurants. In fact, fast-food restaurant benchmarking is not on the list of periodic service benchmarking studies conducted by the Customer Service Benchmarking Association (2008). To ﬁll the void left by prior benchmarking studies, this paper addresses the following research questions:284 RQ1. Which elements comprise customer service attributes that inﬂuence the fast-food restaurant customer’s perception of service quality? RQ2. Which service attributes are most important for customer satisfaction? RQ3. Which fast-food restaurant is perceived to be the industry leader? RQ4. How do we compare the fast-food restaurant’s service performance with that of the industry leader using competitive gap analysis? RQ5. How do we develop a strategic action plan for continuous service improvement of the fast-food restaurant? RQ6. How do the customer needs and preferences change over time and how signiﬁcantly do those changes affect the service performances of fast-food restaurants? 2. Service attributes relevant to fast-food restaurant customers The benchmarking process begins with the establishment of service standards through identiﬁcation of service attributes that comprise service standards. Since serving customers better is the ultimate goal of benchmarking, we ﬁrst identiﬁed service attributes that are most important to fast-food restaurant customers. These service attributes are derived from determinants of fast-food restaurant service quality identiﬁed by Min and Galle (1996), Kara et al. (1997) and Tsai et al. (2007). Examples of these include: taste of food, competitive price, service response time, cleanliness of the fast-food restaurant, fast-food restaurant location, amenity, safety, employee courtesy, restaurant operating hours, and the availability of healthy menus. Also, notice that this list includes word-of-mouth restaurant reputation that may inﬂuence the diner’s fast-food restaurant choice/patronage, but not necessarily the diner’s extent of satisfaction with the fast-food restaurant (Ou and Abratt, 2006). Also, the contribution of these attributes to overall customer satisfaction (or overall service quality of the fast-food restaurant) was measured by the customer feedback that we solicited through the questionnaire survey. To elaborate, the customer feedback was obtained from the sample of 262 fast-food restaurant customers who have dined at ten different fast-food restaurants (McDonalds, Burger King, Wendy’s, Arby’s, Hardee’s, Subway, Johnny Rocket, Red Robin, Fuddruckers, and Roy Rogers) located in the southeastern and midwestern USA during the period of January 2008 through November 2009. These fast-food restaurants were chosen for the study because of their similar characteristics in terms of sizes, location, menus, target customer bases, and service amenities (e.g. availability of children’s playgrounds, drive-in services). For example, we did not include some popular fast-food franchises such as Pizza Hut, Kentucky Fried Chicken, Taco Bell, and Long John Silver’s which specialized in limited menu items such as pizzas, fried chickens, Mexican style food, and fried seafood. On the other hand, despite being a casual dining restaurant,
Red Robin was still included in the study since its food offerings such as burgers and Fast-foodsteak fries are similar to those of other restaurants under study and it has nationally restaurantbased franchises with approximately 400 restaurants all across the USA. Although thesample that we chose is not reﬂective of the entire fast-food restaurant industry, we used franchisesthis sample to illustrate how fast-food restaurant service standards can be set and how toconduct the benchmarking process. Through a ﬁve-page questionnaire survey, theparticipants provided us with data related to their demographic proﬁle (e.g. gender, 285marital status, age), frequency of their fast-food restaurant visits, the patronagebehavior, the relative importance of service attributes to overall fast-food restaurantservice quality, and the level of customer satisfaction based on their service experiences.Some of the non-demographic questions were selected from service attributes ´considered to be critical to service quality (Vazquez et al., 2001; Lovelock and Wright,2002; Min, 2006). The Statistical Packages for Social Sciences (SPSS) for Windows (2008) were used toanalyze the data collected from this sample. All of the participants reported havingvisited at least one of the seven fast-food restaurants for this study. In fact, a majority(72.4 percent) of the participants said that they visited one of these fast-food restaurantsat least once a week in the past. A vast majority (94.3 percent) of them reported havingdined at one of these fast-food restaurants at least once a month. More than two-thirds(70.2 percent) of them spent an average of $5 or more per visit. Most of the surveyparticipants are frequent diners of the fast-food restaurants. Among these, roughly half(50.4 percent) of them patronize a particular restaurant; thus are familiar with fast-foodrestaurant service quality. In particular, these participants were carefully selected to maximize responses to thesurvey. Rather than distributing the questionnaire to the potential participants throughthe mail, six surveyors (the author plus ﬁve hired graduate assistants) approached agroup of people who had just dined at the fast-food restaurant, or handed out thequestionnaire to the restaurant diners through local church organizations, universityclasses, and apartment complexes where the surveyors resided. Occasionally, a souveniritem (e.g. pen, notepad) with a nominal value was offered to the reluctant participants toencourage them to ﬁll out the questionnaire. The rationale for the use of this surveymethod is a potential increase in survey responses by face-to-face interactions withpotential respondents. In fact, low-response rates are an ongoing concern in conductingtraditional mail surveys (Greer et al., 2000; Larson and Poist, 2004). For mail surveys,response rates in the neighborhood of 10-20 percent are not uncommon (Yu andCooper, 1983; George and Mallery, 2001). Thus, to avoid the potential non-response bias,we directly approached and asked restaurant diners to answer the structuredquestionnaire. Also, we solicited survey participation from a number of differentlocations (e.g. churches, universities, residential areas) to increase sample size. However,notice that the geographical coverage of this direct contact survey can be still limited. The results of the survey revealed that there were a total of 15 service attributes thatwere considered relevant to fast-food restaurant service quality. These salient attributeswere identiﬁed based on importance ratings provided by the respondents who werebeing asked to indicate how important a given attribute is to them in gauging the level oftheir satisfaction with service quality. Myers (1999) suggested that importance ratingswere one of the most straightforward but effective ways of measuring customersatisfaction and determining the relative importance of service attributes
BIJ to service quality. As summarized in Table I, the attribute considered most important in18,2 forming a perception of fast-food restaurant service quality is taste of food. The next four most important attributes were cleanliness of the fast-food restaurant, service response time, competitive price, and quality of prior service. These results are consistent with those of other service quality studies such as Crawley (1993), Babin and Darden (1996), Min and Galle (1996) and Miranda et al. (2005) indicating that facility atmospherics such286 as cleanliness of the fast-food restaurant can lift the mood of the diners and may impel them to visit more. Similarly, Dijksterhuis et al. (2005) argued that subtle environment cues such as cleanliness of the fast-food restaurant might unconsciously affect the restaurant customer’s dining behavior. Also, as expected, competitive price turned out to be a central inﬂuence on fast-food restaurant service quality. This ﬁnding is congruent with that of Curry and Riez (1988) indicating that the price paid for the food signiﬁcantly inﬂuences the customer’s service experience. On the other hand, word-of-mouth reputation, amenity, proximity to a highway/major road, safety, and health food offering were considered relatively unimportant. It is interesting to note that, unlike other service settings such as hotels, employee courtesy was not a deciding factor for fast-food restaurant service quality. This ﬁnding may be due to the fact that hotels primarily sell intangible experience through their employees’ direct interactions with customers, whereas fast-food restaurants primarily sell instant meals without much involvement of their employees. Relative insigniﬁcance of employee courtesy to overall service quality of the fast-food restaurant may be due to limited face-to-face interactions with employees resulting from the increased use of drive-in service. Indeed, more than two-thirds (67.9 percent) of our survey respondents reported using drive-in service. Another ﬁnding was that four out of the six most important attributes seemed to represent “functional service.” Functional service refers to service attributes that are Average degree of importance Ranks Service attributes 2009 (n ¼ 262) 1994 (n ¼ 111) 2009 1994 Taste of food 1.31 (0.520) 1.31 (0.49) 1 1 Cleanliness 1.63 (0.693) 1.48 (0.83) 2 2 Service response time 1.75 (0.714) 1.69 (0.72) 3 3 Competitive price * 1.77 (0.762) 2.12 (0.88) 4 5 Quality of prior service 1.86 (0.795) 1.67 (0.77) 5 4 Proximity to a customer’s residence * 1.97 (0.787) 2.46 (0.94) 6 8 Proximity to a customer’s school/workplace * 2.08 (0.827) 2.42 (1.05) 7 7 Employee courtesy 2.15 (0.807) 2.15 (0.97) 8 6 Operating hours 2.18 (0.922) 9 Variety of food * 2.34 (0.878) 2.70 (0.97) 10 10 Safety 2.39 (1.138) 11 Healthy food 2.42 (1.102) 12 Proximity to a highway exit or major road 2.71 (1.088) 13 Amenity 2.75 (1.110) 14 Word-of-mouth reputation 2.84 (1.066) 2.66 (0.93) 15 9Table I.Attributes for the Notes: *Difference is statistically signiﬁcant at: a ¼ 0.05; scale: 1 – extremely important, 2 – somewhatfast-food restaurant important, 3 – neither important nor unimportant, 4 – somewhat unimportant, 5 – not at all important;service quality numbers in parentheses are standard deviations
akin to attributes of a product (e.g. food) and/or can be improved without direct reference Fast-foodto customers (Chakrapani, 1998). This category of the service attributes includes taste of restaurantfood, cleanliness of the restaurant, competitive price, and restaurant location (proximityto a customer’s residence). On the other hand, “personal service” refers to service franchisesattributes that are difﬁcult, if not impossible, to improve without reference to customers(Chakrapani, 1998). This category of the service attributes includes service responsetime, employee courtesy, restaurant operating hours, amenity, and safety. 287 To see if the 15 service attributes could be broken down into sub-categories,we conducted exploratory factor analysis. The exploratory factor analysis was precededby the Bartlett’s test of Sphericity. The Bartlett’s test (with a x2 value of 729.452) showedthat some of these service attributes were signiﬁcantly correlated among themselves.The Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy was also employed tomeasure the strength of the relationship among service attributes. A factor analysis wasfurther justiﬁed, since the KMO value of 0.744 was greater than a threshold score of 0.70. Considering the statistical signiﬁcance of correlation among these service attributes,we conducted principal component analysis to determine the minimum number ofcommon factors needed to explain correlation among the attributes using the eigen valuegreater than one rule. To obtain a more meaningful representation of the factor structure,we used the varimax rotation with Kaiser Normalization. To elaborate, varimax rotationis an orthogonal rotation of the factor axes to maximize the variance of the squaredloadings of a factor (column) on all the variables (rows) in a factor matrix where eachfactor tends to have either large (close to 1) or small (close to 0) loadings of any particularvariable (Kaiser, 1958; Fabrigar et al., 1999). In particular, we chose a varimax rotationbecause it enables us to easily identify each variable with a single common factor.As summarized in Table II, we extracted ﬁve common factors:Factors Factor 1 Factor 2 Factor 3 Factor 4 Factor 5Factor label Service Menu Location Accessibility Drawing image selection powerEigen value 3.537 1.688 1.394 1.155 1.014Percent of variance 23.583 11.252 9.295 7.702 6.758VariablesCleanliness 0.592 0.428 0.155 0.006 0.012Service response time 0.753 20.015 0.132 0.037 20.096Employee courtesy 0.783 0.260 0.033 0.009 0.052Quality of prior service 0.664 0.140 0.047 0.231 0.069Healthy food 0.062 0.740 2 0.112 2 0.064 0.103Variety of food 0.151 0.540 0.050 0.198 0.296Word-of-mouth reputation 0.116 0.502 0.174 0.454 20.076Safety 0.275 0.617 0.044 0.106 20.127Proximity to a customer’s residence 0.176 20.151 0.748 0.027 0.195Proximity to the school or workplace 0.054 20.014 0.871 0.038 0.005Proximity to a highway or major road 0.062 0.300 0.590 0.233 20.032Amenity 0.113 0.139 0.109 0.726 20.008Operating hours 0.049 20.019 0.041 0.793 0.137Taste of food 0.366 20.271 0.018 0.229 0.507 Table II.Competitive price 2 0.145 0.226 0.129 2 0.010 0.819 Factor analysis results of service attributes forNote: A KMO measure of sampling adequacy ¼ 0.744 fast-food restaurants
BIJ (1) service image;18,2 (2) menu selection; (3) location; (4) accessibility; and (5) drawing power.288 These factors are found to have an eigen value greater than 1. That is to say, the result of the factor analysis veriﬁed that the 15 service attributes could be classiﬁed into ﬁve categories of services: (1) service image; (2) menu selection; (3) location; (4) accessibility; and (5) drawing power. 3. The development of service standards To stay competitive, a fast-food restaurant must establish proper service standards in relation to its customers’ needs and expectations. With this in mind, the survey participants were asked to rate on a ﬁve-point Likert scale the service performance of the six fast-food restaurants with respect to 15 attributes listed in Table I. These fast-food restaurants are: McDonalds, Burger King, Wendy’s, Subway, Arby’s, and Hardee’s. A rating of the service performance of the fast-food restaurants was used to determine a leading fast-food restaurant (benchmark) which best exhibits each service attribute and provides its customers with the highest overall service quality. To develop an objective service standard, the raw ratings were converted to relative priority scores using an analytic hierarchy process (AHP) introduced by Saaty (1980). AHP is a systematic scoring method that was designed to synthesize the fast-food restaurant customers’ level of satisfaction with each service attribute into an overall service performance score of each fast-food restaurant. Accordingly, AHP helps the fast-food restaurant not only identify the principal competitors in the market, but also assess the service performance of the fast-food restaurant relative to its competitors. In contrast with the SERVQUAL instrument suggested by Berry et al. (1985), AHP permits the fast-food restaurant manager to investigate the sensitivity of the service performance measure to changes in customer perception of importance of service attributes and the customer’s degree of satisfaction with those attributes (Min and Min, 1996). Furthermore, AHP can enhance the fast-food restaurant manager’s ability to make tradeoffs among various quantitative (e.g. price, restaurant operating hours, quick response time) and qualitative attributes (e.g. cleanliness, employee courtesy, safety) (Saaty, 1988). The application of benchmarking to fast-food restaurants involves four major steps (Wind and Saaty, 1980; Zahedi, 1989; Min and Min, 1996): (1) Break down the service-evaluation process into a manageable (e.g. no more than seven) set of criteria and attributes and then structure these into a hierarchical form. (2) Make a series of pairwise comparisons among the criteria and attributes according to the customers’ satisfaction level with service performances.
(3) Estimate the relative weights of service criteria and attributes based on the Fast-food customers’ perceived importance of those criteria and attributes. Also, determine restaurant the local priority scores and ranks of the respective fast-food restaurant in terms of their service performances. franchises (4) Aggregate these local priority scores and synthesize them for the overall measurement of fast-food restaurant service quality. Then, identify the best-practice (leading) fast-food restaurant. 289Based on the above steps, the process of benchmarking was structured into ﬁve levels(Figure 1). Since this hierarchical representation eases the complexity of analysisthrough decomposition, it aids the fast-food restaurant in understanding the interactionsamong various service criteria and attributes. As shown in Figure 1, the top level of ahierarchy represents the ultimate goal of determining the best-practice fast-foodrestaurant. At the second level of a hierarchy, the ﬁve distinctive service criteria: (1) service image; (2) menu selection; (3) location; (4) accessibility; and (5) (customer) drawing powerwere placed because they are generally considered important in measuring thefast-food restaurant service quality. The attributes belonging to one of the ﬁve service criteria were connected to thebottom level of the hierarchy represented by six fast-food restaurants under evaluation.4. The service performance evaluation of fast-food restaurantsFor illustrative purposes, we considered the base-line scenario involving six fast-foodrestaurants for their service performances relative to others. Under this scenario,we estimated relative weights of criteria, and attributes and then derived priority scoresof each fast-food restaurant with respect to the given criteria, and attributes through aseries of pairwise comparisons. Herein, relative weights represent fast-food restaurantcustomers’ perceived importance of each criterion and attribute. As indicated earlier,these weights were determined primarily based on the surveyed opinions of fast-foodrestaurant customers. Since these customers’ perception of service quality can besubjective and inconsistent, we estimated the degree of consistency in the customers’opinions using a consistency ratio (CR), that is mathematically expressed as: CI CR ¼ ; RIwhere CI ¼ consistency index, RI ¼ random index: ðlmax Þ CI ¼ n21 lmax ¼ maximum eigen value of the matrix of pairwise comparisons; n ¼ number of criteria or attributes in the consideration; and RI ¼ mean CI of a randomly generated reciprocal matrix from a ratio scale of 1-9.
BIJ 18,2 290Figure 1.restaurantsHierarchy ofbenchmarking fast-food Goal: Competitive benchmarking of fast-food restaurants Criteria Service Image Menu selection Location Accessibility Drawing power (0.218) (0.161) (0.178) (0.163) (0.280) Attributes Attributes Attributes Attributes Attributes Cleanliness Healthy food Proximity to Taste of food (0.280) residence Amenity (0.256) (0.442) (0.575) (0.374) Service response Variety of Proximity to workplace Store operating Competitive time (0.261) food (0.265) (0.354) hours (0.558) price (0.425) Employee Word of mouth courtesy Proximity to reputation (0.213) a highway (0.219) (0.272) Quality of Safety prior service (0.260) (0.246) Alternatives McDonald’s Wendy’s Burger king Subway Arby’s Hardee’s Note: Numbers in parentheses represent given weights
The relative weights and consistency ratios were calculated using the AHP software Fast-foodcalled Expert Choice (2000) program. Also, the AHP enabled us to derive the priority restaurantscores from the customers’ satisfaction level with services rendered to them during theirvisitation of the fast-food restaurant. These scores, however, are not absolute measures franchises(raw scores), but relative measures that represent the service performance of thefast-food restaurant relative to its competitors. Thus, pairwise comparisons wereintended to derive numerical values (relative measures) from a set of fast-food restaurant 291customers’ judgments, rather than arbitrarily assigning numerical values to criteria andattributes. These pairwise comparisons of fast-food restaurants produced a ﬁnalranking of fast-food restaurants with respect to their service performance relative toothers. Since all of these pairwise comparisons are tested against pre-assignedconsistency ratios, consistency is ensured with an overall consistency index of 0.00.It should be noted that a consistency ratio of 0.10 or less is generally consideredacceptable (Saaty, 1980). The detailed results of the comparative performances of fast-food restaurants withrespect to each service attribute are summarized in Table III. These results show thatMcDonalds tops the list in terms of overall service quality. In particular, McDonalds isthe leader in terms of service response time, location, amenity, operating hours, andcompetitive price. However, Subway turns out to be the service leader with respect tocleanliness, employee courtesy, quality of prior service, healthy food, a variety of food,word-of-mouth reputation, safety, and taste of food. Aggregation of local priority scoresinto global priority scores (overall service quality metrics) indicated that McDonalds andWendy’s ranked highest and second highest, respectively (Table IV). McDonalds isconsidered the best-practice fast-food restaurant (benchmark) in terms of its overallservice quality. On the other hand, it is intriguing to note that despite some strengths,Subway is ranked third best in terms of its overall service quality since it fell behindseveral other restaurants with respect to service response time, competitive price,operating hours, and location (Table V). Regardless, as shown in Table VI, bothMcDonalds and Subway were the two most popular restaurants in terms of thefrequency of their visits. Especially, Subway’s popularity grew dramatically for the last15 years, whereas both Burger King and Hardee’s suffer from declining popularity.Subway’s increased popularity may stem from its continuous service improvement incleanliness, employee courtesy, taste of food, and a variety of food, although its apparentweakness is relatively high price of food and slow response time as compared toMcDonalds, Wendy’s and Burger King. To see if a fast-food restaurant ranking changes in accordance with the changes inrelative importance of service attributes such as taste of food, competitive price, andlocation convenience, we performed a series of sensitivity analyses for all the attributes.We discovered that, irrespective of changes in a relative weight of the importance ofservice image, location, and accessibility, McDonalds would be a superior fast-foodrestaurant to the others including Wendy’s and Subway. On the other hand, if a relativeweight of taste of food increased from a given weight of 0.575 to 0.850, both Subway andWendy’s were preferred to McDonalds. Table VII shows that a ranking of the fast-foodrestaurants is sensitive to changes in the importance of taste of food and competitiveprice, whereas it is insensitive to quality of prior service, variety of food, healthy food,safety, proximity to a workplace/school and a highway. These results imply that serviceattributes such as taste of food and competitive price can be key differentiators
Criteria Attributes Restaurants Priority scores Ranks Fast-food restaurant Subway 0.01191 3 Burger King 0.01153 4 franchises Arby’s 0.00874 5 Hardee’s 0.00677 6 Proximity to a customer’s school/workplace McDonalds 0.01217 1 293 Wendy’s 0.01217 1 Burger King 0.01217 1 Subway 0.01035 4 Arby’s 0.00962 5 Hardee’s 0.00669 6 Proximity to a highway or major roads McDonalds 0.00898 1 Wendy’s 0.00898 1 Burger King 0.00898 1 Subway 0.00808 4 Arby’s 0.00718 5 Hardee’s 0.00628 6Accessibility Amenity McDonalds 0.01337 1 Subway 0.01239 2 Wendy’s 0.01209 3 Burger King 0.01205 4 Arby’s 0.01200 5 Hardee’s 0.01009 6 Operating hours McDonalds 0.01855 1 Wendy’s 0.01821 2 Burger King 0.01652 3 Subway 0.01419 4 Arby’s 0.01260 5 Hardee’s 0.01087 6Drawing power Taste of food Subway 0.03405 1 Wendy’s 0.02898 2 Arby’s 0.02766 3 McDonalds 0.02658 4 Burger King 0.02534 5 Hardee’s 0.01834 6 Competitive price McDonalds 0.02776 1 Wendy’s 0.02303 2 Burger King 0.02082 3 Subway 0.01827 4 Hardee’s 0.01499 5 Arby’s 0.01424 6 Table III.for enhancing the fast-food restaurant’s competitiveness. For instance, sales promotionsthrough deep discounts and value-meal coupons can attract more customers. By thesame token, improvement of taste of food through the use of better quality meat andfresh ingredients may enhance the fast-food restaurant’s competitive position.5. Managerial implications and recommendationsIn today’s saturated fast-food restaurant market, mere compliance with past servicestandards will not result in the level of improvement necessary to become
BIJ Overall priority scores18,2 obtained from AHP (overall consistency index ¼ 0.00) Ranks Restaurants 2009 1994 2009 1994 Overall level of customer satisfactiona294 McDonalds 0.190 0.161 1 2 1.94 (0.870) Wendy’s 0.184 0.163 2 1 1.88 (0.782) Subway 0.180 0.155 3 3 1.79 (0.910) Burger King 0.169 0.145 4 4 2.21 (0.937) Arby’s 0.154 0.132 5 6 2.20 (0.898) Red Robin Not applicable 2.55 (0.779) Johnny Rocket Not applicable 2.79 (0.707) Fuddruckers Not applicable 2.89 (0.552) Hardee’s 0.123 0.134 6 5 2.96 (0.691) Roy Rogers Not applicable 3.00 (0.403)Table IV. Notes: aThe numbers represent the average score of a ﬁve-point scale for the degree ofComparison of fast-food customer satisfaction evaluated by the respondents where: 1 – very satisﬁed, 2 – somewhat satisﬁed,restaurants with respect 3 – neither satisﬁed nor dissatisﬁed, 4 – somewhat dissatisﬁed, 5 – very dissatisﬁed; the numbers into overall service quality parentheses are standard deviations Average frequency of visits Ranks Restaurants 2009 (n ¼ 262) 1994 (n ¼ 111) 2009 1994 McDonalds 2.01 (0.859) 2.10 (0.97) 1 2 Subway * 2.07 (0.881) 3.32 (0.90) 2 6 Wendy’s 2.12 (0.862) 2.02 (0.82) 3 1 Burger King * 2.56 (0.891) 2.12 (0.92) 4 3 Arby’s 2.85 (0.847) 2.92 (0.88) 5 5 Red Robin 3.59 (0.642) 6 Johnny Rocket 3.73 (0.532) 7 Fuddruckers 3.79 (0.525) 8 Hardee’s * 3.79 (0.468) 2.32 (0.67) 9 4 Roy Rogers 3.92 (0.317) 10Table V. Notes: *Difference is statistically signiﬁcant at: a ¼ 0.05; scale: 1 – most frequently visited, 2 –The popularity of the occasionally visited, 3 – rarely visited, 4 – never visited; numbers in parentheses are standardfast-food restaurant deviations the “best-of-breed” fast-food restaurant. In other words, fast-food restaurants need to achieve service excellence by constantly improving service performances. Fast-food restaurants cannot improve service performances unless they understand what the leading competitors do in the market and what level of service gaps exists between current performances and best practices. They also need to cater their service offerings to the dynamically changing preferences and needs of their customers over time. Thus, we proposed dynamic benchmarking as an effective way of sustaining service excellence. This section summarizes several major ﬁndings of the current benchmarking study as compared to the previous benchmarking study conducted in 1994,
Fast-food Competitive gapsb Benchmarka restaurantKey attributes (McDonalds) Wendy’s Subway Burger King Arby’s Hardee’s franchisesService imageCleanliness 2.14 0.15 * * 20.20 * 0.33 * 1.12 * 0.73 *Service response time 1.64 0.20 * 0.69 * 0.47 * 1.21 * 1.21 * 295Quality of prior service 1.94 20.06 20.15 * * 0.27 * 0.26 * 1.02 *Employee courtesy 2.27 0.10 0.17 * 0.18 * 1.41 * 0.54 *Menu selectionVariety of food 2.22 20.15 * * 20.27 * 0.22 * 0.66 * 0.79 *Word-of-mouth 2.17 20.01 20.36 * 0.26 * 0.43 * 1.72 *LocationProximity to residence 1.49 0.15 * 0.33 * 0.39 * 1.02 * 1.71 *AccessibilityOperating hours 1.63 0.03 0.40 * 0.20 * 0.77 * 1.15 *Amenity 2.28 0.22 * 0.18 * 0.25 * 0.24 * 0.74 *Drawing powerTaste of food 2.05 20.17 * 20.45 * 0.10 20.08 0.92 *Competitive price 1.56 0.32 * 0.81 * 0.48 * 1.48 * 1.33 *Notes: Statistically signiﬁcant at: *a ¼ 0.05, * *a ¼ 0.10; athe benchmark index representsthe average score of a ﬁve-point scale for the degree of customer satisfaction where: 1 – extremelysatisﬁed, 2 – somewhat satisﬁed, 3 – neither satisﬁed nor dissatisﬁed, 4 – somewhat dissatisﬁed, 5 – not Table VI.at all satisﬁed; bthe positive gap occurs when the service performance of a given restaurant is worse than Competitive gap analysisthat of its benchmark (McDonalds) of fast-food restaurantsexpounds the managerial implications of those ﬁndings, and develops practicalguidelines for continuous service improvement. First, we discovered that a service attribute considered most important to thefast-food restaurant customers’ impressions of service quality is taste of food. Also,the effect of “atmospheric” impression such as cleanliness of the restaurant seems to besigniﬁcant, because cleaner dining environments may look more sanitary to thecustomers. That is to say, neatly cleaned tables, chairs, and ﬂoors in the fast-foodrestaurant can play a signiﬁcant role in improving its customers’ impressions of servicequality and thereby retaining its customers. It is also not surprising to ﬁnd that people goto the fast-food restaurant due to its quick service response time. Thus, the relativeimportance of these service attributes to the fast-food restaurant customers’ impressionsof service quality virtually remains the same as the 1994 study. On the other hand, therestaurant customers tend to value competitive price signiﬁcantly more than they did in1994 (Table I). Also, the fast-food restaurant customers were very sensitive to pricechanges (Table VII). This ﬁnding indicates that the fast-food restaurant customers arestill looking for bargain or value meals. In particular, in this era of worldwide economiccrisis and rising food prices, a signiﬁcant price increase without noticeable improvementin taste of food and physical restaurant environments can undermine the fast-foodrestaurant’s competitiveness. Thus, we recommend that the fast-food restaurant shouldfocus more on “every-day low price” strategy than on “occasional coupon or promotionalsales” to obviate customer defections and phantom demand. Another intriguing ﬁndingis that the fast-food restaurant customers tend to take restaurant location (namely,proximity to their residences, schools, and workplaces) far more seriously than before.
BIJ Service attributes Degree of sensitivity18,2 Service image Cleanliness Somewhat insensitive Service response time Somewhat sensitive Employee courtesy Somewhat insensitive296 Quality of prior service Insensitive Menu selection Variety of food Insensitive Healthy food Insensitive Safety Insensitive Word-of-mouth reputation Somewhat insensitive Location Proximity to residence Somewhat insensitive Proximity to school/workplace Insensitive Proximity to highway Insensitive Accessibility Amenity Somewhat insensitive Operating hours Somewhat insensitive Drawing power Taste of food Sensitive Competitive price Sensitive Notes: “Very sensitive” – a ranking of all the restaurants changes drastically in the entire weight range; “sensitive” – a ranking of several restaurants changes constantly in the entire weight range;Table VII. “somewhat sensitive” – a ranking of two restaurants changes gradually in the limited weight range;Sensitivity analysis of “somewhat insensitive” – a ranking of one restaurant changes gradually in the very limited weightservice attributes range; “insensitive” – a ranking of no restaurant changes in the entire weight range This pattern reﬂects the fact that, with rising gasoline prices in times of a severe economic downturn, the restaurant customers prefer to dine at the restaurant not too distant from their home, school, or workplace. Second, as expected, the overall leader (i.e. McDonalds) of fast-food restaurant service quality turned out to be the most frequently visited restaurant (Table V). In fact, we discovered some correlation between the relative service performance of the fast-food restaurant and its popularity (Tables IV and V). Similarly, we found a pattern of the correlation between the overall level of customer satisfaction with the fast-food restaurant and its word-of-mouth reputation as evidenced by the top three rankings of Subway, Wendy’s, and McDonalds (Tables III and IV). That is to say, fast-food restaurant branding can foster positive images of its service quality and subsequently help attract more customers in the future. Thus, this ﬁnding reafﬁrms earlier discoveries by Ou and Abratt (2006) and Balmer (2001) that word-of-mouth reputation or branding could have a long-lasting impact on patronage, competitiveness, and business survival. Also, our survey result indicated that nearly half (43.7 percent) of the surveyed customers, who were disappointed with the service quality of a fast-food restaurant, would not return to the same fast-food restaurant. Thus, sustaining the high level of service quality is essential for customer retention. More importantly, it should be reminded that good branding has a lasting impact on the customer’s loyalty to a particular fast-food restaurant. Indeed, Rhee and Bell (2002) observed that many customers had a primary afﬁliation to a “primary store” that
captured the majority of their purchases despite being presented with a signiﬁcant Fast-foodinducement to shop elsewhere. Thus, we recommend that the fast-food restaurant restaurantshould develop a long-term branding strategy to prevent service failures and foster itsnice images. Such a strategy may include: recognition of loyal patrons by their ﬁrst franchisesnames, special coupons/discounts or free meals/drinks for repeated visitors, and quickattention to service failures (e.g. customer complaints). Third, the customers tend to be more favorable to easily accessible and national 297fast-food restaurant franchises such as McDonalds, Wendy’s, and Subway than lessaccessible, relatively new, and regional counterparts such as Roy Rogers, Hardee’s,Fuddruckers, Johnny Rocket, and Red Robin. This tendency may have something to dowith the risk-averse trend of today’s customers who do not want to dine at theunfamiliar restaurants. As a matter of fact, half (50.4 percent) of the surveyedcustomers reported patronizing the same restaurant for repeated visits. Also, given theincreasing importance of location to the restaurant service quality, less accessiblerestaurants such as Roy Rogers (primarily located near the major highway exits or restareas) and Hardee’s with the limited number of establishments may suffer from thedeclining popularity. For example, the Hardee’s popularity has signiﬁcantly declinedover the years (Table V). Considering this ﬁnding, we recommend that relatively newand regional fast-food restaurants should locate their establishments near to the clusterof other competing restaurants such as McDonalds and Wendy’s to negate theircompetitor’s locational advantage and then draw the attention of potential customers. As summarized above, this study incorporated the customers’ perception of servicequality into the fast-food restaurant benchmarking process and then evaluated “what-if”scenarios associated with changes in the customers’ perception of service quality(i.e. changes in relative importance of service attributes) using the AHP. Althoughthe current study was one of the ﬁrst longitudinal studies to evaluate the comparativeservice performances of the fast-food restaurants over time, it can be extended to includelarge samples in different regions across the USA. Similarly, this study can be extendedto include samples from different countries and then conduct cross-cultural studies toexamine any cross-cultural differences in the customer perception of fast-foodrestaurant service quality. Also, future studies can be directed toward the identiﬁcationof various latent variables (e.g. diners’ gender, age, profession, ethnicity) that mayinﬂuence the diners’ perception of restaurant service quality using the structuralequation model.ReferencesBabin, B.J. and Darden, W.R. (1996), “Good and bad shopping vibes: spending and patronage satisfaction”, Journal of Business Research, Vol. 35 No. 3, pp. 201-6.Balmer, J.M.T. (2001), “Corporate identity, corporate branding and corporate marketing: seeing through fog”, European Journal of Marketing, Vol. 35 Nos 3/4, pp. 248-91.Berry, L.L., Zeithaml, V. and Parasuraman, A. (1985), “Quality counts in service, too”, Business Horizons, Vol. 28 No. 3, pp. 44-52.Chakrapani, C. (1998), How to Measure Service Quality and Customer Satisfaction, American Marketing Association, Chicago, IL.Crawley, A.E. (1993), “The two-dimensional impact of color on shopping”, Marketing Letters, Vol. 4 No. 1, pp. 59-69.
BIJ Curry, D.J. and Riez, P.C. (1988), “Product and price quality relationship”, Journal of Marketing, Vol. 52 No. 1, pp. 36-52.18,2 Customer Service Benchmarking Association (2008), “Customer service measurement benchmarking studies”, available at: www.csbenchmarking.com/ Dijsterhuis, A., Smith, P.K., van Baaren, R.B. and Wigboldus, D.H. (2005), “The unconscious consumer: effects of environment on consumer behavior”, Journal of Consumer Psychology,298 Vol. 15 No. 3, pp. 193-202. Expert Choice (2000), Advanced Decision Support Software, Expert Choice, Pittsburgh, PA. Fabrigar, L.R., Wegener, D.T., MacCallum, R.C. and Strahan, E.J. (1999), “Evaluating the use of exploratory factor analysis in psychological research”, Psychological Methods, Vol. 4 No. 3, pp. 272-99. George, D. and Mallery, P. (2001), SPSS for Windows Step by Step: A Simple Guide and Reference, 3rd ed., Ally and Bacon, Boston, MA. Greer, T.V., Chuchinprakarn, V. and Seshardri, S. (2000), “Likelihood of participating in mail survey research”, Industrial Marketing Management, Vol. 29 No. 2, pp. 97-109. Harrington, H.J. and Harrington, J.S. (1996), High Performance Benchmarking: 20 Steps to Success, McGraw-Hill, New York, NY. IBIS World Industry Report (2009), Fast Food Restaurant US Industry Report, available at: www.ibisworld.com/industry/default.aspx?indid¼1676, December 22, 2009 (accessed January 7, 2010). Kaiser, H. (1958), “The varimax criterion for analytic rotation in factor analysis”, Psychometrika, Vol. 23 No. 3, pp. 187-200. Kara, A., Kaynak, E. and Kucukemiroglu, O. (1997), “Marketing strategies for fast-food restaurants: a customer view”, British Food Journal, Vol. 99 No. 9, pp. 318-24. Kotelikov, V. (2008), “Customer retention: driving proﬁts through giving lots of reasons to stay”, available at: www.1000ventures.com/business_guide/crosscuttings/customer_ retention.html Larson, P.D. and Poist, R.F. (2004), “Improving response rates to mail surveys: a research note”, Transportation Journal, Vol. 43 No. 4, pp. 67-74. Lovelock, C. and Wright, L. (2002), Principles of Service Marketing and Management, 2nd ed., Prentice-Hall, Upper Saddle River, NJ. Min, H. (2006), “Developing the proﬁles of supermarket customers through data mining”, The Service Industries Journal, Vol. 26 No. 7, pp. 1-17. Min, H. and Galle, W.P. (1996), “Competitive benchmarking of fast food restaurants using the analytic hierarchy process and competitive gap analysis”, Operations Management Review, Vol. 11 Nos 2/3, pp. 57-72. Min, H. and Min, H. (1996), “Competitive benchmarking of Korean luxury hotels using the analytic hierarchy process and competitive gap analysis”, Journal of Services Marketing, Vol. 10 No. 3, pp. 58-72. Min, H. and Min, H. (1997), “Benchmarking the quality of hotel services: managerial perspectives”, International Journal of Quality & Reliability Management, Vol. 14 No. 6, pp. 582-97. Min, H., Min, H. and Chung, K. (2002), “Dynamic benchmarking of hotel service quality”, Journal of Services Marketing, Vol. 16 No. 4, pp. 302-19. Miranda, M.J., Konya, L. and Havrila, I. (2005), “Shoppers’ satisfaction levels not the only key to store loyal”, Marketing Intelligence & Planning, Vol. 23 No. 2, pp. 220-32.
Morey, R.C. and Dittman, D.A. (1995), “Evaluating a hotel GM’s performance: a case study in Fast-food benchmarking”, Cornell Hotel & Restaurant Administration Quarterly, Vol. 36 No. 5, pp. 30-5. restaurantMyers, J.H. (1999), Measuring Customer Satisfaction: Hot Buttons and Other Measurement franchises Issues, American Marketing Association, Chicago, IL.Neely, A., Gregory, M. and Platts, K. (2005), “Performance measurement and system design: a literature review and research agenda”, International Journal of Operations & Production 299 Management, Vol. 25 No. 12, pp. 1228-63.Nessel, J. (2010), “10 restaurant ﬁnancial red ﬂags”, Restaurant Resource Group (RRG), available at: http://rrgconsulting.com/ten_restaurant_ﬁnancial_red_ﬂags.htm (accessed January 7, 2010).Ou, W. and Abratt, R. (2006), “Diagnosing the relationship between corporate reputation and retail patronage”, Corporate Reputation Review, Vol. 9 No. 4, pp. 243-57.Phillips, P. and Appiah-Adu, K. (1998), “Benchmarking to improve the strategic planning process in the hotel sector”, The Service Industries Journal, Vol. 18 No. 1, pp. 1-17.Reichheld, F.F. and Sasser, W.E. Jr (1990), “Zero defections: quality comes to services”, Harvard Business Review, Vol. 68 No. 5, pp. 105-11.Rhee, H. and Bell, D.R. (2002), “The inter-store mobility of supermarket shoppers”, Journal of Retailing, Vol. 78 No. 4, pp. 225-37.Saaty, T.L. (1980), The Analytic Hierarchy Process, McGraw-Hill, New York, NY.Saaty, T.L. (1988), Decision Making for Leaders, RWS, Pittsburgh, PA.Schlosser, E. (1998), “Fast-food nation: the true cost of American diet”, Rolling Stone Magazine, Issue 934, available at: www.mcspotlight.org/media/press/rollingstone1.html (accessed January 2, 2010).Tsai, M., Shih, K. and Chen, J.C.H. (2007), “A comparison of the service quality of fast food chain franchises”, International Journal of Services and Standards, Vol. 3 No. 2, pp. 222-38. ´ ´ ´Vazquez, R., Rodrıguez-Del Bosque, I.A., Dıaz, A.M. and Ruiz, A.V. (2001), “Service quality in supermarket retailing: identifying critical service experiences”, Journal of Retailing and Consumer Services, Vol. 8 No. 1, pp. 1-14.Wiki Analysis (2009), “Rising food prices pressure fast food margins”, available at: www. wikinvest.com/industry/Fast_Food_Restaurants_(QSR) (accessed January 7, 2010).Wind, Y. and Saaty, T.L. (1980), “Marketing applications of the analytic hierarchy process”, Management Science, Vol. 26 No. 7, pp. 641-58.Workman, D. (2007), “Top fast food countries: American companies and consumers lead world in outside casual dining”, available at: http://internationaltrade.suite101.com/article.cfm/top_ fast_food_countries (accessed January 2, 2010).Yu, J. and Cooper, H. (1983), “A quantitative review of research design effects on response rates to questionnaires”, Journal of Marketing Research, Vol. 20 No. 1, pp. 36-44.Zahedi, F. (1989), “The analytic hierarchy process – a survey of the method and its applications”, Interfaces, Vol. 16 No. 4, pp. 96-108.Further readingDavid, L. (2000), Consumer Products Survey, Shopper’s Voice, Buffalo, NY.Mackintosh, G. and Lockshin, L.S. (1997), “Retail relationships and store loyalty: a multi-level perspective”, International Journal of Research in Marketing, Vol. 14 No. 5, pp. 487-97.
BIJ Magi, A.W. (2003), “Share of wallet in retailing: the effects of store satisfaction, loyalty cards and shopper characteristics”, Journal of Retailing, Vol. 79 No. 2, pp. 97-106.18,2 Simmerman, S.J. (1992), “Improving customer loyalty”, Business and Economics Review, Vol. 38 No. 3, pp. 3-6. SPSS (2008), SPSS Base 16.0 User’s Guide, SPSS, Chicago, IL.300 Corresponding author Hokey Min can be contacted at: email@example.com To purchase reprints of this article please e-mail: firstname.lastname@example.org Or visit our web site for further details: www.emeraldinsight.com/reprints