Impact of Service Quality on Customer Loyalty in Malaysian Restaurants

Malaysia is a rapidly developing country in Asia and economic growth is projected to moderate to 5. 2% in 2011 (Suzy, 2011). According to the World Bank Group, Malaysia GDP per capita is 14,215 USD, which is adjusted by purchasing power parity. This shows that the purchasing power and standard of living of the Malaysians is growing adequately. Consequently, Malaysians allocate largest amount of household expenditures to their food budgets (Nezakati et al.

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, 2011). In today’s fast changing social and lifestyle trends, more and more Malaysian households are eating outside due to time constraints.

More women are involving in the working force. Parents are working all day long and they are no longer willing or able to spend some time in preparing dinner for the family at home after a tiring working day (Nezakati et al. , 2011; Jangga et al. , 2012). This is especially true in the big cities like Kuala Lumpur where the people spend most of their time working. Besides, the number of people dining out is increasing due to movement away from extended family hosueholds (Nezakati et al. , 2011). In addition, some families spend their weekend gathering with other family members in restaurants (Jangga et al., 2012).

On the other hand, Generation Y (Refers to those who were born from 1979 to 1994 and under the age groups between 16 to 33 years old) prefers to eat outside or involve in social gathering activities at the restaurants (Kwek et al. , 2011). In the Chinese culture, restaurants are a common venue for social gatherings and business entertainment. Food consumption in restaurants provides an experience of excitement, celebration, and establishing social connections (Feng, 2003).

The best option is to get a pleasant restaurant that could provide quality service and good dining experience.

All these factors contribute to the great potential of the Malaysia’s restaurant industry in terms of profitability and economic growth. The restaurant industry is one of the key contributors for the service sector in Malaysia. The restaurant industry is relatively competitive in nature with stiff competition within the industry due to the arising of more local and foreign full service restaurants as well as the increasing number of new entrants offering differentiated food products and services (Voon, 2011). On the other hand, customers are becoming more demanding and their needs are rather diverse (Stevens et al., 1995; Kueh and Voon, 2007).

With increasing competition within the restaurant industry, attracting new customers can no longer guarantee profits and success, but retaining existing customers is more vital to the success of the restaurant businesses (Shoemaker et al. , 1999; Anderson and Narus, 2004; Gee et al. , 2008; Haghighi et al. , 2012). Parasuraman et al. (1985) and Zeithaml et al. (1990) stated that the key strategy for the success and survival of any business is the delivery of quality service to customers, and this especially important in the service sectors like restaurant industry.

The quality of service offered to the customers will influence customer satisfaction and attitudinal loyalty, which will then lead to success of the businesses (Ravichandran et al. , 2010). 2. 0Background of Research Customer service quality is a crucial source of distinctive competence and is often considered as a key success factor in sustaining competitive advantage in service industries (Palmer, 2001). Thus, the delivery of a higher level of service quality is a very important strategy by which service organizations can position themselves more effectively in the market place.

The success of restaurant businesses relies on providing superior service quality, value, and customer satisfaction, which in turn enhances customer repeat patronage (Heskett et al. , 1997). The important relationships between service quality, customer satisfaction, and customer loyalty have thus been an important area of research (Zeithaml et al. , 1996; Pettijohn et al. , 1997; Dabholker et al. , 2000; Sivas and Baker-Prewitt, 2000; Kueh and Voon, 2007; Qin and Prybutok, 2008). Parasuraman et al.

(1994) emphasized that SERVQUAL is a lasting and reliable scale of service quality and it is applicable in an extensive spectrum of service domains such as financial institutions, libraries, hotels, medical centers and restaurants. Many researchers have tried to use SERVQUAL in different service domains such as medical services (Swartz & Brown, 1989; Lam, 1997), tourism (Tribe and Snaith, 1998; Atilgan et al. , 2003), libraries (Nitecki, 1996; Coleman et al. , 1997), banks (Angur et al. , 1993), restaurants and hotels (Hokey et al., 2002), and government services (Donnelly et al. , 1995).

Past researches in the restaurant industry has identified several factors that determine the level of satisfaction experienced by customers when they visit full service restaurants. The factors are such as quality of food, service and physical environment (Han and Ryu, 2009), atmosphere of the restaurant (Ladhari et al. , 2008), service and delivery (Goyal and Singh, 2007), cleanliness and service quality (Lockyear, 2005), and appropriate cost and attentive service (Namkung and Jung, 2010).

Most restaurant quality related studies have focused mostly on the ambience and service delivery as a core competency of a restaurant (Namkung and Jang, 2007). Ladhari et al. (2008) mentioned that service quality has the most significant effect on dining satisfaction, followed by product quality, hygiene, menu diversity, price-value and convenience. 3. 0Problem Statement What are the key service quality dimensions influencing the customer satisfaction and customer loyalty in Malaysia’s restaurant industry? 4. 0Research Objectives The main objectives of the study are:

1. To identify the key dimensions of service quality that affect customer satisfaction and customer loyalty in Malaysia’s restaurant industry. 2. To study the importance and impact of service quality on customer satisfaction and customer loyalty in Malaysia’s restaurant industry. 3. To determine the current customer satisfaction and customer loyalty levels in Malaysia’s restaurant industry. 4. To recommend some guidelines for improvement of service quality from the customers’ perspective in Malaysia’s restaurant industry. 5. 0Justification of Research

There is a lack of researches in measuring the service quality with the five generic dimensions of SERVQUAL in Malaysia’s restaurant industry. This has spurred on the interest of the study in identifying the importance of service quality from the customers’ perspective in Malaysia’s restaurant industry especially on the full service restaurants. This study will offer important practical implications especially in service quality for the Malaysia’s restaurant industry. This will provide the restaurateurs with detailed information in service quality to help them to identify the key service quality dimensions for success and competitiveness.

This can help the restaurant managers and staffs to focus their efforts on improving customer perceptions of service quality and enhancing the dining experience of their customers. Due to the intensive competition in the restaurant industry, therefore, there is an urgent need to identify the key service quality dimensions influence the customer satisfaction and customer loyalty to their preferred full service restaurants which in turn increases patronage rates of their preferred restaurants. The focus of the study is mainly on the role of service quality adopted from SERVQUAL in the full service restaurants in Malaysia.