Content uploaded by Faraj Mazyed Aldaihani
Author content
All content in this area was uploaded by Faraj Mazyed Aldaihani on Jul 04, 2018
Content may be subject to copyright.
Content uploaded by Faraj Mazyed Aldaihani
Author content
All content in this area was uploaded by Faraj Mazyed Aldaihani on Jul 04, 2018
Content may be subject to copyright.
!
1!
Journal of International Business and Management (JIBM)
https://rpajournals.com/jibm
!
JIBM
Journal of International Business and Management
Journal Homepage: https://rpajournals.com/jibm
Factors Affecting Customer Loyalty in the Restaurant
Service Industry in Kuwait City, Kuwait
Faraj Mazyed Faraj Aldaihani*1
Noor Azman bin Ali, PhD2
Faculty of Economics and Management1,2
Universiti Putra Malaysia (UPM)1,2
Abstract
The aim of this study is to explore the critical factors of service quality, customer value and
brand image, which help to generate customer loyalty in the restaurant industry in Kuwait.
Moreover, this study has also attempted to validate the link between the independent
variables, such as service quality, customer value and brand image, and the dependent
variable being customer loyalty. This study employed the simple random sampling method
to select 100 respondents who eat in the different restaurants in Kuwait. The personal
information of the respondents has been analysed through the use of descriptive analysis. In
addition, Pearson’s correlation test has been used to test the hypotheses. According to the
results, all the hypotheses have been found to be supported, representing the fact that the
tested variables are significantly related to each other. Thus, the results outline that
restaurant management should not only build and maintain a competitive edge in the
restaurant industry market but should also put more effort into improving the service
quality, provide better customer value, and attain a brand image that will finally contribute
to securing customer loyalty.
Keywords: Restaurant, Corporate Image, Customer Loyalty, Brand Image, Service
Quality
Introduction
The restauranteur environment is a globally competitive marketplace which pushes food
and drink outlets to offer quality products or services, maintain productivity and
consistency, and ensure customer satisfaction in order to remain in existence and to
continue to progress. Moreover, the need to create and retain customer loyalty has also
been recognised as the most salient requirement for organisational success in this
competitive market. According to Eshghi et al, (2007) customer loyalty is described as the
strong intention of customers to buy the products or services repeatedly from the same
company. Loyal customers not only buy the products or services frequently, but also
recommend others to visit and buy the same or similar products (Liu et al, 2011). Customer
loyalty has been identified as the basis for a company in any industry to gain a competitive
RPA$$$
Journals$$
Journal of International Business and Management 1(2): 1-14 (2018)
Print ISSN: 2616-5163
Online ISSN: 2616-4655
!
*Corresponding author: Faraj Mazyed Faraj Aldaihani*1,
Email: f.airforce@hotmail.com
Submission Date: 11th June 2018
Revision Date: 30th June 2018
Acceptance Date: 1st July 2018
!
!
2!
Journal of International Business and Management (JIBM)
https://rpajournals.com/jibm
!
advantage. It is measured based on returning customers, referrals, and word of mouth. The
improvement and retention of loyalty amongst customers is a crucial factor for the
organisation’s sales performance and growth (Reicheld, 1996; Liu et al, 2011).
There are many companies in the service industry of Kuwait, especially in Kuwait
City; however, this study is limited to the restaurant industry of the city. The rise of
international hotels, fast food chains and restaurants, and hyper dynamic market
circumstances pose crucial challenges for the existing hotels and restaurants in all
countries, including developed and developing countries, like that of Kuwait, with 2.2
million foreigners living in the country and a market of $3.5 billion spent annually at
restaurants. Moreover, there are more than 4,700 restaurants including fast food
organisations such as Burger King, Chilli’s KFC, Nandos, McDonalds, and Peppe’s Pizza.
In such a competitive market the restaurants have to attract new customers and retain them
to ensure a growing market share and to gain a competitive advantage (Hong and Goo,
2014; Enshghi et al, 2007; Kaufman, 2015). Hence, it is necessary for the restaurant
companies to identify what factors affect both new and existing customers in selecting
restaurants and food.
Once the restaurant companies are able to meet the expectation of the local and
international customers, creating loyal customer relationships and achieving customer
satisfaction will easily gain them a greater marketing share. There have been several
studies on the variables affecting customer loyalty and customer satisfaction in different
industries and factors such as the convenience of obtaining products, supporting services,
the cost of products or services, quality, brand, and customer value. However, there has
been no empirical research on the restaurant industry of Kuwait and other countries to
understand what factors affect customer loyalty. This scanty amount of data regarding the
factors, which affect customer loyalty in Kuwait’s restaurant industry inspires us to
conduct this study, including several specific factors such as brand, service quality, and
customer value, which affect customer loyalty to the restaurants located in Kuwait City.
Therefore, this study was conducted in Kuwait City to explore how customers in
different restaurants view the three variables of restaurant service, namely, brand, quality
of service, and customer value. Furthermore, we have also measured how strongly every
variable included in the study is related to the phenomenon of customer loyalty. Thus, the
results from the research give us comprehensive and updated ideas as to how these
variables are linked to customer loyalty in the restaurant marketplace in this Gulf Country.
Literature Review
Service quality is identified as a global concept for all industries and the fundamental
requirement for all customers regardless of their products and services (Li et al, 2011;
Sundbo, 2015; Su, Swanson & Chen, 2016). They advised that the service quality largely
determined the profitability of an organisation and its link to continuing growth. There
have been numerous studies, which have shown strong relationships between the service
quality of products and the customer’s satisfaction, readiness, and intention to buy again,
as well as their verbalisation and continuous loyalty to a particular organisation (Zeithaml
et al, 1996; Liu et al, 2011; Ali, 2018). In addition, the best service quality not only attracts
customers from competitors, but also contributes to them making frequent purchases of
particular products and services and to recommend others as a result of positive feedback
and referral (Ventis and Ghauri, 2000; Thompson et al, 2006; Woodcock et al, 2011;
Nwakuna, 2017). According to Lie et al, (2011), the regular purchases by the customers
!
3!
Journal of International Business and Management (JIBM)
https://rpajournals.com/jibm
!
and the future of an organisation mostly depends on loyalty, which is an indirect and
subconscious promise to repurchase certain products and services on a regular basis.
Strong and positive relationships have been pointed out in the researches of Kuo et
al, (2009) and Aydin and Ozer (2005). However, their studies were conducted regarding
the mobile companies’ services related to the quality of service and subsequent intention of
the customers to want to order the same certain service package from this provider. Their
investigations found that post-purchase satisfaction is generated among customers based on
the good quality of the products or services. Moreover, in other studies, the intention to
repurchase from a particular service provider and suggest to others to buy particular
products from an organisation, mainly originates from service quality (Levesque and
McDougell 2010; Cronin et al, 2000; Chiu, Wang, Fang & Huang, 2014; Choi and Mattia,
2018). These have been acknowledged within the research findings of Liang et al, (2013),
who found that changing service provider and leaving an organisation were the results of
the failure of a particular company to provide good services to the customers. These denote
that the failure of providing good quality services to customers can be a fundamental
reason for a customer to switch restaurants by a customer in Kuwait City. Hence, the
hypothesis can be created as:
Hypothesis 1: The quality of the service in restaurants creates a positive relationship and
increases customer loyalty.
Brand image plays a significant role in formulating an image about a company and its
products and services because it conveys an organisational exceptionality in terms of
products and services (Cleopartra, et al, 2004; Aldousari & Elsayed, 2018). On the other
hand, Nguyen and Leblanc (2001) outlined that the corporate image or brand recognition is
related to the behavioural and physical characteristics of an organisation’s architecture,
business name, the services or tangible products, and the perception of quality, which is
conveyed by every internal stakeholder through their interaction with the customers.
Nguyen and Leblanc (2001) came to the conclusion that the brand image or corporate
image is strongly related to the three industries of retail, telecommunications, and
education. Johnson et al (2001) found in their study that the brand image has a certain
impact on the behavioural aspects, especially customer loyalty. There have been some
companies, which have experienced dramatic sales reductions due to negative brand
image; for example, Tesco in the UK experienced sales reductions due to the horsemeat
scandal, which seriously hampered its brand image (Lawrance, 2013; Duijst, 2014).
According to Brakus et al, (2009) and Wang (2010) customers remain loyal to a brand
because it conveys a positive organisational image among the customers, particularly in the
case of tangible products and exchanges of services. Therefore, we can hypothesise that:
Hypothesis 2: There is a positive relationship between a restaurant’s brand image and
customer loyalty.
Customer value has a positive impact on the customer’s intention to purchase a particular
product or service (Kuusik 2007; Wang et al, 2013; Kandampully, 2014; Mehajan et al,
2017). This is also supported from the research of Dodds et al (1991) illustrating that the
decision to purchase and repurchase is affected by the customer’s perceived value. A
customer’s value or perceived value not only has a strong impact on the decision to
purchase a particular product but also the word of mouth intentions of a customer (Casalo,
et al, 2008; Fandos Roig et al, 2009; Markovic, 2015). According to the research of Pura
(2005), the customer value works to ensure a frequent readiness to buy particular products
or services. The customer value is defined as the ‘utility that is originated from the
!
4!
Journal of International Business and Management (JIBM)
https://rpajournals.com/jibm
!
expected performance and perceived quality of a product or service that immediately and
directly affects customer loyalty’ (Wang et al, 2004). In addition, several studies proved in
their particular research fields and industry that the customer’s perceived value has a
positive relationship and strong influence on customer loyalty (Wang et al, 2004; Gruen et
al, 2006; Liu et al, 2011). Hence, it is hypothesised that:
Hypothesis 3: There is a positive relationship between customer value and customer
loyalty in the restaurant industry of Kuwait.
Methodology
A survey was conducted to collect primary data through the use of a questionnaire, which
was adapted and modified from Chereang, (2007). The questionnaire has been prepared
based on five sections: section A included information on the demographic profile of
participants; section B included fourteen items relating to the perception of service quality;
section C included fourteen items about customer value relating to the service industry;
section D included eight items relating to restaurant brand image; and section E included
four items relating to customer loyalty towards restaurants in Kuwait. The questionnaire
was also pre-tested before it was distributed among 150 individuals in Kuwait; however,
there were only 100 useable questionnaires out of those returned because twenty-three
were incomplete and the rest were not returned. The random sampling method was applied
to those individuals asked to complete the questionnaire. The characteristics of the data
were defined through the descriptive analysis. The data from the participants has been
summed up in a direct and comprehensible manner and subsequently analysed based on the
demographic profile of the participant, for example: age, gender, marital status, race,
occupation, personal income (monthly) and education level. To test the hypothesis,
Pearson’s Correlation coefficient has been applied to determine the relationships between
the variables and establish whether the results met the hypotheses.
Results and Discussion
Respondents’ Demographic Profile
Table 1 below provides the demographic profiles of the respondents.
Table 1: Respondents’ Demographic Profile
Variables
Values
%
Age
Below 20
0
21-30
49
31-40
37.4
Above 40
13.6
Gender
Male
83
Female
17
Marital Status
Married
76
Singe
24
Education level
Undergraduate
81
Masters/MBA
29
MPhil/DBA/PhD
0
Marital Status
Married
76
Singe
24
Occupation
Public Sector
14
Private Sector
36
Unemployed
34
Students
16
Monthly Income
Above $10000
21
$3000 - $9900
74
Below 1000
5
!
5!
Journal of International Business and Management (JIBM)
https://rpajournals.com/jibm
!
Reliability Test
A reliability test was conducted to measure the internal consistency and reliability of the
results based on the value of the Cronbach’s Alpha. The acceptable score of a Cronbach’s
Alpha coefficient value is 0.70 (Nunnally and Bernstein, 1994). If the Cronbach’s Alpha
(α) coefficient value is closer to 1, the higher value is the indication of the internal
consistency. Hence, it denotes that the items in the particular variables are highly inter-
correlated. The results for the reliability test have been outlined in Table 2 where the
Cronbach’s Alpha values are varied from between 0.760 to 0.842. The variation indicates
the scales used in this study are consistent and reliable.
Table 2: Results of the Reliability Test
Variables
Items
Cronbach’s Alpha
Service quality
24
0.844
Customer value
14
0.832
Brand image
8
0.760
Customer loyalty
4
0.826
Pearson’s Correlation Analysis
The relationship between the independent and dependent variables have been outlined in
Table 3. According to Pearson’s correlation test results, it has been identified that there is a
positive and significant relationship between the independent variable such as service
quality, customer value and brand image and the dependent variable customer loyalty in
the restaurant industry in Kuwait.
Table 3 Pearson’s Correlation Test Results
Variables
Customer
loyalty
Service
quality
Customer
value
Brand image
Customer loyalty
1
0.924
0.854(**)
0.860(**)
Customer value
0.854(**)
1
Brand image
0.860(**)
1
Service quality
0.924(**)
1
Hypothesis 1: The quality of the service in restaurants creates a positive relationship and
increases customer loyalty.
The P value of the 0.0001 obtained, outlines the results that service quality is positively
and significantly related to the loyalty of the customers or guests in the restaurant industry
of Kuwait, since any P value less than 0.005 (p<0.05) is an indication of the significant and
strong relationship between independent and dependent variables. According to the results,
the positive Pearson Correlation value of 0.924 represents that the service quality has a
positive relationship with customer loyalty. Hence, Hypothesis 1 becomes supported
according to the Rule of Thumb of Guildford where an r value of 0.924 outlines a very
strong correlation between service quality and customer loyalty. This finding is supported
by Yee, Ling and Leong (2015), Lee, (2011) and Lei et al, (2009) where they also
identified strong relationships between the service quality and customer loyalty in the
industry where they conducted research.
!
6!
Journal of International Business and Management (JIBM)
https://rpajournals.com/jibm
!
Hypothesis 2: There is a positive relationship between a restaurant’s brand image and
customer loyalty.
The P value of the 0.0001 obtained outlines that customer value is positively and
significantly related to the loyalty of the customers or guests in the results industry of
Kuwait since any P value less than 0.005 (p<0.05) is an indication of the significant and
strong relationship between independent and dependent variables. Since, the positive
Pearson Correlation r value is 0.854, we can say that this represents a positive relationship
between customer value and customer loyalty. Hence, Hypothesis 2 is supported according
to the Rule of Thumb of Guildford where an r value of 0.854 outlines a very strong
correlation between customer value and customer loyalty. This result is consistent and
supported with the findings of Yee, et al, (2015), Chreang (2007) and Wang et al. (2004).
Hypothesis 3: There is a positive relationship between customer value and customer
loyalty in the restaurant industry of Kuwait.
The P value of the 0.0001 obtained outlines that brand image is positively and significantly
related to the loyalty of customers or guests in the restaurant industry of Kuwait since any
P value less than 0.005 (p<0.05) is an indication of the significant and strong relationship
between independent and dependent variables. Since, the positive Pearson Correlation r
value is 0.860, we can say this represents that there is a positive relationship between brand
image and customer loyalty. This result is also supported from the research works of Yee
et al, (2015), Kim and Lee (2010) and Lennon, (2009).
Conclusion
The restaurant industry has been facing tremendous competition across the world, both in
developed and developing countries. Therefore, customer loyalty is vital for future growth.
However, customer demand can change overnight and therefore organisations have to put
in the effort so that customers want to remain loyal. The findings of this study reveal that
the there is a strong and positive relationship between customer loyalty, and service
quality, brand image and customer value. The findings of this study have shed light on why
customers go to a particular restaurant; if the customer has a good experience in the
restaurant, is treated with respect, and provided with good food and a quality service, this
will hopefully result in customer loyalty. It is therefore important to support restaurant
organisations and encourage them to improve their quality of service, reflect a better brand
image and deliver great service to their customers. The management of the restaurants can
make best use of this information to identify the ways to retain existing and loyal
customers and attract new ones.
Limitations and Direction for Future Research
Every research study has some limitations. Hence, this study has also had limitations, such
as the level of participants due to using the simple random sampling method. Therefore,
the sample cannot be typical for the target population and there is a limited possibility of
the generalising of the present findings. However, the findings of the study may lay the
groundwork for future studies to include the larger population from various occupations in
Kuwait.
!
7!
Journal of International Business and Management (JIBM)
https://rpajournals.com/jibm
!
References
! Aldousari, A. A., & Elsayed, I. M. (2018). Factors differentiating between concentric and
sprinkled multiple-patronage shoppers in Kuwait. Management & Marketing, 13(1), 730-
747.
! Brakus, J. J., Schmitt, B. H., & Zarantonello, L. (2009). Brand experience: what is it? How is it
measured? Does it affect loyalty? Journal of marketing, 73(3), 52-68.
! Casaló, L. V., Flavián, C., & Guinalíu, M. (2008). The role of satisfaction and website usability in
developing customer loyalty and positive word-of-mouth in the e-banking
services. International Journal of Bank Marketing, 26(6), 399-417.
! Choi, S., & Mattila, A. S. (2018). The Effect of Experience Congruity on Repurchase Intention:
The Moderating Role of Public Commitment. Service Science, 10(2), 124-138.
! Chreang, S. (2007). Evaluating Service Quality, Customer Value, Corporate Image, Customer
Satisfaction and Behavioral Intentions for Mobile Services in Cambodia. Unpublished
Master’s Thesis, National Cheng Kung University, Tainan, Taiwan.
! Fandos Roig, J. C., García, J. S., & Moliner Tena, M. Á. (2009). Perceived value and customer
loyalty in financial services. The Service Industries Journal, 29(6), 775-789.
! Gruen, T. W., Osmonbekov, T., & Czaplewski, A. J. (2006). eWOM: The impact of customer-to-
customer online know-how exchange on customer value and loyalty. Journal of Business
research, 59(4), 449-456.
! Kandampully, J., Zhang, T., & Bilgihan, A. (2015). Customer loyalty: a review and future
directions with a special focus on the hospitality industry. International Journal of
Contemporary Hospitality Management, 27(3), 379-414.
! Kuusik, A. (2007). Affecting customer loyalty: Do different factors have various influences in
different loyalty levels?
! Kwon, W. S., & Lennon, S. J. (2009). What induces online loyalty? Online versus offline brand
images. Journal of Business Research, 62(5), 557-564.
! Lin, H. H., & Wang, Y. S. (2006). An examination of the determinants of customer loyalty in
mobile commerce contexts. Information and Management, 43(3), 271-282.
! Liu, C. T., Guo, M.,Y., & Lee, C. H. (2011). The effects of relationship quality and switching
barriers on customer loyalty. International Journal of Information Management, 31, 71-
79.
! Kaufman, B. E. (2015). Market competition, HRM, and firm performance: The conventional
paradigm critiqued and reformulated. Human Resource Management Review, 25(1), 107-
125.
! Kim, Y. E., & Lee, J. W. (2010). Relationship between corporate image and customer loyalty in
mobile communications service markets. Africa Journal of Business Management, 4(18),
4035-4041.
! Lai, F., Griffin, M., & Babin, B. J. (2009). How quality, value, image, and satisfaction create
loyalty at a Chinese telecom. Journal of Business Research, 62, 980-986.
! Lee, Y. C. (2011). m-Brand loyalty and post-adoption variations for the mobile data services:
Gender differences. Computers in Human Behavior, 27, 2364-2371.
! Lee, H. S. (2010). Factors influencing customer loyalty of mobile phone service: Empirical
evidence from Koreans. Journal of Internet Banking and Commerce, 15(2), 1-14
! Lobo, M. G. (2017). Handbook of Pineapple Technology: Production, Postharvest Science,
Processing and Nutrition. John Wiley & Sons.
! Mahajan, V., Misra, R., & Mahajan, R. (2017). Review on factors affecting customer churn in
telecom sector. International Journal of Data Analysis Techniques and Strategies, 9(2),
122-144.
! Markovic, S., Iglesias, O., Singh, J. J., & Sierra, V. (2015). How does the perceived ethicality of
corporate services brands influence loyalty and positive word-of-mouth? Analyzing the
roles of empathy, affective commitment, and perceived quality. Journal of Business
Ethics, 1-20.
!
8!
Journal of International Business and Management (JIBM)
https://rpajournals.com/jibm
!
! Nwakuna, O. E. U. (2017). Study on Customer Relationship Management in Growing Companies
in Emerging Economies. Canadian Social Science, 13(5), 54-59.
! Rahimi, R., Köseoglu, M. A., Ersoy, A. B., & Okumus, F. (2017). Customer relationship
management research in tourism and hospitality: a state-of-the-art. Tourism
Review, 72(2), 209-220.
! Rihova, I., Buhalis, D., Gouthro, M. B., & Moital, M. (2018). Customer-to-customer co-creation
practices in tourism: Lessons from Customer-Dominant logic. Tourism Management, 67,
362-375.
! Thompson S.H Teo , Paul Devadoss , Shan L. Pan. (2006). "Towards a holistic perspective of
customer relationship management (CRM) implementation: A case study of the Housing
and Development Board, Singapore". Decision Support systems, 42: 1613-1627
! Venetis, K. A., & Ghauri, P. N. (2000). The importance of service quality on customer retention:
An empirical study of business service relationships (pp. 215-224). Proceedings of the
Marketing in a Global Economy Conference, Buenos Aires
! Wang, Y., Lo, H. P., & Yang, Y. (2004). An integrated framework for service quality, customer
value, satisfaction: Evidence from China’s telecommunication industry. Systems
Frontiers, 6(4), 325-340.
! Woodcock, N., Green, A. and Starkey, M. W. (2011), “Social CRM as a business strategy,”
Journal of Database Marketing & Customer Strategy Management, Vol.18, pp. 50-64."
! Zeithaml, V. A., Berry, L. L., & Parasuraman, A. (1996). The behavioral consequences of service
quality. Journal of Marketing, 60, 31-46.
!
