2011 International Conference on Sociality and Economics Development IPEDR vol.

10 (2011) (2011) IACSIT Press, Singapore

Factors influencing customer loyalty towards fast food restaurants

Hossein Nezakati1*, Yen Lee Kuan2 and Omid Asgari3
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Department of Management and Marketing, Faculty of Economics & Management, Universiti Putra Malaysia (UPM) 2 MBA student, Graduate school of Management (GSM), Universiti Putra Malaysia (UPM) 3 Founder & CEO, Delta Consulting Group (DCG), Tehran, Iran.

Abstract. The fast food industry is on in an upward trend. The demand for fast food product is now
growing as it is convenience which suits the lifestyle of customers. With the changing lifestyle of Malaysian consumers, more educated people and affluent, people tend to eating-out especially in fast food restaurants. Along with the heavily promote through media and information technology exposure, customers has variety choice of fast food pattern and restaurants. Therefore, local fast foods restaurants have to be sensitive to these changing trends and to be innovative and get prepare to change accordingly to avoid from losing their existing and future potential customers. The aim of this study is to examine how the respondents perception will be influenced by factors of customer loyalty towards preferred fast food restaurants. With this important information, marketers or strategy planner can formulate or develop an appropriate strategy that able to outdo the competitors. Furthermore, they also can identify which factors will influence customer loyalty most and made innovative changes to keep track and add value to their fast food restaurants. Besides, this study will provide important information for Malaysia local fast food restaurant business to become more competitive in the current business practices circumstances. It is because this study will provide respondents perception towards their preferred restaurants. The findings of this study indicated that product quality, customer satisfaction and brand trust is the dominant variable that drives the customer loyalty to preferred fast food restaurants.

Keywords: fast food industry, consumer loyalty, halal food.

1. Introduction
Malaysia is a multiracial and multicultural country that made up by several dominant groups such as Malay, Chinese and Indians. Malaysia is a rapidly developing country in Asia and economic growth is projected to moderate to 5.2% in 2011 [1]. According to the World Bank Group, Malaysia GDP per capita is US dollars 14, 215, which adjusted by purchasing power parity. This shows that the purchasing power and standard of living of the population in Malaysia is growing adequately. Consequently, Malaysians allocated largest amount of household expenditures to their food budgets. Owing to the changing lifestyle of Malaysian households, the trend towards greater consumption of take-away food outside the home is increasing. This gave birth to fast food sector. According to Bender and Bender (2001), fast food is a general term used for a limited menu of foods that lend themselves to production line techniques and that are typically hamburgers, pizzas, chicken or sandwiches [2]. According to ACNielsen (2005), there is 59% of adult population that eats at take-away restaurants at least once a week. This is due to convenience concept of fast food restaurant match the busy lifestyles and ease of access to a wide variety of fast food restaurants in the markets [3]. Fast food is now available at restaurants, shopping malls, airports, schools and universities, petrol stations as well as in hospital cafeterias. The fast food outlets that offer quality and variety western menus, modern comfortable ambience with air-condition and highly efficient catering services successfully created consumers awareness. Fast food industry origin from America, it began with

* Hossein Nezakati (Ph.D.), Tell; +60173724245; fax: +60389486188 E-mail address: hossein@econ.upm.edu.my, dr.nezakai@gmail.com
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selling hot dog and ham mburger in so outhern Cali ifornia. Now fast food r w, restaurants ex xtend to eve region of ery f the countrie [4]. Acco es ording to Inv vestment An nalysis (200 Malaysi fast food industry beg in 1963, 09), ia gan , when A&W opened up its first outle at Kuala L W et Lumpur Batu Road which now known as Jalan Tu u h n uanku Abdul l Rahman. M Malaysia fast food indust witnessed growth on after oth western f try d nce her fast food cha ains such as s Kentucky F Fried Chicke (KFC), Burger King, Mc Donald and Pizza Hut were began their operations in en d, o n Malaysia [5 5].

2. Mater rials and Methods

With th rising of affluence and education le he d evel, more women involv w ving in the w working force which lead e d to lack of time to prepar daily meal for their fa re ls amily. Besid the numb of people dining out is increasing des, ber e i g ement away from extend family ho ded ouseholds. Therefore, fas food restau T st urant might be their best t due to move choice to d dine in beca ause of the reasonable price, conv venience, quick services comfortab with airs, ble condition a etc. Besi and ides, fast foo restauran are partic od nts cularly well liked by yo oungsters, wh in turned ho d influence th parents d heir decision of w which restaur rants to visit. As we know Malaysia is a multieth w, a hnic society. . In Malaysia around 60 out of th 28,274,72 population is Malay o Muslim (I a, 0% he 29 n or International Data Base, l , 2010). Mea anwhile, Malaysia is a Mu uslim-majori country since they are 60% Malay ity s e ysian will be demand for e r Halal food products. T Thus, local an western f food rest nd fast taurants start to segme Muslim markets. For ted ent m r example, M McDonald in Malaysia are certified Halal. To satis Halal cer e sfy rtification req quirements, items served i d in Malaysia McDonal are witho pork. Th an ld out herefore, most of the fa food resta ast aurants in Malaysia are M e certified Ha (Debbie, 2007). Ob alal bviously, fas food resta st aurants that p provide Halal food will be the best t choice for t those Muslim to dine in as well as n m n non-Muslim Unfortunat m. tely, the abil of weste fast food lity ern d restaurant t segment Muslim mar to rket created a huge im d mpact to loca fast food restaurant in Malaysia al a th resulting th are more dominant in the market Under th 8 Malay hey e n ts. he ysian Plan, th governme has been he ent n trying to pro omote local fast food ind dustry by off fering financi and traini support. Besides, the government ial ing t estimates to establish a o around 50 ne franchise in future [6]. In fact, rivalry in t fast food industry is ew es the d s getting mor intense wit the arising of more fas food comp re th g st panies and ot ther food ind dustry such as traditional a l restaurant w which offer f fresh, variety of tasty foods and full services. To compete in the industr local fast y l o n ry, t food restaur rant must keep track with the custom h mers, improve and change according t their custo e e to omers need. . Meanwhile, local fast food restaur , rants should increase their customer loyalty an market sh r nd hare through h customer re epurchase. D to the increase rivalr in fast foo industry, therefore, th Due ry od here is an urg gent need to o investigate the factors influence cu ustomer loy yalty to their preferred f r fast food re estaurants wh hich in turn n atronage rate of their pre es eferred restau urants. The purpose of th study was to develop a theoretical p his s l increases pa framework to examine t Factors i the influencing c customer loy yalty towards fast food re s estaurants in Malaysia as s shown in Fi igure 1.

Fig. 1 Conceptual Framework of Customer L 1: o Loyalty

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The research framework derived from [6], [7] and [8]. Two different consumer types will perceptions towards the factors of brand loyalty and seven factors that influence customer brand loyalty namely brand name, product quality, price, style, store environment, promotion and service quality [9]. There are nine factors construct loyalty; involvement, functional value, price worthiness, emotional value, social value, brand trust, customer satisfaction, commitment and repeat purchase. However, only brand trust and customer satisfaction is tested in this research [10]. These two models are selected because it was an important tool to better understand the customer loyalty. Whereas, other related literature are used as supporting references to strongly support the conceptual model of customer loyalty.

2.1. Hypothesis of the Study

H1: Product quality has the significant influence on customer loyalty to their preferred fast food restaurants. H2: Product attribute has the significant influence on customer loyalty to their preferred fast food restaurants. H3: Brand name has the significant influence on customer loyalty to their preferred fast food restaurants. H4: Store environment has the significant influence on customer loyalty to their preferred fast food restaurants. H5: Service quality has the significant influence on customer loyalty to their preferred fast food restaurants. H6: Promotion has the significant influence on customer loyalty to their preferred fast food restaurants. H7: Price has the significant influence on customer loyalty to their preferred fast food restaurants. H8: Brand trust has the significant influence on customer loyalty to their preferred fast food restaurants. H9: Customer satisfaction has the significant influence on customer loyalty to their preferred fast food restaurants.

2.2. Research method

According to Babbie (2008), purposes of research divide into exploration, description and explanation [11]. This study only conducts exploration and description research. Exploration research is conducted to explore a topic which is relative new or examines a new interest. This study chooses to use exploration research because fast food industry is in an upward trend together with government support. Thus, fast food will be the potential market for entrepreneurs. In the other hand, most of the researchers examine the relationship between loyalty with internet purchase, sportswear, newspaper and etc. There is less or limited research conducted in fast food industry with customer loyalty. Besides, this study also used description research. Description research is used to describing situation and events. This study aims to describe how the factors of loyalty influence the customer to be loyal to their preferred fast food restaurants. There are 230 self administrated questionnaires were distributed direct distribution to respondents and small portion of questionnaire are distributed through email. Before the respondents answering the questionnaire, researcher will briefly explain objective to conduct this survey. Brief explanation will be given to respondents face to face when self-administered questionnaire is distributed. There were 230 of questionnaire being distributed to the respondents and there were 217 returned back. From the 217 questionnaires returned, only 196 questionnaires were found to be free of response error and suitable for data analysis. In this project paper, non-probability sampling is used to conduct the survey. According to Babbie (2008), non-probability sampling refers to any technique in which samples are selected in some way not suggested by probability theory. Meanwhile, the sample in this study is mainly from members of the population who are conveniently available to provide information. Because of limited time and cost, this technique enable researcher to gather information quickly and efficiently. Questionnaires are distributed to respondents at Klang Valley areas and some of the universities in Selangor state. The questionnaire is distributed to respondents at Klang Valley areas during weekends. In the other hand, questionnaire will be distributed to universities students during weekdays. The questionnaire that had completed designed was being pre-tested to determine the feasibility and reliability of the questionnaire. There are 30 respondents been selected to complete the pilot test. The pilot test conducts twice which means the respondents need to answer the questionnaire twice to determine the feasibility and reliability of the questionnaire. The
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questionnaire will be distributed to respondents two or three days after they completed the first questionnaire research. Finally, the data collected will be analyzed using SPSS software analysis.

3. Result and Discussion

The main purpose of this study is to investigate how respondents will be influence by factors of customer loyalty. Throughout this research, three objectives have been answering. First, to examine consumers preferred fast food restaurants. Most of the respondents prefer to dine at western fast food restaurants. There are 161 respondents prefer western fast food restaurant while 35 respondents prefer local fast food restaurants. Obviously, western fast food restaurant still dominant in Malaysia fast food markets which create a huge impact to local own fast food restaurants. To compete with other competitors in the market, local fast food companies has to reformulate their strategic in order to keep track with current customer trends. Second, to examine the relationship of product quality, product attribute, brand name, store environment, service environment, promotion, price, brand trust, and customer satisfaction with customer loyalty. Based on the Pearson correlation result, it indicates that all the entire nine independent variables are significant at 0.01 levels. Meanwhile, the nine independent variables (product quality, product attribute, brand name, store environment, service quality, store environment, promotion, price, brand name and customer satisfaction) have a positive relationship with customer loyalty. The positive relationship means that, the higher the independent variables (product quality, product attribute, brand name, store environment, service quality, store environment, promotion, price, brand name and customer satisfaction), the higher the customer loyalty toward preferred fast food restaurants. From the analysis, product quality (0.586) has a strong positive relationship with customer loyalty while promotion (0.285) and brand name (0.219) has a weak positive relationship with customer loyalty. Other variables such as product attribute (0.407); store environment (0.326), service quality (0.300), price (0.361), and brand trust (0.455) and customer satisfaction (0.385) has a moderate positive relationship with customer loyalty. Third, to identify which factor is the dominant variable that influences the customers to be loyal to their preferred restaurants. Multiple regressions were used to determine the dominant variables that influence customer loyalty. The multiple regression result shows that, there are three variables, namely product quality, customer satisfaction and brand trust has contribute to a significant positive influence on customer loyalty towards preferred fast food restaurants. These three variables (product quality, customer satisfaction and brand trust) are significant at 0.05 significant values the findings indicate that Malaysian consumers are concern on product quality of a fast food restaurant. To be loyal to a fast food restaurant, they will consider how the fast food restaurants meet their quality expectation. If the perceived their preferred restaurants produce quality food that meet their expectation, they will loyal to that restaurants. From result analysis, customer satisfaction has a significant positive relationship with customer loyalty. The Malaysian consumers seem to be trust with their preferred fast food restaurants. Customer loyal to their preferred fast food restaurant because they believe the restaurant and product meets their expectations. Brand trust is the central construct for any long-term relationship. Thus, if the customers trust the preferred restaurants, it may be an important contributor that drives to long-term loyalty. Under the effort of Malaysia government to promote and encourage local own fast food restaurants, a number of local fast food successfully create consumer attention. The findings present a big gap between fast food industries. It is because customer aware of local fast food but they are not loyal. Therefore, understand the important of customer loyalty is relatively important in creating loyal patron customers. The findings of this study indicated that product quality, customer satisfaction and brand trust is the dominant variable that drives the customer loyalty to preferred fast food restaurants. Based on the finding, marketers can examine what are the strategies that enable western fast food restaurant dominant in Malaysia market. Besides, marketers also can concern with Secret Recipe management and strategies planning. Since Secret Recipe able to stay competitive with western fast food, other local own fast food companies or marketer can refer to Secret Recipe successful strategies and formulate an appropriate strategies to compete in the industry. As a result from the study, is hoped that the result could be benefit for future researchers or marketers to better understand how the customer loyalty works, which it is also a part of consumer behavior. Besides, the result finding is relatively important for local fast food companies to compete in this competitive edge by creating
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customer loyalty and followed by repeated purchase in future. As a conclusion, to keep track with consumer purchasing behavior, it is essential to identify what is the main factors that may influence customer loyalty. Consumer purchasing behavior will change time to time but if marketers or businesses able to make their customer loyal to their product, for sure it will create a high return. To stay competitive in the market, customer loyalty plays an important role for the future success of this industry. Knowing the dominant factors that may influence the customer loyalty towards preferred fast food restaurant enable marketers to formulate or developing better marketing strategies to make their customer loyal patron to local fast food. Researchers hope that this study can be used as a guideline for local fast food restaurant to enhance their customer loyalty and consumer repeat purchase intention in future.

4. References
[1] Suzy, Malaysian Economic Outlook. http://www.mier.org.my. , 2010, Accessed on 16 January, 2011. [2] Bender, D. A. and Bender, A.E. Benders Dictionary of Nutrition and Food, 2001. [3] AcNielsen, Consumers in Europe-Our Fast Food/Take Away Consumption Habits. http://www.acnielsen.com. Accessed on 17 January, 2011 Schlosser, E. 2000. Fast Food Nation. http://www.nytimes.com. , 2005, Accessed on 15 January, 2011. [4] Investment Analysis, Roy Allen @ Mr. A & W. http://investhunt.com/learn-from-the-best/roy-allen-mr-aw/, 2009, Accessed on 29 January 2011. [5] Opportunity Malaysia, Franchising Market. http://www.malaysiamission.com/. , 2005, Accessed on 15 January 2011. [6] Lau, M. M., Chang, M. s., Moon, k. and Liu, W. S. The Brand Loyalty of Sportswear in Hong Kong, Journal of Textile and Apparel, Technology and Management, 2006, pp.12, 94 107. [7] Wong, F. Y., and Yahyah, S. Influence of Brand Loyalty on Consumer Sportswear, International Journal of Economics and Management, 2(2), 2008, pp. 221 236. [8] Punniyamoorthy, and Prasanna, M. R. An Empirical Model for Brand Loyalty Measurement. Journal of Targeting, Measurement and Analysis for Marketing, 2007, p. 15. [9] Lau, M. M., Chang, M. s., Moon, k. and Liu, W. S. The Brand Loyalty of Sportswear in Hong Kong, Journal of Textile and Apparel, Technology and Management, 2006, pp. 12, 94 107. [10] Punniyamoorthy, and Prasanna, M. R. An Empirical Model for Brand Loyalty Measurement. Journal of Targeting, Measurement and Analysis for Marketing, 2007, pp. 222 233. [11] Babbie, E. Introduction to Social Research. 5th Edition, International Edition, 2008.

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