SERVICE QUALITY PERCEPTIONS IN FAST-FOOD RESTAURANTS IN CHINA

SERVICE QUALITY PERCEPTIONS IN FAST-FOOD RESTAURANTS IN CHINA Hong Qin, University of North Texas, P.O. Box 305249, Denton, TX 76201, USA Email: Hong.Qin@unt.edu; Tel: 940-565-3174 ABSTRACT As a result of intense competition fast-food restaurants are increasingly recognizing the importance to continuously improve their service quality to retain and attract customers. This study explores the potential dimensions of service quality in fast-food restaurants (FFRs) in China. The FFR success model is developed and empirically examined using the original five dimensions in the SERVPERF scale with the additional dimension of recoverability to measure service quality. The findings indicate that recoverability, tangibles, reliability and responsiveness are four most significant dimensions of service quality in the fast-food industry in China. Keywords: China, Fast-food Restaurants, Recoverability, Service quality INTRODUCTION With the global growth of the fast food industry and the consecutive swelling of the Chinese economy, fast food is becoming increasingly important in China. The total revenue from fast food in China in 2006 rose to almost 35 billion dollars in 2006 with an increase of 27.2% over 2005 [1]. Some fast food restaurants are benefiting from this opportunity, such as McDonald s who is going to open another 125 store in this year and as many as 150 in 2008 in China [19]. There are several academic studies that address service quality, customer satisfaction and behavioral intentions in fast-food restaurants [4] [9] [13] [17] [26]; to the best of our knowledge, however, most of the prior studies focused on the U.S. market or European market and none of them conducted the contextualized research in this field in China. This study fills a void in the service quality literature by investigating this issue. It develops a fast-food restaurant success model by examining the key attributes of service quality in the fastfood industry in China. Specifically, another potential dimension, recoverability, is incorporated along with SERVPERF into our survey instrument. The remainder of this article is organized as follows: the next section lays out the theoretical foundations for our measurement of the associated constructs. Section III proposes the research methodology, including a discussion of scale development, data collection, and applied statistical tools. Section IV describes data analysis and model testing. Section V discusses the research results and managerial implications, and the final section (VI) addresses limitations and possible future work. 1821

THEORETICAL FOUNDATION The importance of service quality is substantially addressed in the fast-food management literature. Poor service quality increases customer dissatisfaction and the likelihood that customers dine at a competitor and/or become an active champion in persuading others to go elsewhere [9]. Hence, it is crucial for service managers to understand how customers perceive the service they provide, and what components might determine the nature of the perceived service quality in FFRs in China. Measurement of Service Quality A widely used instrument of service quality in the United States is [23] 22-indicator SERVQUAL scale. It measures service quality by the gap between customers expectations for the service and their perceptions of the providers actual performances [22] [23]. Five dimensions of service quality perceptions include tangibles, reliability, responsiveness, assurance, and empathy. The SERVQUAL instrument was subsequently applied to measure service quality in a variety of business settings [3] [7] [8] [10] [12] [15] [17]. The criticism of the SERVQUAL instrument include the use of gap scores, the overlap among five dimensions, poor predictive and convergent validity, the ambiguous definition of the expectation construct, and unstable dimensionality [2] [5] [25] [28]. Accordingly, some other scales were created, such as the SERVPERF model which discarded the expectations portion in the SERVQUAL model [6]. This performance-only measure is used and suggested by many scholars in various industries [9] [14] [16] [24] [27]. This study will adopt the SERVPERF scale. In addition to the five dimensions of service quality by the SERVPERF model, another dimension, recoverability is incorporated in the proposed FFR success model. It is defined as the ability to deal with service failures. Previous findings indicate that failure itself doesn t necessarily lead to customer dissatisfaction; however, failure to effectively handle recoveries can lead to lost customers and negative word-of-mouth [11] [18]. Four indicators of recoverability were modified from the mass service environment [21]. Therefore, six dimensions are proposed significant to measure perceived service quality in fast food restaurants in China, which include tangibles, responsibility, responsiveness, assurance, empathy, and recoverability, as shown in Fig. 1. Tangibles Assurance Reliability Service Quality Responsiveness Empathy Recoverability Fig.1. FFR Success Model 1822

METHODOLOGY The original 22 items in the SERVPERF were used, including another four items for recoverability. Minor customization in the wording of indicators was conducted in an effort to better fit the FFRs context in China. Each item was rated by respondents on a seven-point Likert scale from number 1 with the verbal statement Strongly Disagree to number 7 with the verbal statement Strongly Agree. This survey was administered to the college students in a large university in China. College students were selected as subjects because they dine at FFRs frequently and are qualified to evaluate service quality in FFRs. Respondents Profiles A total of 182 responses were received, and 11 of them were determined to be unusable. Of the 171 usable responses, 46.2% were completed by male respondents, and 53.8% by female. More than 72.5% of the respondents were between 21 and 25 years old. This is in consistence with our use of college students as the sampling frame. Reliability and Validity Assessment The construct validity of the newly developed scale was assessed by conducting exploratory factor analysis first. Factor analysis was used for each construct and then for the six dimensions of service quality together. Any item with a loading less than 0.50 on any latent variable was deleted. Most of the remaining 13 items have factor loadings above.6 with cross loadings less than.4 after rotation according to the results of exploratory factor analysis. Four dimensions from the exploratory analysis results include reliability, recoverability, tangibles, and responsiveness. This, however, doesn t mean the other two underlying dimensions empathy and assurance are not important for Chinese customers. This instead indicates that it is necessary to modify the items to measure these two dimensions when applying the SERVPERF scale in China. In addition, Cronbach s alpha was used to assess reliability. All the Cronbach s values are greater than the cutoff value of 0.70 [20]. This indicates that all the indicators measure their respective latent constructs reliably. Discriminant validity is supported because all the Cronbach s Alpha values are higher than the correlation coefficients. Model Fit Assessment A second-order Confirmatory Factor Analysis was used to test the relationships between latent variable service quality and its dimensions. The standardized factor loadings indicate that all the proposed dimensions have a significant and positive relationship with service quality. The goodness-of-fit indices support the acceptability of this second-order measurement model. The significance of recoverability substantiates the modification of the SERVPERF instrument in the fast food setting. 1823

DISCUSSION This current study develops a FFR success model in the fast food industry in China. First of all, it posits an instrument to evaluate the perceived service quality. And then, this instrument is empirically tested using the data from a survey of college students who dine at fast food restaurants in China. Meanwhile, the relationship between the perceived service quality and its dimensions is examined. In order to do these, both exploratory factor analysis and confirmatory factor analysis are employed. The findings indicate that the modification of the SERVPERF instrument in a specific setting in different cultures is necessary. The significance of recoverability in this study supports our primary modification of the SERVPERF instrument in the fast food industry. Assurance and empathy were removed according to the results of exploratory factor analysis in this study. This, however, doesn t mean these two dimensions are not important in China; instead, it indicates that the minor modification of the SERVPERF scale when applied in a different country such as China is not appropriate; Chinese consumers may have unique characteristics which are not captured by the SERVPERF scale. Therefore, when applied to a particular industry in any country other than the United States, the SERVPERF should be modified [5] [21]. Reliability, recoverability, tangibles and responsiveness are all significant dimensions of perceived service quality in fast food restaurants in China. This result suggests some managerial implications for fast food restaurant managers. First of all, it is critical to provide reliable and responsive services for fast food restaurants. Customer relationship management is important in China because reliability and trust are prerequisite for the successful business. In addition, the appealing physical facilities have a significant effect on customers perceptions of the service quality in fast food restaurants. Western style fast food franchises were famous and attractive by virtue of their uniform image and facilities when they first entered into the Chinese market in 80 s. Finally, the recovery strategies in fast food restaurants play a more and more important role on the perceptions of service quality which might influence customer satisfaction and behavioral intentions, even company financial performance. Therefore, it is critical for fast food restaurants to track down customer s feedback and complaints over time. LIMITATIONS Several limitations of this study should be acknowledged. First, the generalizations of the findings should be cautious in other industries. The instrument employed is particularly designed for the fast food industry. Selection of college students as our sample is another limitation. Although our respondents dine at fast food restaurants several times within only one week, an on-site survey can provide results more reliable and more generable. Third, most of the dimensions employed in this study were adapted from the existing scales created in the context of the United States; the minor modification might not be enough when applying them to a different culture like China. Therefore, more exploratory analysis is necessary in this area. Further research will focus on the development of service quality in emerging markets. And the comparison of the service quality across different countries is another possible research. As the global economy develops quickly, more and more fast food franchises are entering into a global market. The comparison across different cultures enables fast food mangers to understand the differences between different consumers and take actions more effectively and efficiently. 1824

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