Does Word of Mouth Enthuse Customer Satisfaction? A Casual Dining Restaurant Perspective

Nainan Nawaz^*
*Correspondence: Nainan Nawaz, Professor, Department of Business Administration, IQRA University, Pakistan, Tel: +923126944113, Email:

Keywords

Customer satisfaction • Word of mouth • Service Quality • Restaurants

Background of the Study

Consumers have always valued opinions expressed directly to them. Marketers may spend millions of dollars on elaborately conceived advertising campaigns, yet often what makes up a consumer's mind is not only simple but also free: a word of mouth recommendation from a trusted source [1]. As consumers are overwhelmed by product choices, it tunes out the ever-growing barrage of traditional marketing; word of mouth cuts through the noise quickly and effectively [2]. The services industry research about customer satisfaction has been increased rapidly in current years [3]. This has been motivated through the growing development of the services business. Offering excellent service and growing customer satisfaction are extensively accepted as significant aspects important to the achievement of corporations in the catering, hotel, and tourism industries [4]. Restaurant and hotel suppliers must provide customers sheer satisfaction of service to overshadow other opponents and get an important place in the industry; through these services, the hotel providers can establish their customer's loyalty and generate constructive word of mouth [5]. Nowadays, with the markets getting more competitive and the working environment undergoing constant change, organizations have realized that they no longer face an expanding economic system with ever-growing demands; thus, every customer has gained a new value [6]. Customer satisfaction is considered a factor encouraging customers to use the service again [5].

Gap Analysis

These days due to increased employment of women outside the home and extensive lifestyle changes, the use of restaurant food and fast food is growing, which can provide an outstanding market for this industry [7]. On the other hand, competition is also increasing in restaurants. With growing competition between restaurants, attracting new customers can no longer guarantee profits and success, but retaining existing customers is of more importance [8]. A competitive environment provides customers with more substitutes to choose from. Thereby, they can select their favorite option from several alternatives Consequently, customer satisfaction is considered to be a vital factor for success, continuation, and profitability of the restaurants [9].

In Pakistan, fast food restaurants have rapidly increased over the last few years [10]. Not just the fast food restaurants have grown even the theme and fullservice food restaurants have changed as well. Because the way of living of customers have been changed drastically. Today, feasts are not planned as an occasion to eat in the restaurants. People love to go to restaurants and eat whatever they want to eat and enjoy. But the dire point here is the selection of good restaurants in service quality, price, and food quality. Most consumers go for the suggestion of their relatives and friends about a particular restaurant. Word of mouth is used for this type of communication among the consumer's relatives and friends. This ultimately affects customer satisfaction in the restaurants. Increasing hostility in the restaurants and the growing significance of customer support enforce the need to supply superior services and please customers. The ever increasing competition among the restaurants forces the management to provide quality services and retain their current customers instead of attracting new customers [8]. Because restaurants can generate profit from their current customers who are more important and spread positive word of mouth among new customers. In extremely viable markets, restaurants are highly afraid of consumers after service behavior. This has been acknowledged that purely satisfied consumers are not enough to protect customer reliability [11]. Thus, it makes it viable to know about the impact that word of mouth and service quality have on the satisfactory behaviors of customers in the restaurant industry.

Research Objectives

The research objectives of the study are as follows:

• To develop and clarify a conceptual model integrating word of mouth and service quality and their impact on customer satisfaction.

• To specify and test hypothesized relationships derived from the conceptual framework.

• To examine the conceptual framework empirically in the context of casual dining restaurants.

Research Significance

Growing competition in the restaurants and the increasing importance of consumer patronage impose the need to provide better services for satisfying the customers. Soriano [5] noticed that restaurant failures are partly due to management's lack of strategic orientation in measuring and focusing on customer satisfaction. Many studies have been conducted on how customer satisfaction powers customers to spread word of mouth according to their restaurant experience regarding the food, service quality, and environment [3]. But no apparent study has been conducted on the impact of word of mouth and service quality on customer satisfaction in casual dining restaurants. The effect of word of mouth on customer satisfaction level is still not been investigated. This research has considered this issue more carefully and has developed the framework for investigating the relationship between word of mouth and customer satisfaction in casual dining restaurants. And also, the relationship of service quality with customer satisfaction has been analyzed.

Literature Review

Word of Mouth

Repetitively, many researchers agreed upon the relative importance of word of mouth in the attitudes of customers [12]. In the form of purchase of products [13] and in decreasing the risk factors related to the purchase [14].

On the other hand, as the significance of word of mouth is accepted, significant research is lacking. Initially, forces that affect the power of word of mouth are not known by the researchers. However, some authors do some work on the communicator's part [14].

Brown and Reingen or the services industry [15,16] but on the power of recommendation, the relation of these two groups remains under-researched. For that reason, it has been recommended to consider how the power of word of mouth depends on the relation between the product maker and the communicator's personality as the referral receiver [17].

Next, the concern of measurement of word of mouth has been neglected traditionally. While measuring the word of mouth influence, researchers faced many problems because measuring word of mouth is not as easy as measuring the number of restaurants in a city. The effect of other factors such as reputation, satisfaction, dissatisfaction, and promotions campaigns are unknown as well. Most of the time, it is not viable to predict the reasons behind the customer's decision. Although, the actions of customers in response to word of mouth have not been investigated.

Word of mouth has a powerful impact on service and product awareness, primarily to modify the decision, significance ratings, and possibility of buy [18]. Word of mouth is significant in the last phases of the buying procedure to make customers comfortable and decreased post-purchase risk. Customers are extra willing to depend on impersonal interaction. Though, the crucial effect of word of mouth, which might referee these relations, is going on supposed danger. Risk is reduced through positive word of mouth in the customer purchase cycle through the valuation period [1]. Customer behavior before purchase explained the customer's natural perceived risk. However, Services are regularly indefinable and not possible to assess [19]. Inseparability, heterogeneity, intangibility, and perishability directs towards services loftydanger awareness [20]. Hence, as previously renowned, word of mouth is expected to be supplementary important in service perspective.

On the other hand, researches demonstrated the informational side of social control on customers' purchase decisions [13]. As compared to other market influential factors, research showed that word of mouth has more impact on customers' behaviors. Word of mouth's significance over the unbiased feature sources also has been observed [12]. Behavior, behavioral intentions, attitudes, perceptions, expectations, and awareness are the other conditions that have been influenced by word of mouth. During restaurant assortment, the purpose of consumption out in an exacting place is to enhance when positive suggestions are made and attitudes of affecting referent. In the administrative process, significant weight is given to these attitudes. It appears that suggestions are extensively hunted and specified, with feast and food being one of the essential types according to Talk track, a continuing review of American customers [20].

Though, research has been done into this significant area. An additional previous study has paid attention to what occurs when word of mouth is acknowledged or on the circumstances on which word of mouth would be mainly efficient in attracting a recipient's opinions or perceptions [13]. On its foundation, word of mouth is a procedure of individual authority, in which interpersonal interactions among a correspondent and a recipient can change the recipient's attitudes or behavior [6]. People's capacity to manipulate other person's attitudes is of typical concern of businesses searching for market services and products, particularly those advertising gifts that cannot be pursued former to buy [21].

Persons differ in their reaction to word of mouth shows that word of mouth is heterogeneous in the impact on customers. Through this, the understanding of marketers on the factors that boost word-of-mouth impact can be increased, and by doing so, they can conclude how to enhance and exploit word of mouth as a relational and promotional tool [22]. Word of mouth can take part in a significant task for service businesses [19]. Word of mouth is significant when services have high perceived risk or are complex as it is observed as a very convincing information resource as the correspondent is generally self-sufficient of the business giving service and not be seen to get straight as of promoting services [19]. Word of mouth has paid attention to its cohort suggested by most research [13]. Furthermore, research that contains word of mouth from a cohort viewpoint frequently applies word of mouth as simply a single of numerous valuable effects of further crucial assemble, for instance, service superiority. Brown and Reingen [15] new researches that emphasize word of mouth particularly.

Service Quality

Oh [23] proposed a model to verify the relationship between service quality, customer value, and customer satisfaction. The main focus of this study was to know the role of customer value concerning service quality and customer satisfaction. The relationship of customer value with service quality, customer satisfaction, performance, and the recommendation was examined by focusing on the intentional behaviors of post-purchase. The purchase decision's understanding was proposed in the integrating model. In this study, all the diversified factors related to customer satisfaction, service quality, and customer value have been included under a single framework so that they can be easily analyzed. All the different sights related individually to the models of service quality, customer satisfaction, and customer value regarding the purchase decision process of customers has been integrated into this study. In the proposed model, all the variables included in the purchase decision process have been identified. The causal relationship among the variables has been identified through the arrows. Apart from the relationship of customer value with perceived price, all the other variables contained a positive relationship with another. The data was collected from the customers of two luxurious hotels of US. Four week time period was taken for this study in which 3451 guests in total were contacted. Results of this study showed that the integrative model has the prospective ground for future implications in the models of service quality and customer satisfaction in the industry of hospitality. The results showed the relationship of perceived value with customer satisfaction and intention to repurchase. It also showed the link that how the perceived value influenced word of mouth through affecting customer satisfaction and intention to repurchase. The most important thing to be notified here is that all these results indicate the need to redefine the existing models of service quality, customer satisfaction, and customer value. The relationship between service quality and the perceived price was founded negative and insignificant in the study. As a summary, it was founded by the study that there was no significant relationship between service quality and perceived price as a combination of service quality and customer value can change the attitudes of customers in the direction of customer satisfaction. In consideration of customer satisfaction and service quality, customer value is a significant variable. For the evaluation of the firm's performance as well as the understanding of the purchase decision process, the proposed model can be used as a useful framework.

In another study Sureshchandar, Rajendran, and Anantaraman investigated the relationship between customer satisfaction and service quality. In the study, it was stated that customer satisfaction needs to be considered the same as service quality is considered. In order to find out the linkage between customer satisfaction and service quality factors of both the variables was determined by Sureshchandar. Five critical features of service quality and customer satisfaction were taken into consideration. From 43 banks of India, the data was collected. In total, 277 customers of different banks were taken as the sample. The random sampling technique was used for this purpose. The data was analyzed through the CFA (confirmatory factor analysis) approach. In order to check the uniqueness of customer satisfaction and service quality, five hypotheses were made. Another set covering five hypotheses was developed to analyze the strength between these two variables. The results of this study indicate a significant and positive relationship between service quality and customer satisfaction. It was concluded that the customers with a high perception of quality of service would be highly satisfied and vice versa.

Lee Park and Kwon [24] created a structural model to investigate the impact of service quality on customer satisfaction, customer loyalty, and service value. And after that, also check the relative influence on word of mouth and repurchase intention. Service quality's ultimate impact on customer loyalty was investigated in order to contribute something for the improvement of service quality of the Korean restaurants. In this study, the factor service quality was treated as an independent factor regardless of all the other factors and created in such a manner that had all the powers to influence the other factors accordingly. Service quality looked like a factor having different subdimensions related to it. Service quality was sub-divided into five different dimensions, which were sensory, responsiveness, empathy, assurance, and tangibles. The conceptual research model was used to analyze the impact of service quality on customer satisfaction, service value, customer loyalty, word of mouth, and repurchase intentions. In order to analyze the relationship between these variables, seven hypotheses were created. The data was collected from two famous family restaurants in Korea called Baenamugol and Nolboo. In order to collect the data perfectly, nine graduates of university (private) were hired. A total of 300 questionnaires were used in the study, but only 250 were recollected. But due to the incompletion of answers, 32 questionnaires were excluded, so; only 218 were taken as the sample of the study. Service quality was measured through the SERVQUAL instruments. The analysis was done by comparing the six-factor and single-factor model with the fit model showing the multi-dimensional of service quality. After that, a reliability test was applied to the six factors. Lastly, the CFA (Confirmatory factor analysis) was applied to all the factors. In the comparison step, in the beginning,a single-factor model was used, but it was failed to provide accurate results. Next, the two-factor model was applied then, but unfortunately, the results of this model were also not significant. So, in the end, the six-factor model was used. The Six-factor model allowed all the factors to correlate with each other in a good manner. And the results of this model were also significant and far better than the results of single and two-factor models. LISREL 8.5 was used to test the proposed model. The results of this study showed that service quality was critically defined by the dimensions of sensory, assurance, and tangibles. Empathy whereas considered the most significant dimension of service quality. According to the results, all these dimensions of service quality need to be included in the development of marketing strategy. The results of this study indicated the importance of service quality in restaurants. And the managers need to pay attention to this important factor of service quality.

A study was conducted by Tam [11] in order to know the effect of service quality, customer satisfaction, and perceived value on the intentions of post-purchase customers, specifically in the restaurants. Basically, this study also focus on the influence of customer satisfaction, service quality, and perceived value on the attitudes and actions of customers, as well as know the relationship among these factors. A Chinese restaurant located in North England was selected as the target market for this study. In 1998, over a time period of 3 consecutive weeks, the data was collected. A sum of a total of 200 questionnaires was used as the instrument for this study. The data was tested by the use of correlation analysis. Also, the analysis of regression was performed for the data by using structural equation modeling. Three regression analyses were performed to analyze the relationship between independent and dependent variables. The relationship of perceived value and service quality was arbitrated by customer satisfaction proposed through the results of regression analysis. In order to check the relationship of behavioral intentions with perceived value, customer satisfaction, and service quality, structural equation modeling was used. The first model shows the relationship that how customer satisfaction arbitrated perceived value and service quality on behavioral intentions. The first model was called the basic model. In the second model, the relationship of service quality with behavioral intention was shown directly. And in the third and last model, direct linkage of perceived value with behavioral intentions was shown. After the comparison of these three models, it was concluded that model three was the most significant one, which shows both the indirect and direct relationship between perceived value and behavioral intentions. This study clearly concluded that perceived value has more impact on behavioral intentions than service quality.

Customer Satisfaction

Customer's intention towards revisit depends upon the correlation between a restaurant's foodstuff value and customer satisfaction founded by some studies [25]. A well-built optimistic alliance with customer maintenance and positive word-of-mouth approval is verified by Ranaweera and Prabhu [26] in their study trust and customer satisfaction. In many firms and academic research, customer satisfaction is becoming a gradually more prominent subject matter. The main justification at the back of this concern is that customer satisfaction is understood to be linked with productive customer actions from the organization's viewpoint. In fact, numerous experimental studies do specify that related to customer actions just around the corner. For example, a constructive connection is monitored among customer satisfaction and loyalty [6] between customer satisfaction and the tendency to suggest the seller's offerings for other customers. Positive word of mouth decreases the requirement for selling expenditures and might also enhance profits if new customers are fascinated [21].

In the latest years, research in the service industry on the topic of customer satisfaction is enlarged spectacularly [4]. This rise is provoked by the rising development of service industries [3]. Enhancing customer satisfaction and giving superior value service are extensively accepted as significant aspects leading towards the accomplishment of corporations in tourism industries, hotel, and catering [27]. Hotel suppliers are required to offer customers absolute satisfaction in services in sequence to be victorious in business and to compensate other opponents. This is supposed that customers, whenever practiced with services they contained, are more expected to ascertain loyalty [26]. Resulting in favorable word of mouth [12] and repeat purchases [20]. Ladhari, Brun, and Morales [28] investigated the relationship of dining satisfaction with the restaurants. Three main factors were taken into consideration; Negative emotions, Positive Emotions, and Perceived quality. The study focuses upon the influence of these factors on customer satisfaction. The research showed that emotional factors act as the intervening variables among customer satisfaction and quality of service. In the study, it was suggested that emotional behaviors are directly connected with customer satisfaction and indirectly with the quality of service. Undergraduate students of business, 338 in quantity, were taken as the sample for their research. In the first half of 2005, the data was collected with the help of a questionnaire. Stevens et al. [27] developed an instrument, DINESERV containing 29 statements regarding the measurement of quality of service, positive and negative emotions, and customer satisfaction. The structural equation modeling technique was used to check the model by using 6.1 EQS. Word of mouth, willingness to pay more and customer loyalty were the three other attitudes that were founded to be positively related to customer satisfaction. The results show that customer satisfaction in restaurants is dependent upon negative emotions, perceived service quality, and positive emotions. This study also concluded the significant link of customer satisfaction with a willingness to pay more, customer loyalty, and word of mouth (Figure 1).

Hypotheses

The hypotheses of the research study are as follows:

H1: Word of mouth has an impact on customer satisfaction in casual dining restaurants.

H2: Service quality has an impact on customer satisfaction in casual dining restaurants.

Research Design

This study is inferential in nature as it determines cause and effect. Inferential statistics is closely tied to the logic of hypothesis testing [29]. A conceptual model for customer satisfaction in casual dining restaurants is developed and tested by conducting a field study. On the basis of this model, hypotheses are developed.

Sample

The two conventional ways of sampling are probability and non-probability sampling. Probability sampling is most widely used for survey-based research. In this sampling, the population is known, and samples are selected randomly. Non-probability sampling is used when the population is unknown. It includes convenience sampling, judgment sampling, and quota sampling [29]. Convenience sampling has been used for this research. This is the appropriate method for this type of research in terms of cost and the efficiency of data collection because of time constraints. It is widely observed in Rawalpindi and Islamabad. The target population of this research is the people of Rawalpindi and Islamabad. In order to determine the behavior of people towards the word of mouth and service quality effect on customer satisfaction, a total of 200 sample size was selected.

Research Instrument

The survey questionnaire is used as the data collection instrument for the research. This questionnaire's questions for measuring service quality have been adapted from the study of Ladhari et al. [28]. Determinants of dining satisfaction and post-dining behavioral intentions, the questions for customer satisfaction have been taken from the study of [30]. The relationships among overall quick-casual restaurant image, perceived value, customer satisfaction, and behavioral intentions, and the questions of word of mouth have been taken from modeling customer satisfaction and word-of-mouth: restaurant patronage in Korea.

Unit of Analysis and Data Collection

The unit of analysis for the current research was the customer dining at the fine dining restaurants of Islamabad and Rawalpindi. For the collection of data, the fine dining restaurants of the twin cities of Pakistan were selected. The data was collected from the customers after getting the permission of the restaurant management and the customers themselves.

Data Analysis and Results

Correlation

The inter-scale correlation matrix in Table 1 shows that service quality and word of mouth havea significant and positive relation with Customer satisfaction (r>0.3 and p< 0.01). And the relationship between customer satisfaction and word of mouth is also significant and positive.

Reliability

The alpha coefficient is .925, suggesting that the items have relatively high internal consistency. It shows that the instruments which were used were highly reliable (Table 2).

Regression

The value of R in this table represents a simple correlation, and, therefore, the value here is 0.625 and represents a good correlation. The value of adjusted R2 shows that 3.85% of the variation in dependent variable (customer satisfaction) scores is accounted for by independent variables service quality and word of mouth (Table 3).

The significance column indicates the statistical significance of the regression model that was applied. Here, p<0.0005, which is less than 0.05 and indicates that overall the model applied is significantly good enough in predicting the outcome variable. The value of F (198) is 62.939, which shows that independent variables are good in predicting the dependent variable. So, the model is good (Table 4).

The table of coefficients provides information on each predictor variable. This provides the information necessary to predict the impact of service quality and word of mouth on customer satisfaction (Table 5).

It shows one unit increase in the independent variable will cause how much variation in the dependent variable. For service quality, every one unit increase will increase customer satisfaction by 0.187. For every one unit increase in word of mouth, customer satisfaction will increase 0.463. This proves the existence of an inferential relationship among the independent and dependent variables. Then the unstandardized coefficients St. error has explained. This is the standard error for the coefficient; it is used in the calculation of the significance. The significance value that is the p-value comes. If it is under 0.05, then the variable is significant. The value of the variable of service quality is 0.030, which means that the value is significant, which means service quality and customer satisfaction have a significant relationship, and customers get influenced by the service quality of the restaurant. So, here the research accepts the null hypothesis "Service quality in the restaurant industry is positively related to customer satisfaction" and rejects the alternative hypothesis "Service quality in the restaurant industry is not positively related to customer satisfaction" because the value is significant. And positive value of beta shows a direct relationship between service quality and customer satisfaction. Then the value for word of mouth comes, which is 0.000, which means the variable is highly significant, and the relationship between word of mouth and customer satisfaction is also highly significant. This implies that customer satisfaction has been influenced through word of mouth about the restaurant. In the second hypothesis, the research again accepts the proposed null hypothesis "Word of mouth in the restaurant industry is positively related to customer satisfaction" and rejects the alternative hypothesis "Word of mouth in the restaurant industry is not positively related to customer satisfaction." And as the value of beta is positive, it implies that word of mouth and customer satisfaction has a direct relationship. All the above results support the hypotheses. It is exposed that there is a positive direct relationship between service quality and customer satisfaction, and word of mouth and customer satisfaction.

The summary of hypothesis testing is exhibited in the Table 6. The results presented in the preceding section indicate that the research model fits well. They also support that word of mouth and service quality have direct and positive effects on customer satisfaction in restaurants. Collectively, the results support the hypotheses and build on the extant literature. As to the former, our findings indicate that both word of mouth and service quality leads to customer satisfaction.

The results highlight the critical role of service quality in customer satisfaction. These findings coincide with the results of another scholar [28]. That service quality is an important tool in influencing customer satisfaction level in their experience of restaurants. According to that study, service quality is the main source of customer satisfaction with restaurants. Restaurant managers should know about the importance of service quality on customer satisfaction. The study findings coincide with the findings of Sureschandar et al. According to their study, the customers with a high level of service quality perceptions have a high level of satisfaction, those with a medium level of service quality perception have a medium level of satisfaction, and those who graded poor level of service quality have a poor level of satisfaction. And showed a strong correlation between service quality and customer satisfaction.

Conclusion

The general purpose of this research was to investigate the determinants and consequences of customer satisfaction with restaurant services. This study concludes that there are two main sources of customer satisfaction with the restaurant: word of mouth and service quality. The research objective for this study was to investigate the relationship between word of mouth, service quality, and customer satisfaction.

Recent researches have shown that customer satisfaction has a significant impact on customer loyalty, retention, value, and repurchase decisions [23]. However, the existing literature in this area is sparse, especially about the influence of word of mouth on customer satisfaction. Concerning the factors that influencing customer satisfaction, the present research suggests word of mouth and service quality factors as important determinants of customer satisfaction.

In conclusion, this study suggests that by improving the service quality, restaurant managers can satisfy their customers and please them to the fullest. Effective word-of-mouth practices enhance the customer satisfaction level and are likely to maintain long-term relationships with them. Furthermore, this study revealed that word of mouth has more impact on customer satisfaction than service quality. In order to bring customer's trust and loyalty and keep customer retention, restaurant managers must shift the focus to service quality before, during, and after consumption. If any casual dining restaurant is not seriously considering the service quality as a competitive tool in the coming time, it will be at a competitive disadvantage over time and will be left out in the cold.

Recommendations and Managerial Implications

The present study is an attempt to throw light on the relationship between service quality and word of mouth with customer satisfaction. The findings have several theoretical and managerial implications. From a theoretical perspective, this study makes important contributions to the hospitality and tourism literature on restaurant image. This research primarily focused on specific factors of word of mouth and service quality in casual dining restaurants. There are many other internal and external factors that may be contributing to customer satisfaction in casual dining restaurants. Exploring these factors provides an excellent opportunity for future research. A more comprehensive model of customer satisfaction in casual dining restaurants could be developed by including additional restaurant attributes such as price, loyalty, and convenience in the model. In addition, casual dining restaurants could be compared with other themes and foreign restaurants to determine if their customer satisfaction scores differ with regards to word of mouth and service quality. Furthermore, this study revealed that word of mouth is more strongly related to customer satisfaction than service quality.

Word of mouth and Service quality in combination may completely mediate customer satisfaction in restaurants. The relationship between service quality and customer satisfaction can be investigated in other sectors of services. The restaurant management team can use the customer satisfaction research to see the extent to which the factors of word of mouth and service quality are suitable for the betterment of restaurants. Though this study concentrates only on casual dining restaurants in Rawalpindi and Islamabad, it can further be extended to other restaurant categories so that a holistic picture of customer preferences and satisfaction can be viewed. From a managerial perspective, it is important to develop appropriate programs and provide ongoing training on the issue of service quality so that customer satisfaction can be ensured.

Limitations

Although this research provides some useful findings, there are some limitations in this study. First, the research was conducted on a small level. Only casual dining restaurants were included in it. The scale for data collections was also very small as the data was only collected from the twin cities Islamabad and Rawalpindi. Second, the results of this study cannot be applied to the whole restaurant sector and all types of services because of the different nature and characteristics of the numerous restaurant and service types. Another limitation of the study is that participants were asked to recall their last restaurant consumption experience when filling in the questionnaire. Because asking the respondents about their last consumption experience (which might not have been the latest one) might cause biased results.

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