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Chapter 1
Introduction
Customer’s
measurement
of
service
quality
is
very
important
information
for
every service provider who
wants
to
improve their business performance, build up core
competencies and
make
a
better
positioning
in market
place.
In fact, a company
that
provides superior quality of service will experience superior economics return. Therefore,
almost every service provider
nowadays seeks out competitive advantage by providing
superior
services.
This
phenomenon
also happened in fast-food industry.
Fast-food
restaurants have always been competing among one another in providing better services.
Fast-food restaurants provide both products and services. In order to stay in the
business, they need to find ways to maintain their core competencies and always improve
their service quality. Superior service can reward the restaurant with loyal and satisfied
customers who hold a very important role in the growth of every fast food restaurants.
On the other
hand, poor service quality
will
reward
the restaurants with
unsatisfied customers who can give them disadvantages by not coming to the restaurant
or,
in
a
worse
situation,
they
would
persuade other
people
not
to
go
that
restaurant.
Acquiring new customers will cost
much
more effort and
money
than retaining the one
that already on hand. Thus, it would be very important to understand how customers
recognize
the
service
provided
and
how
these recognitions convert into customers’
satisfaction and retention.
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1.1 The Research Done in Texas
The previous research was done in Texas, America by Hong Qin and Victor R.
Prybutok
in
2008
with
title
“Determinants
of
Customer-Perceived
Service
Quality
in
Fast-Food Restaurants and Their Relationship to Customer Satisfaction and Behavioral
Intentions”.
With market share of 33% in 1975, 39% in 1980, and 46% in 1990 (Kara,
Kanyak, and Kucukemiroglu 1995), fast-food restaurants have experienced a continuous
increase
in
sales over
the
past
three
decades.
According
to
the
National
Restaurant
Association’s 2007 Restaurant industry forecast, in 2007 fast-food industry sales were
expected to reach $150.1 billion, a
gain of 5% over 2006. Without a doubt,
many
fast
food
restaurants are benefiting
from the
trend
that more
and
more American are eating
out. However, with the increase in the number of fast food restaurants competing for
market share, some restaurants have had difficulty in sustaining sales growth (for
example: Kenny Rogers Roasters, Boston Market) (Seidman 2001). The competitive
business environment in the fast-food restaurants industry has forced many to find a way
to continuously
improve their service
quality
(Gregory, Smith,
and Lenk
1997).
According
to
Seidman
(2001),
around
50%
of
the
time,
dissatisfied
customers
don’t
reveal their complaints
to
the restaurants
and 90% of these
“silent critics” will
simply
give their patronage to a competitor. Therefore, it is imperative for a fast-food restaurant
to understand customer perceptions of service quality in order to provide superior service
and to meet their goal of satisfying customer.
The
aim of
this
research
done
in
Texas
is
to
build
up a
model and the
related
metrics that measure fast
food restaurant’s service quality. In here, the author modified
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 the
classic SERVPERF
instrument
to
study
the
relationship
among
and
between
food
service quality, price/value, food quality, customer satisfaction, and behavioral intention.
The modified SERVPERF instrument was directed to some of college students at a large
Southwestern University. Some findings were found, including that the five dimensions
(tangibles,
reliability, empathy,
employee
behaviors,
and
responsiveness)
positively
influence people’s insight of service quality. The result supports the concern that service
quality
and
customer
satisfaction
are
two
important
experience of
customer
intention.
This study is not supporting the indirect effect of service quality on behavioral intentions
because the authors did not find a considerable relationship between service quality and
customer satisfaction. The result also proves that food quality is a major factor in
customer satisfaction.
1.2 Fast food industry in Indonesia
Indonesia
is
a
country
that
has a
wide
variety
of
cultures,
states,
and
regions.
There are 17.508 islands in Indonesia with 5 major islands (Java, Sumatra, Kalimantan,
Sulawesi, and Papua) and 33 provinces culture backgrounds vary between one another.
mid=1722). These cultural differences bring
wide
variety of cooking,
taste perception,
and
food-consumption behavior.
The
main
and the
most
crowded
city
in
Indonesia
is
Jakarta, the capital city of Indonesia. People
in Jakarta come
from all
over Indonesia.
Varieties of cultures are gathered there. This is one reason that this research put focus in
Jakarta.
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In the past, Jakarta’s citizens tend to eat home-made food at home. However, this
tendency has been shifting
towards eating at the restaurant or buys take-away food or
even orders food deliveries. As the impact, thousands of people open new restaurants,
cafes, and bars which spread in all over Jakarta. Slowly, western food and service culture
adapted to Indonesian peoples’
behavior. The first fast food restaurant that
penetrated
Indonesian
market
was Kentucky Fried
Chicken.
Following
the success
of
Kentucky
Fried Chicken, other fast food restaurant started to invade Indonesian market.
Unlike in the past, now people can found fast food restaurant almost everywhere in
Jakarta.
The huge number of fast food restaurant in Indonesia makes the competition
among them becomes fiercer and fiercer. These fast food restaurants consist of both local
brand restaurants such as Es Teler77, Bakmi GM, etc. as well as internationally branded
franchised restaurants such as McDonald’s, Kentucky Fried Chicken, Wendy’s, Hoka-
Hoka
Bento, Pizza Hut and etc. In general,
these restaurants offer their customers not
only their product but their service as well.
A
swift rise in the recognition of franchise-based business was studied all the way
through the review period, not only in the big cities, but also in the smaller developing
cities. Both local and international brands are continuing to expand their outlets through
franchising system, and a number of new brands started to be introduced in countries all
around the world. In theory, both parties (the franchisors and franchisees) are having so
much to gain from such schemes, along with consumers. A rapid rise in the popularity of
franchise agreements in 2005 facilitate the boost up of
the
growth of chained consumer
food service.
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 Among Indonesian chained operators, international brands have dominated the
market due to their early entry and high worldwide brand awareness. In reality,
multinational
companies
are
the
pioneers
in mounting
consumer
foodservice
outlets
mainly for cafes, bars and fast food. On review period, however, local brands started to
show promising signs of catching up with the existed International brands. This was
indicated by a rapid outlet expansion with franchise schemes.
With the fairly lower fee for franchise and royalty compared to multinational
brands, local brand fast-food restaurants can satisfy consumers’ demand for local flavors
and they were also accelerated their outlet expansion into the smaller cities in 2005. Such
local brands include Bakmi Gajah Mada, Es Teler 77, etc.
Es Teler 77 is one of Indonesian fast-food restaurant that applies franchise
system. The restaurant was established in 1982 in Jakarta by Mr. Sukyatno Nugroho. Es
Teler 77 serves Indonesian food and beverages. Most of them are made from Ms
Murniati Widjaja's home cooking recipes. She won a cooking competition in Indonesia
and
become
a
champion because of
her
own
creation
of
traditional
Indonesian
drink
called es teler. Es Teler 77 sells noodle, fried rice, meatball, etc. and es teler as their main
menu. Now they have over 200 outlets in all over Indonesia, Malaysia, Singapore and
There are a lot of international-franchised brand in the fast food business that
penetrated Jakarta’s market. One of them is a part of Yum Restaurant International “Pizza
Hut”.
In 1984, Pizza Hut entered
Indonesian Market as the first pizza restaurant
in the
city. They specialized in Pizza. Now, among the pizza business Pizza Hut has the biggest
number of outlets,
which consist of 12000 outlets
in all over 86 countries.
The
fact
is
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 Pizza Hut has also localized their menu and services, here in Indonesia, they have many
local menus like chicken wings, soup and some of their pizzas are made differently from
other countries. Pizza Hut also employs around 5000 local employees which spread in all
100 outlets
in 22 provinces. Besides pizza
hut
there
are also a similar
fast
food outlet,
they are Papa Ron’s Pizza, Izzi Pizza, California Pizza Kitchen, etc. They are also
specializing in pizza, but unfortunately they are not as popular as Pizza Hut in Indonesia. (
Kentucky Fried Chicken was founded by Harland Sanders in the 50’s. KFC
entered Indonesian market in October 1979 with
their
first
outlet
locate
at
Melawai,
Jakarta as the first ever Quick Service Restaurant (QSR) in Indonesia. KFC is a fast food
restaurant that specializes in fried chicken. PT Fastfood Indonesia holds the franchising
right of KFC in Indonesia. Now this company owns 270 KFC outlets spread in more then
60 town in Indonesia, employs 10.293 employees and recorded more than 1,276 trillion
Rupiah as their total sales in the end of 2006. Just like Pizza Hut, KFC is a part of Yum
Restaurant International. (
mid=240&limit=1&limitstart=1)
McDonalds which was established in 1940 is now the world’s largest fast food
restaurant chains. Currently, McDonalds has over 20.000 restaurants in 120 countries
around the world with more than 447.000 employees and their nearly 54 million
customers gave them total revenue 20.460 Billion USD in year 2005. McDonald entered
Jakarta, Indonesia later than the other fast food outlets. Their first outlet was in Sarinah,
established at 23 February 1991, and they still have this outlet until now. Now, not only
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 people can find McDonald’s outlets in Sarinah, but also many other outlets all over
Indonesia. McDonald’s has also localized their menu by serving rice, fried chicken, and
spaghetti,
unlike
in
other
countries
especially
America
where
McDonald’s
only
specializes
in making burgers. Most of fast food companies especially McDonalds have
localized their
services and
menu by employing
local employees and also by including
rice
and
fried
chicken
into
their
menu
because
they
want
to
draw
local
customers
to
come.
This
could
be
done
because
the
companies
have
studied the
habit
of
the
Indonesian’s people at the first place.
McDonald’s, Pizza Hut, KFC and Es Teler 77 are the most regularly visited fast
food outlets in Jakarta. In Indonesia, with the consumer trend changing towards modern
lifestyle, fast food is becoming more and more popular.
1.3 Consumer Behavior
Consumers
will
put
service
quality as
their
consideration
of visiting
fast-food
restaurants.
That
is why all
fast
food restaurants are trying to provide superior services.
Various kind of act are taken such as being selective in hiring their employees, providing
training to their employees, using modern and convenient tools and equipments to
support the service, providing delivery service, etc. As people know, the culture in
western countries is different with Indonesian’s and because of the differences, the
service provided should also be different. For example, customers of fast food restaurant
in America
have a
habit
to throw
their trash and leftover to
garbage bin after
they eat,
which they do on their own willingness. On the contrary, in Indonesia, people tend to just
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leave the restaurant after they eat and left their trash and leftover on the table. That’s why
to maintain the cleanliness, fast food outlets in Indonesia have to employ more employees
as cleaning service.
Most Indonesian people eat rice as their main dish for lunch, dinner and even for
breakfast. Indonesian people eat a
lot of rice everyday and also they
love
hot and spicy
food. Therefore to gain a success, fast-food restaurants in Indonesia need to adjust their
menu
to the Indonesian taste and preference: provide rice
in the menu, provide hot and
spicy food. Moreover, they also forbid to serve pork because most of Indonesian people
are Moslems. Almost all franchised fast-food restaurant in Indonesia do not serve pork in
their meals, but in additional they make new meals that are already localized and adapted
to Indonesian people’s taste.
In Indonesia,
fast
food restaurant called “rumah makan siap
saji”. Most of the
fast food restaurants in Indonesia are McDonald, KFC, Pizza Hut, Es Teler 77, Hoka-
Hoka Bento, etc. However, in this examining study, fast food is defined as fast in serving
readily available
food;
having reasonable price and it is an alternative to home cooked
meals.
Most of fast food restaurant in Indonesia has already localized their menu and
adapted
their
services to Indonesian
culture.
As
an example,
McDonald
and
Wendy’s
have been including fried chicken and rice into their menu and also employing local
employees.
In Jakarta, fast food is a rapid growing industry, but not all fast food restaurants in
Indonesia
are
succeeded. There
are also
fast
food
industries
that
didn’t
succeed
in the
market, but there is not much literatures existing about service quality on fast food
especially on Jakarta’s youth consumers. Thus, this research is going to be an exploratory
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study on the context on Jakarta, Indonesia. This study will put more focus on young
Indonesian
people
at
the
age
of
21-25
years old, trying to understand their perception
about service quality in fast food restaurant, and how these things affect their satisfaction
and behavioral intention.
1.4 Scopes
This research is a replication of previous research done in Texas, America. It
focused on young consumers since they are the main target market of fast-food
restaurant. Therefore, this
research
will
also
focus
on
young
consumers
in Indonesia,
especially
students
from Binus
International,
Pelita
Harapan,
and
Tarumanagara
University.
1.5 Purpose/Aims
The purpose of conducting this research is
1. To get to know about consumer perception of service quality,
food quality and
price/value in McDonalds, Kentucky Fried Chicken, and Pizza Hut.
2. To
measure customer
satisfaction, and behavioral
intentions
of
these
three
(3)
fast-food restaurants
3. To study the relationship between and among service quality, food quality,
price/value, customer satisfaction and behavioral intention.
4. To develop a model and the associated metrics that measure service quality in fast
food restaurant.
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