RESTAURANT ENVIRONMENT ON

CONSUMER BEHAVIOR
CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION
This chapter is an introductory note to the whole research effort. It begins with
background of the study, followed by the research problems, and research
objectives. Next, significance of the study and the research scope will be
discussed. Lastly, the organization of the report will be outlined

1.2 BACKGROUND OF THE STUDY

Restaurant is a French word which means to “restore “ In our ever-increasingly

globalised world, the fast food industry represents billions ofdollars yearly and is
still growing, specifically in Asia (Data Monitor, 2005). AC Nielsen Online
Consumer Survey (ACNielsen, 2005) reveals that Asians are the world’s greatest
fast food fans. A total of 30 percent of Asia Pacific consumers eat at take-away
restaurants at least once a week and 35 percent of the population of Asia Pacific
eats at take-away restaurants three times a week and some even more than once
a day. Along with the fast changing lifestyle, eating out habit is becoming a part of
modern lifestyle which has driven customers to try new things and experiences.
These changes have then led fast-food industry to grow rapidly and become one
of the fastest growing business sectors in recent years. The increase in the
number of outlets, sales volume, recognition and popularity has witnessed the
success of fast food industry.
2. The growth of the fast food industry shows the dramatic increase of
competitions and challenges in the market. Competition among existing players is
becoming much stronger than before. According to Alonzo (1986), restaurant
business is a very high risk business because about 80% of new businesses
including fast food restaurants(FFRs) fail within the first year. Thus, it is significant
to the fast food operators tocraft their marketing strategies and tactics to
generate profits and ensure the growth of the company. To be specific, the
marketing strategies aim at increasing repatronageintentions and maximising
market share in view of the positive impacts on the financial performance of the
organization.Customers are the basis of and the reason for the business activities
ofany firm. The population of more than 1.1 billion makes India one of theworld’s
largest consumer markets. The food consumption is expected toreach 229.7
billion dollars by 2013 (Srinivas, 2009). India also is the 12thmost attractive
destination in the Asia Pacific region and overall it stands68th in the world’s list of
attractive destinations according to The Travel andTourism Competitiveness
Report 2011 by the World Economic Forum. Theother factors driving
consumption is thatservice independent

1.2.1 Definition of Fast Food

As different people may have different perception towards the term fast food,
manydefinitions have been given to fast food in prior research. In general, fast
food is viewed as quick, acceptable priced and is an alternative to home cooked
food (Goyaland Singh, 2007). Although fast food best fits the modern lifestyle in
terms of convenience and economy, fast foods have generally been perceived as
foods which are unhealthy for consumption and which contain high calories,
saturated fat, sugar and salt. Liu and Chen (2000) have stated that fast food is a
new breath from the traditional catering methods and standards. The catering
methods and standards of fast foodbusiness have resulted in more sophisticated
operations and styles for services. Fast food restaurants (FFRs) provide flexibility
and comfort with reasonable price
There are also some other definitions given by researchers. Here are some
examples:
Definition 1: Fast food generally refers to “a limited menu of foods which lend
themselves to production-line techniques; suppliers are likely to specialize in
products such as hamburgers, pizzas, chicken or sandwiches” (Bender and
Bender, 1995).
Definition 2: The market of fast food is described as “the sale of food and
beverages for instant usage either on the premises or in selected eating areas
shared with other foodservice operators or, for usage elsewhere” (Data
Monitor, 2005).
Definition 3: Fast food is “inexpensive food, such as hamburgers and fried
chicken, prepared and served quickly” (www.thefreedirectory.com).
Definition 4: Fast food is “prepared for ready availability, use or consumption and
with little consideration given to quality or significance”
(www.mw.com/dictionary/fast-food).
.
Varies from consumer to consumer:
All consumers do not behave in the same manner. Differ-ent consumers behave
differently. The differences in consumer behaviour are due to individual factors
such as the nature of the consumers, lifestyle and culture. For example, some
consumers are technoholics. They go on a shopping and spend beyond their
means.
They borrow money from friends, relatives, banks, and at times even adopt
unethical means to spend on shopping of advance technologies. But there are
other consumers who, despite having surplus money, do not go even for the
regular purchases and avoid use and purchase of advance technologies.
Varies from region to region and country to county:
The consumer behaviour varies across states, regions and countries. For example,
the behaviour of the urban consumers is different from that of the rural
consumers. A good number of rural consumers are conservative in their buying
behaviours.
The rich rural consumers may think twice to spend on luxuries despite hav-ing
sufficient funds, whereas the urban consumers may even take bank loans to buy
luxury items such as cars and household appliances. The consumer behaviour may
also varies across the states, regions and countries. It may differ depending on the
upbringing, lifestyles and level of development.
Information on consumer behaviour is important to the marketers:
Marketers need to have a good knowledge of the consumer behaviour. They need
to study the various factors that influence the consumer behaviour of their target
customers.

According to Louden and Bitta, ‘consumer behaviour is the decision

process and physical activity, which individuals engage in when
evaluating, acquiring, using or disposing of goods and services’.

Statement of Problem
What appeals to consumers’ preferences are not only food and
beverages, an enjoyable dining environment also matters. Increasing
attention is being paid not only to pricing and the merchandise itself,
but also to the provision of a pleasant and possibly exciting, shopping
atmosphere (Baker, 1986; Baker et al., 1992; Dawson et al., 1990;
Sherman et al., 1997; Sherman & Smith, 1986; Tai & Fung, 1997).
Further, academic interest in how atmospherics influence consumer
behavior has grown following the Kotler’s article (1973).There are a
large number of studies which focus on the influences of store
environment onconsumer behavior in the retail world, but only a few
studies explore the influences of atmospherics on consumer behavior
and satisfaction in the hospitality industry, especially that of the
restaurant business. Although some researchers have conducted
surveys to investigate the effects of some dimensions of atmospherics,
the number of studies that summarize all the influences of dimensions
on consumers’ behavior are insufficient. The present study just
summarizes those influences, so restaurant owners and managers can
find this study meaningful.

SCOPE AND LIMITATIONS

This study is limited for five staff in choobi-choobi located in Ayala Centrio Mall
Cagayan De Oro City. This study focused on service quality as dependent variable
and customer behavior in quality of a staff as independent variable.

Significance of the Study

Comprehension of customer co-creation behavior is still emerging despite the
importanceof value co-creation formation. Empirical investigations are scarce and
knowledge of the nature of restaurants’ innovativeness, customer value co-
creation, and, methods for measuring theconcept are very limited. In the absence
of such knowledge, both academic researchers and industry practitioners have an
incomplete understanding of how customers perceive innovativeness, and how
customer value co-creation relates to outcomes of customers’ behavior. In the
absence of such information assessing methods restaurants use to create value
for customers and achieve management effectiveness is difficult. Hence, this
study provides a foundation for future hospitality research by investigating
customer value creation behavior and linking customer value creation theory to
actual customer value creation phenomena. The study contributes to the
literature with respect to customer value co-creation behavior by linking
customers’ perceptions of restaurants’ innovation and customers’ behaviors
resulting from delivered services. Discovering the links facilitates empirical
research and supports developing strategies regarding customer value creation
for practitioner.
THIS STUDY FINDINGS :

(1) Contribute to accumulated research that examines the influence of customer

value cocreation behavior within the context of foodservice by addressing the
research gaps identified in the literature review.
(2) Assess and improve understanding of previous studies that examined
consumer. perception of restaurant innovativeness.
(3) Identifies, through a pioneering study of customer value creation behavior in
the hospitality context, a range of dimensions within this context and provides
valuable insights in to the way customers behave toward creating value with
restaurants. In other words, this study conceptualizes and empirically tests a
comprehensive model of customer value co-creation
behavior in the hospitality context.
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DEFINATION OF TERMS :

REPATRONAGE
Intention (Positive Attitude) Three, seven-point Likert-type items are used to
measure a person's intention to not only go to a store again in the future but to
look forward to it. attitudes, retail, enjoyment, loyalty, future, patronage.

CONSUMER
A person who purchases goods and services for personal use.

MAXIMISING
Make as large or great as possible.

CONSUMER BEHAVIOR
Consumer behaviour is the study of individuals, groups, or organizations and all
the activities associated with the purchase, use and disposal of goods and
services, including the consumer's emotional, mental and behavioural responses
that precede or follow these activities
 Research Objectives
The overall objective of this study is to examine the relationship among
service quality, food quality, perceived value, customer satisfaction and
behavioral intentions in the fast food industry in the country. Thus,
several specific objectives are formulated to help accomplish the tasks
of this study

Consumer behavior Objectives

1.to understand what consumer behavior is and the different types of consumers
2.to understand the relationship between consumer behavior and the marketing
concept, the societal marketing concept, as well as segmentation, targeting and
positioning
3.to understand the relationship between consumer behavior and customer
value, satisfaction, trust and retention
4.to understand how new technologies are enabling marketers to better satisfy
the needs and wants of the consumers
5.to understand how marketers are increasingly able to reach consumers
wherever consumers wish to be reached
6.to understand how the world’s economic condition is leading to consumption
instabilityconsumer behaviorThe behavior that consumers display in searching
for, purchasing, using, evaluating and disposing of products and services that they
expect† will satisfy their needs2 consumer entitiespersonal
consumersorganizational consumerFrom 1850’s to 1920’s production was the
focus. Demand exceeded supply.
 CHAPTER II
REVIEW RELATED LITERATURE

Environment and Atmospherics

According to Kotler (1973) the influence of atmospherics in marketing
contexts is based
on the premise that the design of an environment through a variety of
means, including lighting,
layout, sounds, colors and temperature could stimulate perceptual and
emotional responses in
consumers and affect their behavior. Bitner (1992) distinguished three
dimensions of
atmospherics that she called the SERVICESCAPE: ambient conditions,
spatial layout and
functionality, and signs, symbols, and artifacts.
Ambient conditions are the intangible background characteristics that
tend to affect the
non-visual senses and may have a subconscious effect on consumer.
Bitner (1992) stated that
ambient conditions refer to the background characteristics of the
environment, such as
temperature, lighting, noise, music, and scent. As for music, Milliman
(1986) reported that the
tempo of music in a restaurant affected the time that people spend
there, such as individuals
dining under the fast music condition spent less time at their tables
than individuals dining under
the slow tempo condition. Furthermore, an appropriate music can
increase sales (Mattila&Wirtz,
2001; North & Hargreaves, 1998). Milliman carried out a research and
found that groups dining
under the slow music condition spent on average, 40% more on drinks
than groups dining under
the fast tempo condition. As for lighting, Baron (1990) showed that the
subjects had a more
positive effect on conditions of low levels of lighting compared to high
levels of lighting. A
relatively low levels of light had the high level of comfort, while the
high levels of light had the
low one.
Bitner (1992) stated that spatial layout refers to the ways in which
machinery, equipment,
and furnishings are arranged, the size and shape of those items, and
the spatial relationships
RESTAURANT ENVIRONMENT ON CONSUMER BEHAVIOR 5
among them, with functionality indicating the ability of those items to
facilitate performance and
the accomplishment of goals. A layout may have a direct effect on
consumer’s quality
perceptions, pleasure, and excitement levels, and an indirect effect on
the desire to return
(Wakefield & Blodgett, 1999). For example, the locations of tables in
restaurants have a
tremendous influence on the overall experience of a customer. Table
placement has the ability to
transmit a sense of privacy, portray the functionality desired, and
operate as boundary for the
customer (Lin, 2004). Moreover, signs, symbols, and artifacts, which
include signage, personal
artifacts, decor, and other physical elements that serve as explicit or
implicit signals that
communicate with users (Biter, 1992).
However, Berman and Evans (1995) divided atmospheric stimuli into
four categories: the
store exterior, the general interior, layout and design variables, and
point-of-purchase and
decoration variables. According to their categorization, the exterior
dimension comprises such
elements as the storefront, the marquee, the entrance, the display
window, and the building
architecture. In addition, the effects of human variables on atmospheric
perceptions also should
be considered (Turley &Milliman, 2000).
Turley and Milliman (2000) reported that the human variable category
comprises the
consumer (customer characteristics and customer crowding and
density), the employee
(personnel characteristics and employee uniform), and privacy. The
human variables generally
could be divided into two areas: the influence of other consumers and
the influence of employees
on shopping behavior.
Nevertheless, it is difficult to control physical appearance of other
consumers in the
restaurant industry, only employee appearance as well as number and
gender was used to assess
the human variables. Meanwhile, the interactions between employees
and consumers are not the
RESTAURANT ENVIRONMENT ON CONSUMER BEHAVIOR 6
attributes of the tangible quality, so they are not considered as the
elements of human variables
in this study.
In terms of the employees, the more social cues (number/ friendliness/
appearance of
employees) appear in the restaurant environment, the higher the
consumers’ arousal (Baker et al.,
1992). Tombs and McColl- Kennedy (2003) argued that employees are
related to the desired
social density, which influences consumer affective and cognitive
responses as well as
repurchase intentions.
The Effects of Environment on Consumer Behavior
In order to deal with the interaction between the environment and
individual responses to
environment stimuli, Mehrabian and Russell (1974) presented a well-
recognized model in the
field of environmental psychology. The M-R model was not initially
used for consumer behavior
studies, but it has been proved to be an appropriate way to analyze the
influences of
atmospherics on consumer behavior in different consumption settings
(Donovan &Rossiter,
1982; North & Hargreaves, 1996; Ryu& Jang, 2007).
M-R showed that responses to an environment can be categorized as
either “approach” or
“avoidance” behavior. Favorable environments are stated to cause
approach behavior, it includes
the enhancement of satisfaction with task performed and the desire to
stay, explore and
communicate with others. Besides, spending and repeat purchase are
also regarded as examples
of the approach behavior (Chang, 2000; Donovan &Rossiter, 1982).
However, unfavorable
environment are stated to cause avoidance behavior, which is the
opposite of approach behavior.
Furthermore, some researchers found that atmospherics directly affect
the consumer
behavior. The influence of a restaurant atmospherics on behavior
intensions is mediated by
emotions and perceived value (Liu & Jang, 2009). Nevertheless, the
other researchers found that
RESTAURANT ENVIRONMENT ON CONSUMER BEHAVIOR 7
physical environment did not affect the consumer behavior directly.
Chang (2000) reported that
physical environment had no significant on return intensions in a direct
way; rather, its influence
was found to be mediated through consumer satisfaction.
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CHAPTER III
METHODOLOGY

RESEARCH DESIGN
The purpose of the present study is to find out the effects of restaurant
environment on consumer behavior. To obtain the primary data, the
self-administered questionnaires will be distributed to patrons in
selected restaurants as they are waiting for their checks or as they are
getting ready to leave after meals. This method ensures that the
patrons will give responses which can accurately reflect their evaluation
of the dining experience. The questionnaire will measure participants’
perceptions of the restaurant environment and their behavioral
intentions.

SUBJECT OF THE STUDY

The study area was located on Ayala Centrio Mall Cagayan De Oro
City. The population comprised of staff inchoobi-choobi. Sample of 5
respondents were the one who answer the questions. The Respondent
was to answer some question given by researcher.

Sampling Procedure
In order to use a convenient sampling approach, the sample will consist
of ten middle and upscale full-service restaurants which are chosen
according to the staffAll of the selected restaurants are located in
ayalacentrio mall. These restaurants will provide a range of cuisines,
including , authentic contemporary Japanese cuisine, and innovative
Chinese foods. Participants are voluntary and will be selected from all
the staffs in selected restaurants. The same questionnaires will be
distributed to them after obtaining informed consent from them.

Instrument
In order to make sure most of the restaurant staff can read and
understand the questionnaire, it will be designed in English version. The
content of the questionnaire will be divided . Will measure participants’
perceptions of the restaurant environment and atmospherics. It
contains 10 attributes which reflect the dimensions of restaurant
atmospherics. Furthermore, these attributes will be described as the
statements that reflect patrons’ perceptions of the environment and
atmospherics. Then, there will be a five-point Likert scale range from 1
(strongly disagree) to 5 (strongly agree) to be selected as their
responses. As for the last part, it will elicit relevant personal
information, such as participants’ age, gender, educational level, job,
and position in restaurant.

Data analysis
After finishing the survey, the frequency of each response will be
computed and summarized. There will be several tables and charts
constructed to assess the responses from participants. All the statistics
tests will use the standard alpha level (α = .05). The analysis of the data
will provide a general idea about consumers’ attitudes to the restaurant
environment. It would be fruitful for owners and managers of the
restaurants to find appropriate ways to improve consumers’
satisfaction and to increase profits.