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Int. J. Services and Standards, Vol. 5, No. 4, 2009 291 Copyright © 2009 Inderscience Enterprises Ltd. Service quality in the USA and mainland China’s fast-food restaurants Hong Qin* College of Business Administration, University of Texas-Pan American, 1201 West University Drive, Edinburg, TX 78539, USA Email: [email protected] *Corresponding author Victor R. Prybutok and Daniel A. Peak College of Business Administration, University of North Texas, Information Technology and Decision Sciences Department, P.O. Box 305249, Denton, TX 76203, USA Email: [email protected] Email: [email protected] Abstract: This study involves a cross-cultural examination of a modified service performance (SERVPERF) instrument as well as measures of food quality, perceived value, customer satisfaction and behavioural intentions. Specifically, the attribute recoverability was incorporated into the survey instrument and empirically refined and validated in the setting of the fast-food industry in both the USA and China. Additionally, several potential antecedents of customer satisfaction in fast-food restaurants were assessed – service quality, food quality and perceived value. Finally, the direct and positive relationship between behavioural intentions and customer satisfaction was examined in the context of our model in both countries. Keywords: behavioural intentions; customer satisfaction; fast food; recoverability; services; standards; service quality. Reference to this paper should be made as follows: Qin, H., Prybutok, V.R. and Peak, D.A. (2009) ‘Service quality in the USA and mainland China’s fast-food restaurants’, Int. J. Services and Standards, Vol. 5, No. 4, pp.291–315. Biographical notes: Hong Qin is an Assistant Professor in the College of Business Administration at the University of Texas-Pan American. She has published in Quality Management Journal and the Decision Sciences Institute conference proceedings, and has presented her research at the INFORMS Annual Meeting and the DSI Annual Meeting. Her research interests include service operations, quality control, supply chain management. Victor R. Prybutok is a Regents Professor of Decision Sciences in the College of Business at the University of North Texas. He is an ASQ certified quality engineer, certified quality auditor, certified quality manager, and served as a

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Int. J. Services and Standards, Vol. 5, No. 4, 2009 291

Copyright © 2009 Inderscience Enterprises Ltd.

Service quality in the USA and mainland China’s fast-food restaurants

Hong Qin* College of Business Administration, University of Texas-Pan American, 1201 West University Drive, Edinburg, TX 78539, USA Email: [email protected] *Corresponding author

Victor R. Prybutok and Daniel A. Peak College of Business Administration, University of North Texas, Information Technology and Decision Sciences Department, P.O. Box 305249, Denton, TX 76203, USA Email: [email protected] Email: [email protected]

Abstract: This study involves a cross-cultural examination of a modified service performance (SERVPERF) instrument as well as measures of food quality, perceived value, customer satisfaction and behavioural intentions. Specifically, the attribute recoverability was incorporated into the survey instrument and empirically refined and validated in the setting of the fast-food industry in both the USA and China. Additionally, several potential antecedents of customer satisfaction in fast-food restaurants were assessed – service quality, food quality and perceived value. Finally, the direct and positive relationship between behavioural intentions and customer satisfaction was examined in the context of our model in both countries.

Keywords: behavioural intentions; customer satisfaction; fast food; recoverability; services; standards; service quality.

Reference to this paper should be made as follows: Qin, H., Prybutok, V.R. and Peak, D.A. (2009) ‘Service quality in the USA and mainland China’s fast-food restaurants’, Int. J. Services and Standards, Vol. 5, No. 4, pp.291–315.

Biographical notes: Hong Qin is an Assistant Professor in the College of Business Administration at the University of Texas-Pan American. She has published in Quality Management Journal and the Decision Sciences Institute conference proceedings, and has presented her research at the INFORMS Annual Meeting and the DSI Annual Meeting. Her research interests include service operations, quality control, supply chain management.

Victor R. Prybutok is a Regents Professor of Decision Sciences in the College of Business at the University of North Texas. He is an ASQ certified quality engineer, certified quality auditor, certified quality manager, and served as a

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Texas Quality Award Examiner in 1993. He has authored over 90 journal articles, several book chapters and more than 70 conference presentations in information systems measurement, quality control, risk assessment and applied statistics.

Daniel A. Peak is an Associate Professor of Information Technology in the College of Business at the University of North Texas. He has more than 25 years of IT consulting and planning experience working for managers and executives of Fortune 500 companies, and has won and participated in numerous production and research grants. He has published in Informing Science, Information and Management, Journal of Computers and Information Systems, Information Systems Management, and others.

1 Introduction

Although the fast-food industry has existed since the ancient Romans, the modern fast-food industry is only a century old. Ever growing in popularity, worldwide fast-food consumption has accelerated over the past several decades, having achieved a global total of 80.3 billion transactions in 2006 with forecasts reaching 86.4 billion by 2011 (Datamonitor, 2007). The US and Chinese economies account for the vast majority of those fast-food transactions.

The USA, which possesses a 14.6 trillion-dollar economy – the largest in the world – also contains the world’s largest fast-food market, having generated 63.1% of the global fast-food market revenues (Datamonitor, 2007; CIA World Factbook, 2009). China, which possesses a 7.8 trillion-dollar economy and a 1.3 billion population – the largest population in the world and four times larger than the USA population (CIA World Factbook, 2009) – contains the world’s largest potential fast-food market. This potential is supported by China’s prodigious two-decade average of double-digit economic growth. Its gross domestic product and national industrial output have advanced at 11% and 10.3%, respectively (Datamonitor, 2007). As their standard of living continues to improve, the Chinese people are demonstrating a complementary affinity for fast food.

With Chinese citizens preparing fewer and fewer home-cooked meals (Cullen et al., 2008), Fast-Food Restaurant Revenue (FFRR) has increased in recent years – having reached nearly 35 billion dollars in 2006 – an increase of 27.2% over 2005 (Asia Market Information & Development Company, 2007). Still, Chinese fast food represents only 9.8% of the outside meals, compared with 84.5% in the USA (Datamonitor, 2007). The relatively lower market share of Chinese fast food suggests a significant business opportunity for fast-food restaurants (FFRs) that operate globally, such as McDonald’s that opened 125 new Chinese restaurants this year and plans 150 more in 2009 (China Economic Review, 2008), as well as for domestic FFRs, such as Chinese fast-food teahouses that provide tea, snacks and traditional fast food (Access Asia, 2007).

The concept of service quality plays a central role in understanding customer satisfaction and behavioural intentions (Parasuraman et al., 1985), demonstrating that companies that provide superior service quality are able to maintain a more satisfied customer base and consequently experience higher economic returns (Gilbert et al., 2004; Malhotra et al., 2005; Gilbert and Veloutsou, 2006). For instance, Hofstede’s (1980) cultural dimensions indicate that the USA is ranked higher in individualism, masculinity and short-term orientation than China; while China ranks higher on collectivism, power

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distance, long-term orientation and uncertainty avoidance. This study helps fill the gaps in understanding between the China and US FFR markets – which can be achieved by examining the differences in culture and influences of cultural factors – to improve transference of the US fast-food service quality model to China. As a result, we believe studies that examine how customers from different cultures evaluate service quality can provide insight into foreign consumer markets, such as the emerging Chinese fast-food market. As researchers have noted, understanding core competencies and how they are culturally relevant is vital, because transference of the US fast-food model is not necessarily appropriate to a global environment (Leong and Kim, 2002).

2 The purpose of this study

We believe this study adds to service quality research via its contributions to the understanding of service quality differences between the US and Chinese fast-food markets for the following reasons. First, US fast-food franchises increasingly seek China’s emerging fast-food market; the number of FFRs of all kinds in China is growing rapidly (Witkowski and Wolfinbarger, 2002). China is a major global player in this market due to its rapid consumption growth rate and enormous population, particularly since its accession to the World Trade Organization (Zhao et al., 2007).

Second, because US consumer requirements do not necessarily transfer to those of Chinese consumers, we and others believe it is important to conduct research comparing the perceptions of service quality across different cultures (Zhao et al., 2007). This work adds to that of Qin and Prybutok (2008), who investigated the dimensions of perceived service quality and its relationship to customer satisfaction and behavioural intentions. That work did not examine the influences of cultural factors in fast-food settings. It is also relevant to this research that numerous studies have substantiated the major differences between Chinese and US consumers (e.g. Friedman et al., 2006; Friedman et al., 2007; Chan and Wan, 2008).

Third, Chinese consumers possess a profoundly different cultural heritage and different food flavour preferences from Americans (Jie, 2006). Traditional Chinese fast food, including street-side wontons, pulled noodles, dumplings, steamed stuffed buns, soybean milk drinks and tea-eggs dominated the local China market in early 1990s; large western fast-food companies failed to seriously challenge traditional Chinese fast-food chains until the mid-1990s. However, over the next ten years, Chinese FFRs experienced a powerful marketing assault from these western-style FFR chains, such as McDonald’s, KFC and Pizza Hut (Jie, 2006). Moreover, customer satisfaction evaluations are susceptible to cultural variation (Heskett et al., 1990; Trompenaars, 1994; Mattila, 1999; Furrer et al., 2000); business sensitivity to cultural differences is vital to business strategy.

Finally, there is a paucity of work examining the differences between Chinese and US customer perceptions of FFR service quality. Although some studies have addressed service quality and customer satisfaction in FFRs (Lee and Ulgodo, 1997; Brady et al., 2001; Gilbert et al., 2004; Qin and Prybutok, 2008), most of the prior research associated with quality management in China is characterised by descriptive statistics and lacks reliability and validity assessments. Therefore, contextualised research focusing on theoretical relationships within specific industries is worthy of investigation (Zhao et al., 2007).

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In this paper, we first develop a FFR success model by examining the primary dimensions of service quality in FFRs in the USA and China. Specifically, along with the five dimensions of the SERVPERF instrument, contextualised recoverability is incorporated into our FFR survey instrument. We empirically test and refine the modified SERVPERF instrument with recoverability. Finally, we examine and compare the relationships among perceived service quality, customer satisfaction and behavioural intentions between the US and Chinese samples.

The research model presents the hypotheses posited in this study. The research model is followed by the methodology and results for both the US and Chinese samples. The paper concludes with a discussion and conclusion, limitations and future research.

3 Research model

Our foundation rests on the proposition of customer loyalty as a result of the quality of the service received. To provide the necessary background we next discuss the research model and hypotheses posited in this study. The construct relationships are presented in Figure 1.

Figure 1 FFR success model

Food Quality (FQ)

Service Quality (SQ)

Perceived Value (PV)

Customer Satisfaction (CS)

Behavioural Intentions (BI)

H1

H2, 8

H3, 7

H4

H5, 6

3.1 Hypothesis 1: satisfaction and behavioural intention

The relationship between customer satisfaction and behavioural intentions has received considerable attention in the marketing literature (Zeithaml et al., 1996; Meuter et al., 2000; Brady et al., 2002; Bagodi and Mahanty, 2007; Razak et al., 2007; Tsai et al., 2007; Torres-Moraga et al., 2008). A number of studies reported a positive relationship between customer satisfaction and behavioural intention (e.g. Cronin et al., 2000; Olorunniwo et al., 2006), which is consistent with our first hypothesis as follows:

H1: Customer satisfaction has a direct and positive influence on behavioural intention.

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3.2 Hypothesis 2: perceived service quality and customer satisfaction

Researchers generally agree that the service quality and customer satisfaction constructs are different (Boulding et al., 1993); however, there is still an ongoing debate related to the direction of their causal relationship (Andaleeb and Conway, 2006). One research group posits that service quality is the consequence of satisfaction over time (Parasuraman et al., 1985; Parasuraman et al., 1988), while another conversely posits that service quality is an antecedent of satisfaction. Although we find no consensus in the literature on the causal order of these two constructs, the converging opinion is that service quality evaluation of a product or a service encounter leads to an emotive satisfaction assessment that in turn drives behavioural intention (Bagozzi, 1992). As a result, we accept the premise that service quality is a determinant of satisfaction, leading to our second hypothesis:

H2: Service quality has a direct and positive influence on consumer satisfaction.

3.3 Hypotheses 3 and 4: other determinants of customer satisfaction

In addition to service quality, product quality also influences customer satisfaction (Parasuraman et al., 1994). Researchers have tested food quality as a determinant of satisfaction in the fast-food industry (Johns and Howard, 1998; Kivela et al., 1999; Law et al., 2004); our third hypothesis is:

H3: Food quality has a direct and positive influence on customer satisfaction.

Perceived value is also viewed as one of the antecedents of customer satisfaction. The direct and positive relationship between perceived value and satisfaction was found in several prior studies (Kara et al., 1995; Fornell et al., 1996; Lee and Ulgado, 1997; Gilbert et al., 2004). As a result, we propose that perceived value is an antecedent of satisfaction but that it is extraneous to service and food quality. Therefore, the next hypothesis of this study is:

H4: The perceived value has a direct and positive influence on customer satisfaction.

3.4 Hypotheses 5–8: cultural values

Culture is defined as the attitudes, beliefs, values and customs that create behavioural norms within a society (Yau, 1994). Cultural differences can account for varying effects on the acceptability and adoption of services (Javalgi and White, 2002). Consequently, the influence of culture on the perceptions of service quality and customer satisfaction was widely investigated in the fast-food industry (e.g. Mattila, 1999; Furrer et al., 2000; Laroche et al., 2004; Chan and Wan, 2008).

Lee and Ulgado (1997) use the SERVQUAL instrument to examine the differences between US and Korean fast-food consumers. They find that low food prices and trust are of paramount importance to US customers, while Korean customers attach more importance to reliability and empathy. Kara et al. (1995) differentiate fast-food customer perceptions and preferences in the USA and Canada based on the following 11 parameters: price, friendliness of personnel, menu variety, service speed, calorie content, cleanliness, convenience, business hours, service delivery, novelties for children and seating facilities. Gilbert et al. (2004) provide a study of service satisfaction of FFRs, comparing the

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differences in perceived service quality among the customers in four countries: Jamaica, Scotland, USA and Wales. However, none of these studies examine the relationship between customer satisfaction and behavioural intention or investigate the service quality in FFRs in China.

Brady et al. (2001) conducted a cross-cultural assessment of the effects of service quality, service value and satisfaction on behavioural intentions for US and Ecuadorian consumers. Keillor et al. (2004) examined the influences of technical and functional elements on customers’ behavioural intentions across eight countries in both the fast food and grocery industry. With US fast-food consumers, both food quality and service quality are positively related to behavioural intention; with Chinese consumers, only food quality is significant. However, Keillor et al.’s (2004) study used neither the five dimensions of SERVQUAL nor the customer satisfaction construct.

To help fill this void, our next two hypotheses examine the differences between Chinese and US consumers, using the most widely validated cultural factor: individualism versus collectivism (Hofstede, 1980; Hofstede, 1991). According to this cultural factor, China has a highly collectivist culture, which indicates strong and cohesive ties between group members; whereas the USA has an individualist culture characterised by loose ties (Laroche et al., 2004). In collectivist cultures, people are striving to obtain a favourable public self-image or ‘face’ (Goffman, 1967); the relationship between service providers and consumers is more intimate and more loyal. In collectivist cultures, trust and commitment and a favourable network of personal interactions are considered prerequisites of a successful business relationship, which is particularly true in China (Park and Luo, 2001; Laroche et al., 2004). Therefore, we propose reliability, empathy and trust as the most important dimensions of service quality for Chinese consumers.

H5: Reliability, empathy, and trust are more important than the other dimensions to Chinese customers.

In contrast to collectivist cultures, consumers within individualist cultures focus on personal welfare, personal freedom and self-responsibility instead of defining themselves in relation to others; hence, individualistic consumers are more sensitive to service delays and failures (Furrer et al., 2000). As a rule, consumers that live in developed countries characterise time as a limited and scarce resource, and they place a relatively higher value on time (Lane and DiStefano, 1988) than consumers in developing countries. Meanwhile, individualist consumers exhibit higher expectations of service quality and a narrower zone of tolerance for service failures (Malhotra et al., 2005). Consequently, recoverability and responsiveness are hypothesised as two of the most important dimensions for US customers.

H6: Recoverability and responsiveness are more important than the other dimensions to US customers.

An individual’s culture influences his/her perceived performance through personal beliefs, attitudes and values (Ball and McCulloch, 1999). Material and social culture issues are related to food (Renaud, 1931) because food fulfils not only a nutritional function, but also serves social and symbolic functions (Soemardjan, 1985); customers from different cultures can attach different importance to food quality. For instance, nearly every Chinese province has its own culinary tradition, and every small town has

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its own specialty dishes (Dunlop, 2008). Food diversity leaves Chinese customers more options when they make decisions about which FFR to frequent. For US customers, available fast foods are more standardised and limited.

Customers in developing countries such as China exhibit lower expectations of service quality compared with those in developed countries such as USA and Canada (Malhotra and Ulgado, 1994). According to Malhotra et al. (2005), customers in developing countries place more weight on the core benefits of FFRs (i.e. the food quality), while customers in developed countries exhibit greater satisfaction from extended FFR benefits (i.e. lifestyle and sensory experiences). Recognising this dichotomous cultural relationship between food quality and service quality, we posit our final hypotheses:

H7: Food quality is more important than service quality for Chinese customers.

H8: Service quality is more important than food quality for US customers.

4 Methodology

4.1 The measurement of service quality with SERVPERF

A seminal work in service quality is Parasuraman et al.’s (1988) SERVQUAL instrument; it measures perceived service quality by the degree of discrepancy between customers’ expectations for the service and their perceptions of the providers’ actual performances (Parasuraman et al., 1985; Parasuraman et al., 1988). The SERVQUAL model identifies five dimensions as the main attributes of service quality, including tangibles, reliability, responsiveness, assurance and empathy.

The SERVQUAL instrument has received criticism – both theoretically and practically – in spite of its extensive application in a variety of industries (Bojanic and Rosen, 1994; Lee and Ulgado, 1997; Furrer et al., 2000; Heung et al., 2000; Lassar et al., 2000). To cope with the issues regarding the use of gap scores and the ambiguous definition of the expectations (Van Dyke et al., 1999), Cronin and Taylor (1992) justify the SERVPERF instrument by measuring the perceived service quality; SERVPERF uses only the performance portion of the SERVQUAL scale. The SERVPERF scale is employed and suggested in various service settings (Van Dyke et al., 1997; Gilbert et al., 2004; Keillor et al., 2004; Law et al., 2004; Landrum et al., 2009), including the fast-food industry (Jain and Gupta, 2004; Qin and Prybutok, 2008). For the purposes of this study, we adopted the SERVPERF instrument.

Another important contribution of this study is recoverability. Recoverability – the service organisation’s ability to take mitigating actions when service goes wrong – is necessary for that organisation to retain and attract new customers. We examined recoverability in the fast-food environment as a SERVPERF dimension of perceived service quality in this study. We slightly modified the four items (questions) that measure recoverability from a mass service environment application to reflect the fast-food service environment. Our reasons are as follows.

Researchers recommend modifying the SERVPERF instrument to capture the service context (e.g. fast food) of a particular study (Carman, 1990; Andaleeb and Conway, 2006). Qin and Prybutok (2008) examined the modified SERVPERF in the fast-food environment in USA; however, in their work recoverability was not included as one of the dimensions of perceived service quality in that study. Qin and Prybutok’s work provided a

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foundation for this study but the current research made new contributions to this area of service quality measurement because this research examined a modified model that included new dimensions and examined the transfer of the model to China’s growing market.

Recognising this need, we have augmented SERVPERF to measure fast-food service recoverability. For instance, research indicates that customers may be willing to tolerate service mistakes if they believe that the restaurant is concerned about the resolution of the failure (Heskett et al., 1994; Bitner et al., 1990; McColl et al., 2005). These findings suggest that service failures alone do not necessarily lead to customer dissatisfaction because such failures are often minor, as opposed to the major failures that get reported in financial service industries (Koong et al., 2008). Rather, it is the business’s failure to recover effectively that can lead to lost patronage and unfavourable publicity (Heskett et al., 1994; McColl et al., 2005). Furthermore, a business’ successful recovery from a service failure can have positive effects – providing future repeat patronage and favourable word-of-mouth endorsements (Leong and Kim, 2002).

4.2 The instrument constructs

The list of constructs, items and sources used in this study and their sources are shown in Table 1. We applied minor contextual customisation to better fit the FFRs to the fast-food context, especially for those items that measure empathy. Table 1 Sources of questionnaire items

Constructs Items (Questions) Variables Sources Clean dining area Tangibles1 Cronin and Taylor, 1992;

Johns and Howard, 1998; Kara et al., 1995

Tangibles

Well-dressed employees Tangibles2 Using disposable gloves

and hair net Tangibles3

Seating availability Tangibles4 Parking availability Tangibles5

Reliability Providing service as promised Reliability1 Cronin and Taylor, 1992 Sympathetic and reassuring Reliability2 Dependable Reliability3 On-schedule service Reliability4

Accurate charge Reliability5

Assurance Trust employees Trust1 Cronin and Taylor, 1992 Feel safe for financial transactions

Trust2

Friendly employees Trust3

Knowledgeable employees Trust4

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Table 1 Sources of questionnaire items (continued)

Constructs Items (Questions) Variables Sources Responsiveness Telling exact service time Responsive1 Cronin and Taylor, 1992

Employees available to requests

Responsive2

Prompt service Responsive3

Employees willing to help Responsive4

Empathy Availability of sauces, etc.

Empathy1 Cronin and Taylor, 1992; Johns and Howard, 1998

Convenient operating hours Empathy2 Convenient locations Empathy3

Completely packaged food Empathy4

Recoverability Employees quickly apologize for mistakes

Recoverability1 Olorunniwo et al., 2006

Cares about customer’s complaints

Recoverability2

Skills and ability to deal with complains

Recoverability3

Employees empowered to provide compensation

Recoverability4

Food Quality Fresh Food1 Johns and Howard, 1998; Kivela et al., 1999

Presentation Food2 Well-cooked Food3

A variety of food and beverage Food4

Perceived Value

Competitive price for food PerceivedValue1 Kim and Kim, 2004; Kara et al., 1995

Competitive price for beverage PerceivedValue2 Value worthy of price PerceivedValue3

Customer Satisfaction

Satisfied with dining CSatisfaction1 Olorunniwo et al., 2006

Wise choice CSatisfaction2 Right thing CSatisfaction3

Enjoyable experience CSatisfaction4

Behavioural Intentions

Recommendation BIntentions1 Boulding et al., 1993; Keillor et al., 2004

Intention to dine here again BIntentions2 Saying good things about the FFR

BIntentions3

Lee and Ulgado (1997) compare FFRs service quality in the USA and Korea, and find that empathy in the SERVPERF instrument is not a significant dimension of service quality for US customers; US customers are more concerned with the convenience of locations. Also, Andaleeb and Conway (2006) suggest that several of the original empathy items such as ‘individual attention’, ‘personal intention’ and ‘having best interest at heart’

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are not appropriate for the restaurant industry. Therefore, we used the following four items to measure empathy: convenient location, convenient service time, availability of utensils and correctly packaged orders (see Table 1). Another reason for modifying the empathy items is that services provided by most FFRs, regardless of whether dining-in or driving-through, involves a quick encounter between employees and customers. The shortness of FFR encounters makes it difficult for employees to convey that they are offering personalised attention or to demonstrate that they are knowledgeable about a specific customer’s needs and interests. Considering these issues, research indicates that the original empathy items are more appropriate and valuable in other industries where ‘relationship marketing’ is critical, such as hospitals and banks, rather than FFRs where ‘transaction marketing’ is a more appropriate paradigm (Andaleeb and Conway, 2006).

All items were rated by respondents on a seven-point Likert scale. Each item was scaled from number 1 with the verbal statement ‘Strongly Disagree’ to 7 with the verbal statement ‘Strongly Agree’. The questionnaire was first reviewed by several knowledgeable faculty in a large southwestern university and experts in the field of service quality management. Subsequently a pilot test was conducted with 30 doctoral students who are familiar with the research topic and research methodology of this study. Based on their feedback, some modifications were made to better fit the FFR context. And then this FFR success instrument, consisting of 40 conceptual items, was administered to college students that were mostly juniors in a large southwestern university in the USA.

The US sample was used for model development and subsequent testing of the US model was conducted using a similar sample that was obtained in China. The model was first developed in the USA and then tested in China rather than developed and tested as a single multi-country model to enable cross cultural testing of a western FFR model.

4.3 Justification for using college student as subjects

For our Chinese and US subject groups, we used college students as subjects from a large mainland Chinese university and large southwestern US university, respectively, for the following reasons. First, they are part of our research environment; college students are frequently used by researchers in all areas of academic inquiry. Second, college students exhibit homogeneous demographics, which can provide a stronger test of theory for cross-countries studies (Calder et al., 1981). Third, college students dine at FFRs frequently, and possess an intuitive understanding of service quality in FFRs. Fourth, while college students might not be representative of all of the customers from their respective cultures, they represent the educated group from the upper and middle classes that frequents FFRs. Finally, college students are a frequently targeted market segment in foreign countries, because they are a group receptive to this new industry (Laroche et al., 2004; Ueltschy et al., 2004).

5 Results

We distributed the survey and received a total of 453 usable responses from the Chinese and US universities. All respondents had dined at a FFR in the previous month, and about 40% of the respondents had dined in a FFR more than five times within the month

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in which they were surveyed. The demographics of the US and Chinese samples were comparable in this study. Detailed demographic information is provided in Table 2, including gender, age and dining frequency. Table 2 Demographics of sample

Characteristic USA China Male 45.7% 46.2% Gender

Female 54.3% 53.8% 18–20 26.6% 18.7% 21–25 55.7% 72.5% 26–30 10.7% 4.7% 31–35 3.5% 2.9%

Age

Over 35 3.5% 1.2% 0–5 times 41.0% 92.3% 6–10 times 31.6% 5.2%

11–15 times 13.8% 1.7%

Dining Frequency

More than 15 times 13.6% 0.8% Total Respondents 282 171

5.1 Assessment of reliability and validity in the US sample

We applied Exploratory Factor Analysis (EFA) to assess the discriminant and convergent validity of the instrument. Items with a loading less than 0.50 on any latent variable were deleted. The results of principal axis factor analysis after rotation are presented in Table 3. The 13 remaining items loaded into four factors: recoverability, empathy, trust and reliability for the US sample. The intent of this portion of the analysis was to first use the US sample for model development via EFA. Once the items were cleaned via this EFA we fit the model in the USA and then subsequently used the independent sample in China for cross-cultural validation of the model.

We next applied Confirmatory Factor Analysis (CFA) to provide a more rigorous procedure for testing unidimensionality (Anderson and Gerbing, 1988). The LISREL 8.54 structural equation analysis package (Jöreskog and Sörbom, 2003) was used to conduct the CFA analysis. The primary outputs indicate that most of the standardised loadings are higher than 0.80, and all of the t-values are greater than 1.96, which supports the convergent validity of the item measures (Olorunniwo et al., 2006).

We assessed reliability of the instrument using Cronbach’s alpha. All the Cronbach values, shown in Table 3, are greater than the benchmark value of 0.80, ranging from .852 to .929 (Nunnaly and Bernstein, 1994). These results support the contention that all of the items measure their respective latent constructs reliably. The Goodness-of-Fit indices including the chi-square/degree of freedom (χ2/df), the standardised Root Mean Square Residual (SRMR), the Root Mean Square Error of Approximation (RMSEA), the Normed Fit Index (NFI), the Non-Normed Fit Index (NNFI), and the comparative fit index, support the acceptability of this measurement model.

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Table 3 US sample: factor loadings for service quality in FFR success model

F1 Recoverability F2 Empathy F3 Trust F4 Reliability Recoverability1 .727 .302 Recoverability2 .840 Recoverability3 .812 Recoverability4 .710 Empathy3 .304 .572 Empathy4 .834 Empathy5 .836 Trust1 .468 .716 Trust2 .357 .708 Trust3 .468 .608 .337 Reliability1 .344 .333 .669 Reliability3 .418 .302 .643 Reliability4 .448 .310 .608 Mean 4.690 5.649 4.731 5.138 Standard Dev. 1.451 1.323 1.400 1.276 Cronbach’s Alpha .929 .852 .888 .892

Notes: Extraction method: Principal Axis Factoring. Rotation method: Varimax with Kaiser Normalisation.

We assessed discriminant validity by the 95% confidence interval of the inter-factor correlation between two latent variables. In spite of the high correlation coefficients between some variables, their confidence intervals don’t include the absolute value of 1.0 (Anderson and Gerbing, 1988). In addition, composite reliability scores were used to assess the discriminant validity. Table 4 shows that all the composite reliability scores of the diagonal elements are higher than the off-diagonal correlation coefficients, which supports discriminant validity. Table 4 US sample: correlation matrix for service quality dimensions

Recoverability Empathy Trust Reliability Recoverability .929a Empathy .526b .852a Trust .727b .519b .888a Reliability .692b .652b .714b .892a

Notes: aThe diagonal elements are Cronbach’s alpha values. bIndicates significance at p < 0.01 level.

We employed a second-order CFA to examine the relationship between service quality and its main dimensions. Table 5 shows that all the dimensions were significant and positively related to the latent variable service quality. The previously selected fit indices support the contention that this second-order measurement model of service quality is acceptable. Given their good measurement properties (reliability and validity), the average score for each latent construct that comprised service quality was employed in the following hypothesis testing procedures, a methodology that was used by Paswan et al. (1998).

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Table 5 US sample: confirmatory factor analysis of second order measurement model

χ2/df p-value RMSEA SRMR NFI NNFI CFI 181.63/61 0 .090 .049 .97 .98 .98 Path Standardised Loading t-valuea Recoverability Construct Recoverability1 .88 22.53 Recoverability2 .92 _b Recoverability3 .92 25.21 Recoverability4 .80 18.61 Empathy Construct Empathy3 .80 _b Empathy4 .75 11.91 Empathy5 .73 11.70 Trust Construct Trust1 .85 _b Trust2 .83 16.75 Trust3 .88 18.11 Reliability Construct Reliability1 .86 18.51 Reliability3 .87 _b Reliability4 .84 18.02 Overall Service Quality Recoverability .85 15.18 Empathy .77 11.16 Trust .89 14.50 Reliability .91 15.54

Notes: at-values are from unstandardised solution. bt values are unavailable because the loadings are fixed for scaling purposes.

5.2 Structural model fit in the US sample

We used Structural Equation Modelling (SEM) to examine the hypothesised relationships because it is generally considered more suitable for mathematical modelling that involves complicated variable relationships. SEM allows analysis of both the measurement model and the structural model simultaneously. It can not only address measurement errors but also allows the examination of the factor analysis and hypothesis testing together (Gefen et al., 2000). Figure 2 presents all of the proposed relationships in this study for the US sample.

The Goodness-of-Fit indices in Figure 2 indicate a moderately good fit of the full structural model to the data. Hypothesis 1, predicting the direct and positive relationship between customer satisfaction and behavioural intention, is statistically supported. Hypothesis 2 is supported and this indicates that the direct and positive relationship between perceived service quality and customer satisfaction is significant. The finding supports Hypothesis 3, the direct and positive effect of food quality on customer satisfaction. Hypothesis 4, investigating a direct and positive relationship between

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perceived value and customer satisfaction, is not supported for the US sample. The nearly zero negative path coefficient and its insignificance in the US model is potentially due to a high degree of multicollinearity among latent variables (Carr, 2002).

Figure 2 Structural modelling for the US sample Goodness-of-fit Indices: χ2/df p-value RMSEA SRMR NFI NNFI CFI 581.45/128 0 .099 .097 .96 .97 .97 Legend: SQ = Service Quality

FQ = Food Quality PV = Perceived Value

CS = Customer Satisfaction BI = Behavioural Intention

Recoverability

Empathy

Trust

Reliability

Food1

Food2

Food3

Food4

PV1

PV2

PV3

CS1

CS2

CS3

CS4

BI1

BI2

BI3

.84

.76

.87

.78

.68

.83

.86

.84

.93

.86

.80

.93

.95

.93

.91

.86 .92

.96

.79*

–.04

.51*

SQ

CS

BI

FQ

PV

.42*

Hypothesis 6 is not supported. Instead of recoverability and responsiveness as hypothesised, recoverability and trust are the two most important dimensions of service quality in the USA, followed by reliability and then empathy. The results provide some support for Hypothesis 8, suggesting that service quality is the most important factor of customer satisfaction in the USA, because service quality’s path coefficients had the highest magnitude (0.51); however, the difference between that path and the others is not statistically significant. These differences were tested using Paternoster et al.’s (1998) Z test for the comparison of the coefficients. In the following section, the results are discussed in terms of their theoretical and managerial implications.

5.3 Assessment of reliability and validity in the China sample

We had the questionnaire translated for use in China, using procedures involving back-translation and decentring to address the translation problems (Brislin, 1970; Brislin et al., 1973). We employed the same method as described for the US study to assess the

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reliability and validity of the China study. Table 7 shows that 12 items remained and loaded into four factors: reliability, recoverability, tangibles and responsiveness for the China sample. The Cronbach’s alpha values in Table 7 support the reliability of the measure (Nunnaly and Bernstein, 1994). The primary output of the first-order measurement model shows that most of the standardised loadings are higher than 0.80, and all the t-values are higher than 1.96, which supports the convergent validity of the item measures (Olorunniwo et al., 2006). The Goodness-of-Fit indices also indicate that this measurement model is acceptable. Table 6 US sample: hypothesis results

Hypothesis Result LISREL Path Coefficient p-value H1 Supported .79 .00 H2 Supported .51 .00 H3 Supported .42 .00 H4 Not Supported –.04 .24 H5 N/A H6 Not Supported _a H7 N/A H8 Not Supported .51 and .42 .26

Notes: aHypothesis 6 states that recoverability and responsiveness are more important than reliability, empathy and trust to US customers. This pre EFA hypothesis is not testable because responsiveness was removed from the model based on the EFA results.

Table 7 China sample: factor loadings for service quality in FFR success model

F1 Recoverability F2 Tangibles F3 Reliability F4 Responsiveness Recoverability1 .697 Recoverability2 .882 Recoverability3 .681 .300 Tangibles1 .781 Tangibles2 .849 Reliability5 .509 .422 Reliability2 .520 Reliability3 .823 Reliability4 .317 .574 Responsiveness1 .306 .615 Responsiveness2 .778 Responsiveness3 .328 .606 Mean 5.004 5.700 5.012 5.049 Standard Dev 1.242 1.096 1.183 1.210 Cronbach’s Alpha .885 .817 .755 .769

Notes: Extraction Method: Principal Axis Factoring. Rotation Method: Varimax with Kaiser Normalisation.

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Discriminant validity is supported by the higher values in the diagonal elements in Table 8. The 95% confidence interval of the inter-factor correlation between two latent variables doesn’t include the absolute value of 1.0 for the China sample, which supports the discriminant validity of these constructs, as well (Anderson and Gerbing, 1988). Table 8 China sample: correlation matrix for service quality dimensions

Reliability Recoverability Tangibles Responsiveness Reliability .755a Recoverability .532b .885a Tangibles .528b .489b .817a Responsiveness .459b .541b .413b .769a

Notes: aThe diagonal elements are Cronbach’s Alpha values. bIndicates significance at p < 0.01 level. The second-order CFA shown in Table 9 for the China sample indicates that all of the dimensions have a significant and positive relationship with service quality. The fit indices presented in Table 9 indicate the acceptability of this measurement model. Table 9 China sample: confirmatory factor analysis of second order measurement model

χ2/df p-value RMSEA SRMR NFI NNFI CFI 110.56/50 0 .084 .061 .94 .96 .97 Path Standardised Loading t-valuea Reliability Construct Reliability2 .57 6.79 Reliability3 .65 7.74 Reliability4 .79 _b Recoverability Construct Recoverability1 .84 13.55 Recoverability2 .89 _b Recoverabiliy3 .83 13.32 Tangibles Construct Tangibles1 .57 10.11 Tangibles2 .69 _b Reliability5 .81 7.95 Responsiveness Construct Responsiveness1 .64 7.98 Responsiveness2 .89 _b Responsiveness3 .68 8.44 Overall Service Quality Reliability 0.92 9.79 Recoverability 0.73 8.85 Tangibles 0.84 7.52 Responsiveness 0.69 8.14

Notes: at values are from unstandardised solution. bt values are unavailable because the loadings are fixed for scaling purposes.

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5.4 Structural model fit in the China sample

SEM was also used for the China sample. Figure 3 shows the hypothesised relationships related to the China sample.

Figure 3 Structural modelling for the China sample Goodness-of-fit Indices: χ2/df p-value RMSEA SRMR NFI NNFI CFI 225.18/128 0 .051 0.051 0.96 0.98 0.98 Legend: SQ = Service Quality

FQ = Food Quality PV = Perceived Value

CS = Customer Satisfaction BI = Behavioural Intention

.91 .76

.79

.71

.84

.79

.76

.94

.82

.72

Reliability

Recoverability

Tangibles

Responsiveness

Food1

Food2

Food3

Food4

PV1

PV2

PV3

BI1

BI2

BI3

.64

.81

.65

.66

.69

.76

.76

.75 CS1

CS2

CS3

CS4

1.07*

.21*

.31*

.36*

SQ

BI

FQ

PV

CS

The Goodness-of-Fit indices show a moderately good fit of the full structural model to the data. Hypothesis 1, predicting the direct and positive relationship between customer satisfaction and behavioural intentions, is statistically supported for the China sample. Hypotheses 2, 3 and 4 are all supported, which indicates that service quality, food quality and perceived value are all positively related to customer satisfaction.

Hypothesis 5, depicting the greater importance of reliability, empathy and trust for Chinese consumers, is not supported. The items associated with empathy and trust were all removed based on exploratory factor analysis. However, this does not imply that those two dimensions are not important for the Chinese consumer. Rather, it suggests that SERVQUAL instrument requires greater modification when used in non-western cultures; it was developed in a western environment (Zhao et al., 2002). For example,

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some items that measure trust, such as ‘trust employees’, ‘feel safe in their transactions’, are not appropriate in China’s market. Cash is the most common form of payment in China, and very few consumers pay with a credit card. Therefore, the risk related to credit card payment during the transaction is not an important concern in China’s market. The results provide some support for the contention that food quality is perceived as the most important antecedent of customer satisfaction in China’s market, as tested in Hypothesis 7, because it has the highest path coefficient at 0.34; however, the difference between that path and the others is not statistically significant. These differences were tested using Paternoster et al.’s (1998) Z test for the comparison of the coefficients. Table 10 China sample: hypothesis results

Hypothesis Result LISREL Path Coefficient p-value H1 Supported 1.07 .00 H2 Supported .31 .00 H3 Supported .36 .00 H4 Supported .21 .00 H5 Not Supported _

a H6 N/A H7 Not Supported .36 and .31 .38 H8 N/A

Notes: aHypothesis 5 states that reliability, empathy and trust are more important than responsiveness and recoverability to Chinese customers. This hypothesis is not testable because empathy and trust were removed from the model based on EFA results.

6 Discussion and conclusions

This comparative study addresses a gap in the current service research by extending a service quality model developed for US service quality into a multi-national FFR environment, measuring the perceptions of service quality in FFRs with samples obtained from the USA and China. To accomplish this objective, we performed the following tasks.

First, we modified the SERVPERF instrument for the fast-food environment and tested it internationally. Our results show that the modified SERVPERF instrument can provide useful information about service quality management to the fast-food industry in both the USA and China. The results also suggest that some factors important to Chinese consumers are not captured in this instrument, and some existing items measuring the primary dimensions of perceived service quality require modification. So, it is critical to refine the current measurement instrument for use in China to better address what we learned by comparison of the US and China markets (Zhao et al., 2007).

Second, we tested the recoverability in both samples and found that the significance supports our modification of the SERVPERF model used by Qin and Prybutok (2008) – to add recoverability as one of the underlying dimensions of service quality for FFRs. Theoretically speaking, this result also supports modifying the SERVPERF model for a particular industry (Carman, 1990; Olorunniwo et al., 2006). Practically speaking, our

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findings suggest that the ability to deal with customer complaints effectively is directly related to customers’ perceptions of the service quality, which then impact their satisfaction and purchasing intentions.

Third, we determined the relative importance of the main dimensions of service quality for both countries; we found several remarkable differences between them with the second-order confirmatory factor analysis. For instance, empathy contributed more to customer perceptions of the overall service quality of US customers, whereas tangibles had more explanatory power in with Chinese customers. We identified trust as a main dimension of service quality in the USA, but not in China. However, we still believe that trust is important to the Chinese consumer; the results indicate that the items that measure trust need to be modified for use in a global environment. We found that recoverability was the most significant factor in both samples and this finding indicates that recoverability should be incorporated into existing FFR instruments. Practically, FFRs can collect customer feedback about the service they received in real time; furthermore, they can identify and respond to customers with service complaints in a timely manner. This strategy enables FFRs to identify the issues that they are confronting and take corrective actions. Responsiveness was found significant for Chinese customers. This might result from the fact that their pace is increasing and they are viewing time as more valuable than ever. Meanwhile, the Chinese are gradually becoming aware of their rights as consumers, in part due to a western influence (Imrie, 2005).

Fourth, we examined and found that food characteristics are still influential factors for both countries when customers make decisions about the selection of FFRs. Consistent with this finding, providing a wide variety of fresh, tasty food and beverages remains an important criterion for satisfying customers. This finding makes it imperative for FFR managers to develop better strategies to differentiate their services. For example, FFRs might find that segmenting the market by offering specialty market options such as low fat, low calorie, or low carbohydrate items increases their market appeal. Additionally, FFRs could prominently display calorie counts and other nutritional information for menu items on the menus and/or on their website, to better address needs of health conscious customers. Meanwhile, for those American-style FFRs operating in China, the results suggest that they may need to modify their menus.

Last, we examined perceived value, finding it significant in China but not in the USA. We believe that this characteristic is relatively homogenous among the restaurants in the US market, and as a result perceived value does not exhibit significant variation relative to the other factors. Furthermore, it is not a critical issue in evaluating customer perceptions of FFRs because an individual selecting a FFR is doing so in comparison to other FFRs but not to a fine dining establishment. In China, there is not only western fast food but also indigenous fast food, and the latter has the advantage of lower price. The average cost of a meal in Chinese FFRs is around $1.50; however, the cost in western fast-food chains is higher than $3.00. Confronted with the relatively big differences in food prices between these different fast-food chains, consumers place a higher value on price when making dining decisions.

The study empirically tested the relationships among the perceived service quality, satisfaction and behavioural intentions; both exploratory and confirmatory factor analyses were applied to calibrate the proposed service quality instrument using the survey data. The significant impact of active recovery strategies on FFRs’ revenues and profits indicate that FFRs must train employees in service recovery standards and guidelines.

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Meanwhile, employees should be empowered to compensate customers for service failures. For example, employees might be empowered to provide a price discount or coupons for a future visit to compensate customers in the event of a service failure.

Additionally, fast-food service managers should be responsible for recovery of service failures. Besides coordinating among different sections such as kitchen and dining room, service managers need to deal with dissatisfied customers and ensure that service failures are recovered to restore and reinforce customer loyalty. From the perspective of recruiting employees, applicants’ attitudes towards customer complaints should be considered. More opportunities should be given to those applicants who are willing to help customers and to resolve complaints.

The significance of food quality indicates that it is still important to serve meals properly and responsively. Computer ordering systems in FFRs such as the new automated beverage dispensers shorten food preparation time and enhance efficiency. FFRs can also enhance their customer tracking systems to better understand customer satisfaction and intention. Finally, it is important for FFRs to find recipes that work in their environment but allow providing fresh, tasty and healthy foods and beverages.

7 Limitations

The main limitation of this research was the use of college student subjects, which has a partial advantage because their relatively homogeneity in the two countries. To infer broader generalisability, an on-site survey or a more varied set of respondents is recommended. In spite of the homogeneity within our samples, college students are representative of an important segment of FFR target consumers and they are qualified to evaluate the performance of FFRs.

In addition, this study is limited to the fast-food industry, and the findings should be used cautiously in attempting to make generalisations to other industries, including other restaurant markets.

8 Future research

We believe an area of future research should examine how the dimensions of service quality in FFRs potentially differ as a function of culture. With the increasing trend towards globalisation, many FFRs have extended their business reach to different cultures. The dimensions identified in this study might need to be expanded because of the unique characteristics associated with local management. As a result, a direct comparison of the service quality dimensions across different countries is of great value.

The comparison of the service quality of western and local fast-food chains in China is another worthwhile research effort. Customers’ perceptions of service quality are affected by social, economic and cultural factors (Lee and Ulgado, 1997). Because of the remarkable differences between local and western fast-food chains, customers might have distinct expectations and perceptions related to their performance (Zhao et al., 2007). For example, McDonald’s in China is interpreted as a social space for customers to experience US culture; and therefore a greater emphasis is placed on respect for a person’s privacy and rights and on other intangible benefits. By contrast, Grand Mother Dumpling Restaurants, a renowned Chinese-style fast-food chain, is characterised by

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local flavours and lower prices; customers tend to have higher expectations about food quality and low prices. Hence, for different market segments, customers put varying values on various attributes of service quality and customer satisfaction. The awareness of this difference can enable FFRs to thoroughly understand their customers and continuously improve their service performance.

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