Academic journal article International Journal of Business and Society

Developing a Framework of Success for the Foodservice Industry in Malaysia

Academic journal article International Journal of Business and Society

Developing a Framework of Success for the Foodservice Industry in Malaysia

Article excerpt

ABSTRACT

Foodservice establishments must place a high priority on understanding the growing markets resulting from rapid urbanization and rising numbers of tourists. This industry has a huge impact on the economy but significantly affected by customers' ever-changing preferences. Managers need to gain and sustain strategic advantage in this highly competitive industry, thus a local customer preference assessment is crucial. This paper presented the dimensions of customer preference in the Malaysian food service industry, tested empirically for unidimensionality, reliability and validity using both exploratory and confirmatory factor analysis. A 30-item questionnaire was designed and distributed to 1000 foodservice customers, yielding a response rate of 64.2%. Factorial analysis confirmed five dimensions of customer preference, and using multiple regression, their order of importance are Halal (permissible in Islam), Price, Quality of Service, Branding and Tangibles. All the five dimensions have positive correlation with customer satisfaction, which in turn correlates highly with customer loyalty. Hence, a framework of success is proposed as the guidelines for practitioners and authorities in enhancing the success of the foodservice industry.

Keywords: Success framework, customer preference, satisfaction, loyalty, foodservice industry

1. INTRODUCTION

In the ever changing market environment, today's foodservice operators must place a high priority on understanding the market in order to retain and sustain strategic advantage in the highly competitive foodservice industry (McQueen, 1989). This industry is considered to be the fastest growth industry in the global market (Gu & Kim, 2002), and it is described by players of the industry as being in the middle of a perfect storm (Haas, 2008). The U.S. foodservice industry for instance, being the largest globally, is fast becoming influential and important to the U.S. economy, with its $580 billion in sales and 12.7 million employees, making it one of the largest private sector employers (NRA, 2010). However, the economic recession restricts spending which affects the foodservice industry in the United States thus foodservice operators have to reduce prices or offer promotional deals in order to enhance business performance (Euromonitor International Report, 2010).

Likewise, the economic recession since 2008 has restricted customers' spending on foodservice in the Asia Pacific countries namely China, Japan, South Korea, the Philippines, Vietnam and Malaysia. The economic conditions will influence customer preference on foodservice (Mohsin, 2005; Choi, et al., 2009). During the economic downturn, a constant challenge for foodservice is to find the right mix of attributes that could assist in the repatronage decision (Mohsin, 2005). Foodservice has to remain competitive by lowering prices or offering promotional deals in order to lure customers. Hence, economic recessions influence customers to opt for cheaper foodservice (Euromonitor International Report, 2010). Tough economic conditions from late 2008 led to a significant increase in the number of foodservice outlets launching promotional activities in 2009. In addition, most of the promotional activities are the introduction of children's menus and 'value for money' menus which are targeted at price conscious foodservice customers (Euromoniter International Report, 2010). Hence, the study of the foodservice industry is important as the literature has indicated its vulnerability to changes in customer preference in relation to economic trends.

In Malaysia, the foodservice industry is expected to continue its positive performance due to the growing sophistication and affluence amongst foodservice customer. Rapid urbanization and change in lifestyles have brought extra changes to local Malaysian customer preferences (Fatimah, et al., 2011). Hong (1985) highlighted the importance of the foodservice industry in Malaysia in relation to the increasing customer and tourist expenditure in this industry. …

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