Thesis

Current State of the Restaurant Industry:
Literature Review
According to the National Restaurant Association the United States restaurant industry
generates about $799 billion each year (National Restaurant Assosiation, 2017). There
are over one million restaurants in the U.S. and they account for nearly 14.7 million
employees (National Restaurant Assosiation, 2017). There are also about 5,400 more
restaurant employees in January of 2017 than there were in December of 2016. (Bureau
of Labor Statistics, 2017).
The U.S. Census Bureau reported that eating and drinking place sales are up $56 billon
in January 2017 as opposed to $55.2 billion in December 2016 (U.S. Census Bureau,
2017). The U.S.’s Restaurant Performance Index (RPI) is measured in relation to a steady
state level of 100, where values above this line indicate expansion and values below
represent contraction. The RPI in January registered 100.1, down 0.4 percent from a
level of 100.5 in December (National Restaurant Association, 2017). This data is based
off of numbers from 400 restaurant operators nationwide regarding sales, traffic, labor
and capital expenditures. The National Restaurant Association’s Expectations Index also
shows a level of stability that hasn’t been seen since the first half of 2015.
In regards to service success, research shows that service quality has an effect on both
relationship quality and customer loyalty (Chen, 2016). It also states that restaurants
should focus on the responsiveness and assurance aspects of their business to achieve a
higher service quality rating. The more satisfied a customer feels with his or her
experience translates directly into how strong of a relationship the restaurant can
establish. Each restaurant must win over its customers by establishing trust and
confidence in their service and brand (Chen, 2016). Once the restaurant has established
a relationship with its customer it can begin to build customer loyalty. The more
customers embrace this relationship the stronger their loyalty will be.
When evaluating overall service quality, customers focus on four main aspects, price
fairness, food quality, service quality and physical environment (Ryu & Lee, 2013). They
also consider three dimensions of relational benefits, confidence benefits, social
benefits and special treatment benefits (Ryu & Lee, 2013). Customers that sense a high
relationship marketing investment (RMI) in these aspects are more likely to revisit the
restaurant. This principle of customer reciprocity highlights the need for restaurants to
develop and reinforce perceived RMI (Ryu & Lee, 2013).
A study within The Journal of Service Marketing concluded that customer satisfaction
was influenced most by the responsiveness of front-line employees, followed by price
and food quality (Andaleeb & Conway, 2006). This study also concluded that physical
design and appearance had little effect on customer satisfaction, but it can be argued
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