The restaurant industry is a very complex and unique industry, dealing with multiple facets of typical business operations. In essence, restaurateurs are running two critical components of business operations: manufacturing and sales, all under one roof (Biswas & Cassell, 1996). It is one of a few industries that must coordinate these complex tasks within the confines of the same facility. The manufacturing component has to do with kitchen operations. Restaurateurs must coordinate human resource management practices for this component of business, to hire, train, and develop the kitchen staff to produce food items consistently on a daily basis. Secondly, restaurateurs must coordinate proper human resource management practices in hiring, developing, and executing proper salesmanship and service practices to ensure a positive dining experience (Biswas & Cassell, 1996; Smucker, 2001). Therefore, restaurateurs must be concerned with both product quality and the level of service quality provided (Bojanic & Rosen, 1994).
The restaurant industry is the second largest employer in the United States, topped only by the Federal government, and employs 12.8 million individuals. Food and beverage sales are projected to hit approximately $537 billion industry wide in 2007 (National Restaurant Association, 2007).
Employee attitude, behavior, and work effort has a high impact on service quality, satisfaction, and customer retention in the service industry (Stamper & Van Dyne, 2003; Davidson, 2003; Schneider & Bowen, 1993). The theory is especially indicative in the highly competitive full service restaurant industry. The importance of customer–employee interaction in the restaurant industry is magnified because of the high level of contact the employee has with the customer for the duration of the dining experience. Organizational culture has a significant impact on employee service delivery (Davidson, 2003), which in turn could affect customers’ behavioral intentions. With organizational culture being the “glue” that allows the organization to sustain its unique identity (Cameron & Quinn, 1999; Creque, 2003), one would believe that building a customer-oriented restaurant would begin with developing the appropriate culture.
In a survey conducted by the National Restaurant Association (2004), restaurateurs stated that 70% of their business base comes from repeat customers. The same survey asked restaurateurs if it was getting more difficult to maintain customer loyalty. Fifty-two percent of the respondents said yes (Sanson, 2004). According to Crook, Ketchen, and Snow (2003), reasons for this difficulty may be attributed to two factors: (1) increased levels of competition and (2) low switching costs, which refers to customers ease in ability to dine at different restaurants if not satisfied with their dining experience. The restaurant business is a very difficult, highly competitive, and complex business with a high failure rate, running at approximately 60% (Sydney, 2003). Additionally, there are high start-up costs associated with opening a restaurant that add to the burden of failure (Crook et al., 2003).
With an increasing number of people dining out today, restaurateurs are focusing efforts on improving levels of service quality, which will in turn help build frequency of dining. As can be seen through the National Restaurant Association study, return patronage has a significant effect on the longterm success of restaurants. By gaining an understanding of how to provide the highest levels of service, organizations will be able to see increases in both brand loyalty and market share (Oh & Parks, 1997). Every business strives to build a high level of brand loyalty and repeat business. The restaurant business is challenged even more so than other businesses because of the tremendous number of choices and competition in the industry (Crook et al., 2003). According to Stevens, Knutson, and Patton (1995), if a restaurant does not provide its guests with the service and value they demand, they will leave it for another. The linkage of service quality to this defecting behavior was initially studied by Zeithalm et al. (1996) in a variety of industries.