Impact of Employee Performance on Customer Satisfaction in Restaurant Industry: Case of

Nandos UK
Research Proposal
By
[Your official name]
[Degree Title], [University], 20XX

[Name of program]
[Name of University]
[Last month of quarter you plan to graduate] 20XX

Employee Performance and Customer Satisfaction 2

Table of Contents
Introduction......................................................................................................................................3
Organisational Background.............................................................................................................5
Problem Statement...........................................................................................................................5
Aims and objectives.........................................................................................................................6
Research Questions..........................................................................................................................6
Rationale..........................................................................................................................................7
Significance of the Research...........................................................................................................7
Literature Review............................................................................................................................8
Employee Performance................................................................................................................8
Key Performance Indicators.........................................................................................................9
Research Methodology..................................................................................................................10
References......................................................................................................................................12
APPENDIX 1.................................................................................................................................24

Employee Performance and Customer Satisfaction 1

Impact of Employee Performance on Customer Satisfaction in Restaurant Industry: Case of
Nandos UK
Introductionto Research
In the increasingly globalised and competitive environment of 21st century, delivering
high quality service is one of the keys to a sustainable advantage for businesses because
customers are key stakeholders for every profit-based organization. Since customer satisfaction
is the focus of all business activities, ample amount of research has been conducted to investigate
the factors affecting customer satisfaction as well as the impact of customer satisfaction on the
businesses. Customer satisfaction has a positive impact on the profitability of an organization
and because satisfied customers result in repeat purchases and positively affect the brand image
and brand loyalty, they are a key to success for every organisation (Lee et al., 2012, p.20).
In the restaurant industry, customer satisfaction has a direct impact on the overall
restaurant sales (Hwang and Zhao, 2010, p.95). The restaurant industry of the UK is showing
rapid growth with an increase in revenue from 15.5 billion in 2010 to 21.6 billion in 2014.
Wages are growing faster than prices and the UK is heading towards deflation, according to The
Financial Times (2015), boosting up the restaurants performance as consumers spend
generously. Disposable incomes are predicted to grow by 3.7% in 2015 by the EY Item Club,
which is apparently the fastest rate in 20 years. People now have more money available to spend.
As a result, new restaurants have been opening, including fast casual chains which combine
the speed of fast food with dine-in facility (The Financial Times, 2015).
The growth of the restaurant industry has increased the pressure on organizations to
improve customer satisfaction levels to have a sustainable competitive advantage. In order to
deliver quality service, businesses depend on employees. Service quality does not only depend
on the quality of delivered service but also on the person delivering the service (Armstrong et
al., 2014, p.145). In restaurant industry, employees who directly interact with the customers are
the employees on the counter and the waiters / servers. Therefore, the satisfaction of customers is
directly linked with the performance of employees.
Customer satisfaction is the core element of marketing. If a customer is satisfied with a
certain product or service, he or she would be repurchasing that service or a product again on
regular basis. On the other hand, if the customer is dissatisfied, he or she may not try the product

Employee Performance and Customer Satisfaction 2

or service again. Thus, the importance of customer satisfaction can be understood from the fact,
higher the customer satisfaction rate, higher would be the businesss revenue thus larger profit
margin (Gounaris and Boukis, 2013, p.326). If the aspect of customer satisfaction is not
addressed properly by the organization, then it would be facing serious issues in generating
revenue for the business. Extreme dissatisfaction can also have a worst result for the company. It
can create negative word of mouth from the customer which can harm the business and its
reputation to much greater extent. One negative customer can make a chain of negative opinions
regarding a product or a service, thus customer satisfaction carries immense importance and
should not be ignored at any cost (Kimanuka, 2014).
There are number of factors that have an impact on the service quality delivered to
customers (Den Hartoget al., 2013, p.1640). These factors include experience, employee
performance and the level of hiring. Employee performance is regarded as a vital element for the
success of major organizations, thus needs to be evaluated efficiently. Employee performance
measurement is a process of analysing a record of outcomes and behaviour that occurred in a
specific period, and then compares it with the perfect record that should have been achieved
during that same period. Apart from employee behaviour, there are other factors that have a
direct impact on employee performance and therefore will be discussed based on the case study
of Nandos.
Organisational Background
Founded in 1987 in Johannesberg, South Africa by Fernando Duarte and Robert Brozin,
Nandos is an international restaurant chain with 1000 outlets and restaurants in over 30
countries. The restaurants offer casual dining with a Portuguese / Mozambican theme. Within 10
years since its inception, there were over 100 restaurants operating across South Africa. The first
Nandos restaurantin the UK opened in 1992 in West London suburbs of Ealing and Earls Court.
As of 2013, there were about 8000 people employed in more than 280 branches in the UK and
Ireland. Nandos UK won the title of Best Place to Work by Sunday Times. Nandos has the
largest South African art collection in the UK and more than 5000 of the works are displayed at
the restaurants across the UK (Nando UK, 2015).

Employee Performance and Customer Satisfaction 3

Problem Statement
The restaurant industry is one of the largest growing businesses in the service sector
(Pettipher, 2015). According to The Financial Times (2015), the restaurant industry of the UK is
rapidly growing and people are spending more than ever as they have more disposable income.
Competition is also increasingly as a result because new restaurants are opening. To sustain a
competitive advantage, businesses in the restaurant industry are required to deliver superior
quality services in order to attract and retain customers. Since the performance of employees has
a direct impact on customer satisfaction, restaurants are required to manage their workforce
effectively in order to sustain or increase the customer satisfaction levels and to achieve higher
profit margins (Kimanuka, 2015). However, that is not easily achieved because it is unclear
exactly how employee performance is related to customer satisfaction. Further research is needed
to explore the dynamics of employee performance and customer satisfaction to identify the link
between the two variables.
Aims and Objectives
The main aim of this study was to analyse how the performance of employee affects
customer satisfaction by studying the case of Nandos UK. Following were the objectives of the
study:

To study the concept of customer satisfaction and its importance for organisations
To study the factors affecting employee performance
To identify the strategies used by Nandos to improve employee performance
To evaluate the impact of employee performance on customer satisfaction in Nandos UK
To offer recommendations for organisations operating in the restaurant industry for
boosting the performance of their employees in order to increase customer satisfaction

Research Questions
Following research questions were developed to guide the research:

What is the significance of customer satisfaction for organisations?

Which factors affect the performance of employees?
What are the strategies used by Nandos to improve employee performance?
How does the performance of employees of Nandos UK affect the customers
satisfaction levels?

Employee Performance and Customer Satisfaction 4

Rationale of the Study
The importance of the research can be understood from the fact that higher the customer
satisfaction rate, the higher would be the revenues, thus higher profit for the company. Customer
satisfaction also has a positive impact on customer loyalty and retention (Kaser, 2010). Customer
satisfaction can be achieved by offering superior quality of the product and by giving
extraordinary customer services through employees. Particularly in the restaurant business, the
way in which employees and waiters interact with customers has a direct influence on customer
satisfaction (Kimanuka, 2014). If the food they serve is of excellent quality but customer service
is poor, customers are less likely to dine at the same restaurant again and the restaurant may even
lose its customers to its biggest competitors as customers would now be looking for some other
restaurant that provides better customer service. Despite of evident importance of relationship
between employees and customer satisfaction, there are no studies that have empirically studied
the impact of employee performance on customer satisfaction in the context of restaurant
industry.
Significance of the Research
This study will be useful for restaurant businesses because the findings of this study have
important implications for all the stakeholders of the restaurant industry, especially the
management, the employees and the customers. Restaurant managers could benefit from the
findings and recommendations of this study by using this study as a guide to devise better
strategies to improve the performance of employees as well as to increase customer satisfaction
levels. Employees could benefit from this study by gaining an understanding of how their
performance is directly linked with customer satisfaction and how they can contribute to the
success of their organisation by directly influencing customer satisfaction. Customers could gain
an insight into how their behaviour affects the restaurant employees and the other restaurant
workers that come into direct contact with them. Researchers can use this study to formulate
research questions to investigate other factors highlighted in this study that affect employee
performance and customer satisfaction and use the methodology of this study to conduct further
research into the same or other industries.

Employee Performance and Customer Satisfaction 5

Literature Review
Employee Performance
Employee performance, according to Mathis and Jackson (2009, p. 324), is the quantity,
quality and timeliness of the output given by the employee as well as the efficiency and
effectiveness of the work done (as cited in Tinofirei, 2011, p. 12; Thao and Hwang, 2015, p. 2).
According to Thao and Hwang (2015, p. 3), employee performance is reflected through the
successful completion of tasks by the employees in accordance with the pre-set targets and
standards set by the organisation, as well as efficient and effective utilization of available
resources within the dynamic environment of organisation (Thao & Hwang, 2015, p. 8).
In contrast, however, Aguinis (2009) argued that performance is related to the behaviours
themselves, not to the outcomes of employees behaviours and performance is about what
employees do, not about what they produce or their work outcomes (as cited in Onchokeet al.,
2015, p. 138). Employee performance is one of the key factors that affect the overall
performance of organisations and their success in todays competitive world of business (Thao &
Hwang, 2015, p. 8). Ample research has been conducted investigating how employee
performance affects and is affected by various factors, for example, Saeed et al. (2013), Sokoro
(2012), Njanjaet al. (2013), Edirisooriyaa (2014), Mudaet al. (2014), Thao and Hwang (2015),
Tinofirei (2011), etc.
Key Performance Indicators
Key Performance Indicators (KPI), according to Stan et al. (2012, p. 1), are the
performance assessment tools used to identify the level of achieving the pre-defined parameters,
standards or targets. Reh (2015) defined KPI as quantifiable measurements that are pre-defined
and echo the critical success factors of organisations. These indicators help organisations define
and evaluate their progress towards the achievement of organisational goals and are set once the
organisations have analysed their mission, identified their key stakeholders and defined their
goals.
Because organisations exist for different purposes, performance indicators vary across
organisations. There is no consensus over a standard and specified set of indicators that can be
used to measure the performance of employees across. Burkart (2013) identified six indicators to
measure the performance of employees, such as competency, productivity, communication Skills,

Employee Performance and Customer Satisfaction 6

commitment, cooperation and professionalism. Stan et al. (2012, p. 5) identified several factors
to measure employee performance in the industrial production lines, such as frequency of
damaged products delivered, number of complaints from crew members, the average number of
hours employee worked per week, time saved by innovative processes, number of public awards
or appreciation for innovations and the rate of unplanned absenteeism.
Catanoet al. (2012, p. 177) considered employees job performance as a complex,
multidimensional construct and divided job behaviour into three categories; task performance,
contextual performance, counterproductive work behaviour and adaptive performance.
Koopmans et al. (2011) conducted a systematic review in management, psychological and
medical databases to develop a conceptual framework for measuring individual work
performance and identified the three major dimensions as discussed by Catanoet al. (2012, p.
177).
Task performance was defined by Koopmans et al. (2011, p. 858) as the proficiency or
competency with which an employee carries out his main job tasks. Task performance is also
called job-specific task proficiency, technical proficiency and in-role performance and comprises
of quantity and quality of work as well as job knowledge. Task performance behaviours, as
explained by Catanoet al. (2012, p. 177), contribute to the core business activities, such as
production of goods and services, selling merchandise, acquisition of inventory, management and
administration, etc.
Research Methodology
The current study will be based on the positivist philosophy as the researchers aimed to
objectively examine the impact of employee performance on customer satisfaction, while
acknowledging the existence of unobservable realities. The researchers realize that customer
satisfaction cannot be accurately measured because the responses of research participants may be
influenced by various situational and personal factors.
The type of investigation for this research is explanatory as it sought to explain the
relationship between employee performance (independent variable) and customer satisfaction
(dependent variable) in the context of Nandos UK. Moreover, the current research will be
adapting the deductive approach to study the impact of employee performance on customer
satisfaction because the researcher generated hypotheses based on the review of literature and

Employee Performance and Customer Satisfaction 7

aimed to test it to find the relationship and impact on variable over other. On the basis of this
research, the researcher develops and idea about adding or enhancing the theoretical foundation.
Deductive approach also helps in gathering unbiased results and accordingly verifies various
factors and their relationship with a specific phenomenon (Thornhill, 2011). The nature of the
study is quantitative as it relied on collective data through the survey method so that responses
could be quantified and analysed using SPSS (Statistical Package for Social Scientists).
The current research will use the survey strategy to collect data. The significance of
survey can be understood from the fact that it allows the researcher to collect large amount of
data through which the researcher can derive valid and reliable results of the study. As compared
to other research strategies, Survey allows the researcher to collect data from large number of
respondents (Muijs, 2010).
The current research will be using non-probability sampling method and convenience
sampling technique to identify the sample i.e. n=75 customers of Nandos UK and n=75
employees of UK from Nandos.

Employee Performance and Customer Satisfaction 8

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Employee Performance and Customer Satisfaction 16

APPENDIX 1
Questionnaire
Age:

18-25
26-35
36-45
>45

Gender

Male
Female
Other

Questions

Strongly
Agree

Behaviour of employees in a restaurant

affects your purchasing decision
Employee behaviour is the most important
element in a restaurant
The employees at Burn Hotel UK are well
trained
The supervision under which employees
are working is appropriate at Burn Hotel
UK
It does not matter how the employee
behaves in the restaurant as it does not
affect me
Greater the service level at a restaurant,
higher the chances of availing it again
To what extent do you agree to the fact
that employee performance results in
customer satisfaction
Overall, I am satisfied with the service of
the employees at Burn Hotel UK

Agree

Neutral

Disagree

Strongly
Disagree

Employee Performance and Customer Satisfaction 17

The employees at Burn Hotel UK are well
aware of their responsibilities and duties
The employees at Burn Hotel UK have
adequate knowledge of the food they are
serving
Do you think, that Burn Hotel UK needs
to improve their service to another level