International Journal of Hospitality Management 36 (2014) 1–13

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International Journal of Hospitality Management

journal homepage: www.elsevier.com/locate/ijhosman

Applying Service Profit Chain model to the Korean restaurant industry

Gi-Jin Kim ∗
Yeungnam University, 532-278, FS MRI, Jung-dong, Suseong-gu, Daegu 706-050, Republic of Korea

a r t i c l e i n f o a b s t r a c t

Keywords: The purpose of this study is to empirically determine the relationship between employees’ constructs
Service Profit Chain such as internal service quality, service ability, employee satisfaction, and organizational commit-
Korean restaurant ment, and customers’ constructs such as perceived value, customer satisfaction, customer trust, and
Internal service quality
loyalty. This relationship was studied by applying the Service Profit Chain model to the Korean restau-
Employee constructs
rant industry. Results show that internal service quality has a significant effect on service ability, and
Customer constructs
Organizational commitment teamwork/communication has a significant effect on employee satisfaction. Employees’ organizational
commitment has a significant direct effect on the value perceived by customers. Ultimately, there is an
indirect influential relationship between employees’ and customers’ constructs. Implications of these
results are discussed, and possible limitations of the study are addressed.
© 2013 Elsevier Ltd. All rights reserved.

1. Introduction customers to achieve pre-determined goals and improve their

Customers expect their dining experience at restaurants to sat-
isfy their appetite and enrich the quality of their lives. While the
quality of food is a critical aspect of these dining experiences, cus-
tomers’ perceptions of courteous service are also important (Kim
et al., 2009).
When service quality improves, customers’ perceptions of value,
satisfaction, and trust also improve, thus increasing their loyalty
to specific restaurants. Improving customer satisfaction and loy-
alty is related to increasing restaurant profits (Chang et al., 2009;
Heskett et al., 1997; Rosenberg and Czepiel, 1984). Service qual-
ity that meets customer expectations is essential to securing new
customers and retaining existing ones (Disney, 1999).
Customers’ overall service experience in a restaurant results
from the relationship between many different service encounters.
Meanwhile, employees that directly encounter customers are
influenced by internal service suppliers or departments during
the process of making a reservation, helping customers with
their parking, guiding them to their seats, taking their order,
settling their bill, and seeing them off (Zeithaml and Bitner, 1997;
Gummesson, 1994; Rafiq and Ahmed, 1993). Previous studies have
shown a close relationship between internal and external services,
and employee and customer satisfaction (Bouranta et al., 2009; Chi
and Gursoy, 2009; Heskett et al., 1997; Schlesinger and Heskett,
1991). Therefore, restaurants often conduct internal marketing
programs to encourage their employees to improve customer
service. These programs encourage employees who interact with
∗ Tel.: +82 53 762 4336; fax: +82 53 763 9707.
E-mail address: carving@ynu.ac.kr
job performance, thus helping employees meet their basic and
secondary needs (Bruhn, 2003).
Employees perceive an internal service quality based on these
employer marketing programs, and this perception has a signifi-
cant effect on employee satisfaction, which in turn has a positive
influence on employee retention (Xu and Heijden, 2005). It is cru-
cial for restaurants to create working environments that allow and
encourage employees to provide high-quality customer service in
order to improve customer satisfaction and profits, while also pay-
ing careful attention to the perceived internal service quality for
employees, including employee satisfaction and commitment (Chi
and Gursoy, 2009; Gelade and Young, 2005).
The Service Profit Chain model, introduced by Schlesinger and
Heskett (1991) and later expanded upon by Heskett et al. (1994),
illustrates the relationship between employees and customers. At
the time of its introduction, this model combined human elements
with technique to improve customer service and employee morale
and satisfaction. The model has since developed to highlight the
connection between employees’ and customers’ constructs and
shows that customer satisfaction improves when employees are
satisfied.
Previous empirical studies on the relationship between
customers and employees have been diverse, examining the rela-
tionship between employee satisfaction, customer satisfaction, and
financial performance (Chi and Gursoy, 2009), the relationship
between internal and external service qualities (Bouranta et al.,
2009), the Service Profit Chain model in the retail banking sec-
tor (Gelade and Young, 2005), the links between organizational
resources and work engagement with employee performance and
customer loyalty (Salanova et al., 2005), the satisfaction mirror of
the Service Profit Chain model in the retail environment (Silvestro

0278-4319/$ – see front matter © 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.ijhm.2013.07.008
2 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13
Fig. 1. The Service Profit Chain model.
and Cross, 2000), and the relationship between employee satis-
faction, customer loyalty, and financial performance in the retail
banking sector according to the Service Profit Chain model. The
value of the Service Profit Chain model has been acknowledged in
many of these studies; however, empirical studies that attempt to
explain the causal relationship between customers and employees
often fall short because of the difficulty in accurately measuring and
analyzing the data. In most cases, only part of the model has been
analyzed (Bouranta et al., 2009; Chi and Gursoy, 2009; Gelade and
Young, 2005; Salanova et al., 2005). In addition, the effectiveness
of the Service Profit Chain model has been verified in many fields
in many countries, but has not yet been applied to the restaurant
industry in Korea. The Korean restaurant industry has grown very
quickly in recent years and has experienced intense competition,
necessitating an effective service management paradigm.
The purpose of this study is to examine the structural rela-
tionship between employees’ constructs such as internal service
quality, service ability, employee satisfaction, and organizational
commitment, and customers’ constructs such as perceived value,
trust, satisfaction, and loyalty. In the current study, we examined
this relationship by applying the Service Profit Chain model to the
fast growing restaurant industry in Korea. More specifically, we
examined the following relationships: (1) the effects of internal
service quality on service ability and employee satisfaction, (2)
the effects of service ability on employee satisfaction and organi-
zational commitment, (3) the effects of employee satisfaction on
organizational commitment, (4) the effects of organizational com-
mitment on customer’s perceived value, (5) the effects of perceived
value on customer satisfaction and trust, (6) the effects of customer
satisfaction on trust and brand loyalty, and (7) the effects of cus-
tomer trust on brand loyalty. Additionally, indirect effects among
these concepts are examined.
2. Literature review
2.1. The Service Profit Chain model
Since the 1990s, many studies have explored the relationship
between the concepts that composed the Service Profit Chain model
(Heskett et al., 1994, 1997; Reichheld and Sasser, 1990; Schlesinger
and Heskett, 1991). Heskett et al. (1994) proposed that the Service
Profit Chain model shows a structural relationship among basic
concepts such as internal service quality, employee satisfaction,
employee retention, employee productivity, and customers’ service
value, customer satisfaction, customer loyalty, revenue growth, and
profitability. In this study, we drew on the Service Profit Chain
model in order to argue that internal service quality, including
positive working environments and management policies, allows
and encourages employees to provide better service to meet their
customers’ needs and expectations. In a later study, Heskett et al.
(1997) presented a revised model that showed how employee
concepts such as capability, internal service quality, satisfaction,
loyalty, productivity, and output quality have an effect on service
value, and that service value has an effect on customer satisfaction
and loyalty (Fig. 1). They emphasized that determining the type of
relationship is very important; however, the connection among the
constructs in the Service Profit Chain model differs across organi-
zations. Ultimately, they concluded that a leader should manage a
company with an understanding of the Service Profit Chain model
and its applicability for successful company management, and that
it is important for a leader to create practical and specific busi-
ness rules in order to differentiate his or her own company from
competitors.
The Service Profit Chain model has also been studied from
the perspectives of different industries and sectors. For exam-
ple, Gelade and Young (2005) studied the relationships among
organizational climate (team climate, job enablers, and support cli-
mate), commitment, customer satisfaction, and sales achievement
by applying the Service Profit Chain model to the retail banking sec-
tor. They found that organizational climate has a significant effect
on commitment, which has a significant effect on customer satis-
faction, which in turn has a significant effect on sales.
In another study, Salanova et al. (2005) applied the model to
the hotel and restaurant industry. They examined the mediat-
ing role of service climate for employees and customers at the
front desk of hotels and restaurants and determined whether there
was an influential relationship between organizational resources,
work engagement, employee performance, and customer loyalty.
The results showed that organizational resources had an effect
on service climate through mediation of work engagement, while
service climate had an effect on employee performance, which in
turn had an effect on customer loyalty. They further clarified that
customer loyalty had a potentially reciprocal influence on service
climate.
Chi and Gursoy (2009) also used the Service Profit Chain model
to study the influential relationship between employee satisfac-
tion, customer satisfaction, and financial performance in the hotel
industry. They found that customer satisfaction had a significant,
positive effect on financial performance, and that employee satis-
faction had an indirect effect on financial performance through the
mediating role of customer satisfaction.
Xu and Heijden (2005) applied the Service Profit Chain model
to a sample of employees of a Chinese security firm in order to
assess the importance of employee factors. They found a positive
relationship between employee factors and corporate profitability,
and more importantly, a significant effect of internal service quality
on employee satisfaction. High employee satisfaction reduced new
employment by lowering the turnover rate, and employee tenure
strongly affected profitability.
Maritz and Nieman (2008) evaluated business marketing plans
by applying the Service Profit Chain model to examine service
quality in the franchise system. The results showed that the
 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13
Service Profit Chain model effectively accounts for the relation-
ships between employees’ and customers’ constructs. Specifically,
the results showed that (1) there is a positive relationship between
the Service Profit Chain model and service quality, and (2) there is
a connection between the Service Profit Chain model, relationship
marketing, and service quality. Maritz and Nieman’s (2008) study
is important because it expands the Service Profit Chain model to
include the concepts of service quality and relationship marketing.
Using a modified Service Profit Chain model, Sharif (2009) exam-
ined the relationship between the intra- and inter-organizational
service quality environments of Kuwaiti telecommunications com-
panies. They found moderate levels of intra-service quality and
inter-service quality, but no significant relationship between them.
Walker et al. (2006) expanded upon the Service Profit Chain
model by proposing different conceptualizations of customer value
and service quality. They proposed the concepts of intrinsic value
and quality in addition to the extrinsic value and quality concepts
already in the Service Profit Chain model. They argued that value
should be measured alongside perceived quality in order to bal-
ance the provided services customers enjoy with the aggregated
costs for these services.
In this current study, we built on previous research by par-
tially modifying the Service Profit Chain model and applying it
to employees and customers of Korean restaurants. Service abil-
ity was applied as employee capability based on Heskett et al.’s
(1997) argument that the concept of ability includes the concept of
employee capability. The concepts of employee retention, produc-
tivity, and loyalty in the Service Profit Chain model were replaced
with organizational commitment, following Jaworski and Kohli’s
(1993) proposal that the concept of organizational commitment
includes the characteristics of employee participation, effort, and
loyalty. In addition, customer trust was added as the subsequent
variable of customer satisfaction based on studies that show trust
follows satisfaction (Anderson and Weitz, 1989; Ganesan, 1994;
Morgan and Hunt, 1994; Ulaga and Eggert, 2006).
2.2. Using the Service Profit Chain model to develop hypotheses
For the current study, we selected 28 items and applied mea-
surement tools of internal service quality following Hallowell et al.
(1996), Kang et al. (2002), and Bruhn (2003). Then, we attempted
to find the constructs of internal service quality appropriate for the
restaurant industry through an exploratory factor analysis.
Heskett et al. (1997) suggested that internal service quality
plays a decisive role in improving overall service quality, and that
employee capability has an effect on employee satisfaction. In an
earlier study, Hallowell et al. (1996) argued that if companies want
to provide unique and special services to customers, they should
first improve the internal service quality for their employees. Kang
et al. (2002) found that internal service quality factors such as
reliability and responsiveness, influence overall service quality.
Similarly, Bruhn (2003) finds that internal service quality had a pos-
itive effect on employee satisfaction and retention. Based on these
previous findings, we expect a significant relationship between
internal service quality, service ability, and employee satisfaction.
Therefore, we propose the following hypotheses:
Hypothesis 1. Internal service quality has a significant effect on
service ability.
Hypothesis 2. Internal service quality has a significant effect on
customer satisfaction.
Heskett et al. (1997) argued that in their jobs, employees valued
the ability to feel empowered and increase output for customers
the most, and these abilities in turn influenced employee satisfac-
tion. In a study on the employees and customers of an American
3
insurance company, Schlesinger and Zomitsky (1992) found that
service ability had a positive relationship with employee satisfac-
tion and service quality. Bush et al. (1990) showed that employees’
personal abilities had an effect on sales performance, and Burke
(1997) showed that core capabilities such as ability and attitude
affected job satisfaction and productivity. Based on these previ-
ous results, we expect to find a significant relationship between
service ability, employee satisfaction, and organizational commit-
ment. Accordingly, we propose the following two hypotheses:
Hypothesis 3. Service ability has a significant effect on employee
satisfaction.
Hypothesis 4. Service ability has a significant effect on organiza-
tional commitment.
This study measures organizational commitment as employee
loyalty, drawing on Morgan and Hunt’s (1994) analysis that loyalty
and commitment are similar, and uses the concepts of emo-
tional and continuous commitment presented in Meyer and Allen
(1991) and Jaros et al. (1993). These studies suggest that restau-
rant employees could be emotionally attached to the restaurant
while also feeling a sense of responsibility that they should not
leave their job. Williams and Hazer (1986) insisted that job satis-
faction is the preceding variable for organizational commitment;
however, Bateman and Strasser (1984) suggested that the rela-
tionship is the reverse. The current study views satisfaction as the
preceding variable for commitment, following Williams and Hazer
(1986) and Heskett et al. (1994, 1997). In addition, Heskett et al.
(1994) insisted that customers’ perceived service value increases
with high employee productivity, suggesting that employee reten-
tion and productivity are linked to the service value perceived
by customers. Based on these previous findings, we expect a
significant relationship between employee satisfaction and orga-
nizational commitment, and between organizational commitment
and perceived value of customers. These expectations are described
in the following hypotheses:
Hypothesis 5. Employee satisfaction has a significant effect on
organizational commitment.
Hypothesis 6. Organizational commitment has a significant effect
on customers’ perceived value.
It is important for restaurants to propose value to customers and
prioritize the key factors of this value. However, regardless of how
high the value is, it is meaningless unless it is offered well (Anderson
et al., 2006). Since value is one of the most important explanations
of consumer behavior, previous studies have investigated how con-
sumer behavior is directly or indirectly connected with perceived
value (Babin et al., 1994; Richins and Dawson, 1992). According
to Liu et al. (2005), the perceived value is strongly connected with
repurchase, and this connection is strengthened as the relationship
continues.
In order to provide a definition of value, previous studies
have relied on an objective index that measures low-price ben-
efit against abandonment, and offsets the relationship between
the perceived quality of a product and its price (Zeithaml, 1988).
Heskett et al. (1997) argued that customer satisfaction improves
with the perceived service value because value is the result of
receiving a service against the direct or indirect cost. They sug-
gested that service value is the sum total of the costs involved
with customers receiving the result, quality, price, and service.
In addition, they showed that when the customer service quality
exceeded the amount paid, the customer service value increased;
further, the employees’ satisfaction and retention affected cus-
tomers’ perceived value, and ultimately that value is linked to
customer satisfaction. Likewise, Bolton and Drew (1991) also
found that service value had a causal relationship with customer
4 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13
satisfaction, and Cronin et al. (2000) found that value had a positive
effect on customer satisfaction. Ulaga and Eggert (2006) suggested
that cognitive, performance-based construct relationship value
should be considered as an antecedent to commitment, satisfac-
tion, and trust. In addition, they showed that value has a significant
correlation with and effect on satisfaction, trust, and commitment.
In light of these findings, we propose the following hypotheses:
Hypothesis 7. The perceived value has a significant effect on cus-
tomer satisfaction.
Hypothesis 8. The perceived value has a significant effect on cus-
tomer trust.
Ulaga and Eggert (2006) explained that the mediator is the link
between satisfaction and commitment. Morgan and Hunt (1994)
showed that when commitment was made by trust, repurchase
behavior and favorable attitude were formed, thus characterizing
trust and commitment as important variables. Other studies have
shown satisfaction to be the preceding factor of trust (Anderson
and Weitz, 1989; Ganesan, 1994; Morgan and Hunt, 1994; Ulaga
and Eggert, 2006).
According to Heskett et al. (1994), customer satisfaction is linked
to loyalty. They found that customers who rated customer satisfac-
tion five points out of five showed a repurchase rate that was six
times higher than those who rated their satisfaction four points.
McDougall and Levesque (2000) showed that satisfaction had a sig-
nificant direct effect on loyalty. Likewise, Eggert and Ulaga (2002)
showed that satisfaction significantly affected repurchase and word
of mouth (Eggert and Ulaga, 2002).
Studies by Mayer et al. (1995) and Morgan and Hunt (1994)
illustrated that customer trust was related to loyalty because
perceived risk on service decreased when service providers took
action to boost customer trust. Moreover, in their study on bulk
buyers of office supplies, Foster and Cadogan (2000) found that
trust in the company selling the supplies had a direct effect
on loyalty. Meanwhile, Doney and Cannon (1997) showed that
trust in the salesperson or supplier was connected to repurchase
intention.
Based on these previous findings, we predict that there is a
relationship between satisfaction, trust, and loyalty. As such, we
propose the final three hypotheses:
Hypothesis 9. Customer satisfaction has a significant effect on
customer trust.
Hypothesis 10. Customer satisfaction has a significant effect on
customer loyalty.
Hypothesis 11. Customer trust has a significant effect on cus-
tomer loyalty.
3. Methodology
3.1. Procedure and sample
This study was designed based on a pretest that used mea-
surement tools drawn from previous studies to increase reliability
and validity. The pretest was conducted with restaurant employees
(N = 50) and ordinary customers (N = 50). The final questionnaires
were modified and refined based on the results of the completed
pretest.
This study focused on employees working in restaurants and
customers of restaurants. We consulted with the Korea Restau-
rant Association (KRA), the representative body for the Korean food
service, about implementing this survey. Ultimately, the Daegu
branch of the KRA decided to participate in the survey.
Fifty-one restaurants among those registered in the Daegu
branch agreed to participate. Then, we used the snowball method of
sampling and asked the 51 restaurants to recommend other restau-
rants for the survey. Among them, ultimately 100 restaurants were
selected for participation in the project.
In order to obtain the cooperation of the restaurant owners,
we explained the purpose of the survey and informed them that if
they responded to the survey and more than 10 of their customers
responded, we would share the results of the study’s analysis and
customer surveys with them. To ensure honest responses, we con-
ducted the survey anonymously with all the employees of the
restaurants working in the dining room and kitchen. Addition-
ally, the survey was conducted with interested customers over 20
years old, with the assumption that this population of customers
is able to visit restaurants. Graduate students who had taken a
course in survey methodology served as the survey as interviewers.
At the restaurants, they approached customers settling their bill,
explained the purpose of the survey, and asked them to respond to
the questionnaires at the table next to the cashier. For restaurants
where the owner felt uncomfortable with our survey interview-
ers, we trained restaurant employees to conduct the surveys. The
survey interviewers offered cold beverages to employees and cus-
tomers to thank them for their participation.
The survey was carried over six months, between July 1, 2010
and January 5, 2011. We distributed the questionnaires to 800
employees and 1,200 customers. We collected 755 questionnaires
from the employees (response rate of 94.3%) and 1,015 from the
customers (response rate of 84.5%). To increase the reliability of
the returned questionnaires, unreliable questionnaires like incom-
plete responses and those with outlier values, which could lead to
a non-sampling error, were eliminated. Ultimately, we used 741
questionnaires from the employees (98.1% of the collected ques-
tionnaires) and 970 from the customers (95.5% of the collected
questionnaires) for the final analysis.
3.2. Measurement
In order to measure the eight concepts that form the theoreti-
cal integration model, this study modified the measurement items
whose reliability and validity had already been tested in the rele-
vant previous study. This section describes the measurement items
used in this study.
For the employee questionnaire, twenty-eight measurement
items for internal service quality, defined as the level of good
treatment between employees and between departments. These
items were determined by using the INTSERVQUAL and SERVQUAL
frameworks during interviews with a group of experts, composed
of two specialists and three professors in the food service indus-
try, and appropriately modified to fit the goals of this study
(Parasuraman et al., 1988; Zeithaml et al., 1990; Hallowell et al.,
1996; Kang et al., 2002). The questionnaires on internal service
quality were also completed and modified on the basis of the pretest
results. We used six items for service ability, defined as the level
that the employee was satisfied that his skill and competitive-
ness (capability) was utilized in his or her work (Little and Dean,
2006; Mayer et al., 1995). Eight measurement items were used for
employee satisfaction, defined as the degree to which the employee
could work in a positive emotional state, experience growth and
good relationships at both the individual and organizational lev-
els, and be satisfied with his or her working environment and
salary (Hartline and Ferrell, 1996; Megginson and Netter, 2001).
Finally, eight measurement items (four for affective commitment
and four for continuance commitment) were used for organiza-
tional commitment, defined as the degree to which the individual
feels attached to the organization (affective commitment) and the
intention to remain in the organization because of job-switching
costs or benefits of remaining in the organization (continuance
commitment) (Allen and Meyer, 1990; Meyer and Allen, 1991).
 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13
Fig. 2. The conceptual model.
For the customers’ questionnaires, the following items were
used: four measurement items for the perceived value, defined as
the level of total benefit that customers gain from the amount they
pay for the product or service (Babin et al., 1994; Zeithaml, 1988);
four measurement items for customer trust, defined as the level
of assurance about the certainty and sincerity of the restaurant
(Doney and Cannon, 1997; Moorman et al., 1993; Palmatier et al.,
2006); three measurement items for customer satisfaction, defined
as the level of emotional reaction to the difference between expec-
tation before purchasing a product or service and its perceived
quality after purchasing’ (Churchill and Surprenant, 1982; Latour
and Peat, 1980; Oliver, 1980; Westbrook and Reilly, 1983); and
four measurement items for loyalty, defined as the level of repur-
chase intention and commitment to a particular restaurant despite
the aggressive marketing of other restaurants (Blodgett, 1994;
Chaudhuri and Holbrook, 2001).
These items for both employees and customers were measured
by seven-point Likert-type scales. Demographic characteristics of
employees and customers included gender, marriage, age, educa-
tion, and monthly income.
3.3. Procedure for data analysis
For the statistical analysis in this study, we used IBM SPSS 19.0
and IBM SPSS AMOS 19.0, programs that have been widely utilized
in social science research. Frequency analysis was carried out to
examine the demographic characteristics of the respondents, and
exploratory factor analysis (EFA) and confirmatory factor analysis
(CFA) were carried out to examine the reliability and validity of the
concepts. We matched the employee data with each restaurant’s
customer data through summated measure. That is, we created one
case for each of the 100 restaurants by calculating the average for
the employee data and the customer data for each restaurant, thus a
total of 100 cases were created. A correlation analysis between the
constructs of the Service Profit Chain model was also performed.
Additionally, we performed a path analysis for statistical hypothe-
sis testing and examined the indirect and total effects through the
bootstrapping method. Fig. 2 represents the conceptual model used
in this study, showing the measurement items and constructs for
employees and customers.
4. Results
4.1. Respondent profile
The demographic characteristics of employees and customers
were as follows. The majority of employee respondents were
5
female (73.6%), aged over 45 years old (29.3%), high-school gra-
duates (47.4%), and had a monthly income between $884 and
$1,768 (65.6%). Some 50.3% of the customer respondents were
male and 49.7% were female. The highest percentage of customer
respondents was 35-44 years old (29.9%), college graduated
(40.3%), and with an income range of $884 to $1,768 per month
(28.1%). Table 1 summarizes the demographic characteristics of the
respondents.
4.2. Exploratory factor analysis
4.2.1. Employee and customer concepts
To verify the reliability and validity of the measured con-
cepts in this study, an EFA was carried out (see Tables 2 and 3).
We used the Cronbach’s alpha criterion from Nunnally (1978),
which is commonly used in reliability analysis to check for the
internal consistency of concepts. Maximum likelihood estima-
tion and the Varimax’s orthogonal rotation method were used
for factor extraction. We extracted factors in cases where the
eigenvalue was more than 1.0. Items of communality < 50, factor
loading < 40, and cross loading items > 40 were eliminated during
the EFA.
Seven items cross-loaded (IS3: The rest facilities for employ-
ees are well furnished, IS10: Manager is concerned with employee
issues, IS11: Manager has regular meetings with employees, IS12:
Employees freely propose ideas, IS25: Employees know their work
well, IS26: Employees know about the customer service process,
and IS21: Employees can propose better ideas for service any-
time) hindered unidimensionality and were thus deleted. The
evaluation result indicated that the Kaiser-Meyer-Olkin value was
.906 and Bartlett’s chi-square was significant. These values sug-
gested that the data were appropriate for factor analysis. For the
EFA on internal service quality, three factors, namely working
environment, teamwork/communication, and education/training
were used. The total cumulative variance explained by these
three factors was 67.633%, and their Cronbach’s alpha value
exceeded .80. As a result of the factor analysis of the other
concepts, the KMO value was shown to be between .770 and
.921, the Bartlett’s Chi-square values were significant, and the
total cumulative variances were between 68.151% and 89.080%.
Finally, the following items were produced as separate factors
through EFA: employee service ability (Cronbach’s alpha: .921),
employee satisfaction (Cronbach’s alpha: .932), organizational
commitment (Cronbach’s alpha: .932), customers’ perceived value
(Cronbach’s alpha: .944), customer satisfaction (Cronbach’s alpha:
.939), customer trust (Cronbach’s alpha: .953), and customer loyalty
(Cronbach’s alpha: .928).
6 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13

Table 1
Demographic descriptions of the study sample.

Variables Employee (N = 741) Variables Customer (N = 970)

Number % Number %

Gender
Male 191 26.4 Male 473 50.3
Female 533 73.6 Female 468 49.7

Age
20–24 182 25.1 20–24 141 14.8
25–34 142 19.6 25–34 250 26.3
35–44 189 26.0 35–44 285 29.9
45 or more 213 29.3 45 or more 276 29.0

Education
Middle school or less 71 10.3 High school or less 181 19.3
High school 328 47.4 2-year college 378 40.3
2-year college 172 24.9 4-year university 332 35.4
4-year university 116 16.8 Graduate 48 5.1
Graduate 5 0.7

Monthly income
Under $883 182 25.5 Under $883 223 24.3
$884–$1,768 469 65.6 $884–$1,768 258 28.1
$1,769–$2,652 50 7.0 $1,769–$2,652 225 24.5
$2,653 or more 14 2.0 $2,653–$3,537 103 11.2
$3,538–$4,421 59 6.4
$4,422–$5,306 24 2.6
$5,307 or more 27 2.9

Note: Missing value is not dealt with in this analysis.

4.3. Confirmatory factor analysis
4.3.1. Employee concepts
To verify the convergent validity and discriminant validity of the
refined concepts from the EFA, a CFA was performed (see Table 4).
Ten items (IS1, IS5, IS15, IS19, IS23, IS24, SA5, ICS1, ICS6, ICS7)
were found to hinder the model’s goodness of fit and were deleted
through the modification index in the CFA. We carried out the chi-
square test discussed in Bentler and Bonett (1980) to compare the
original and modified models. As a result of the chi-square test
between 2 and df in the model, we found that the goodness of
fit in the modified model improved significantly (2 = 1906.925,
df = 345, p < .05). Two items in the “training/reward” factor in the
original model were removed and renamed “training/evaluation”
in the modified model. The goodness of fit in the modified
model was indicated by 2 = 1111.689, df = 419 (p < .001), GFI = .910,
AGFI = .894, NFI = .939, CFI = .961, RMSEA = .047, and TLI = .957.
We examined reliability and validity according to the criteria
discussed in Bagozzi and Yi (1988, 1991) and Fornell and Larcker
(1981) (see Table 3). The critical ratio between observed and latent
variables was considered significant at the 1% level, with a value
higher than 2.58, and the standard factor loading exceeded the
criteria proposed in Bagozzi and Yi (1991), ranging from .667 to
.900 (proposed criteria = .50 to .95). Both the composite reliability
with a range of .620 to .854 and average variance extracted (AVE)
with a range of .564 to .698 met all criteria (critical ratio ≥ .60 and
AVE ≥ .50) discussed in Bagozzi and Yi (1991). These results show
that the convergent validity was acceptable.
To determine discriminant validity, we compared the squared
multiple correlation (SMC) with the AVE based on the criteria dis-
cussed in Fornell and Larcker (1981). Since the AVE among the
constructs was higher than the relevant SMC, the discriminant
validity was acceptable.
4.3.2. Customer concepts
CFA was also carried out on customer-related concepts such
as perceived value, trust, satisfaction, and loyalty (see Table 5).
The goodness of fit was indicated by 2 = 325.218, df = 84
(p < .001), GFI = .957, AGFI = .939, CFI = .986, NFI = .982, TLI = .983,
and RMSEA = .054. Although the fit of 2 was significant, the other
fits were acceptable because they met the criteria.
For the customer concepts, we also examined reliability and
validity in terms of the criteria discussed in Bagozzi and Yi (1988,
1991) and Fornell and Larcker (1981) (see Table 5). The critical ratio
between observed and latent variables was considered significant
at the 1% level, with a value higher than 2.58, and the standard fac-
tor loading exceeded the criteria proposed by Bagozzi and Yi (1991),
ranging from .773 to .932 (proposed criteria = .50 to .95). Both the
composite reliability range of .872 to .925 and the AVE range of .777
to .835 met all of Bagozzi and Yi’s (1991) criteria (critical ratio ≥ .60
and AVE ≥ .50). These results show that the convergent validity was
acceptable.
To determine discriminant validity, we compared the squared
multiple correlation with the AVE based on the criteria discussed in
Fornell and Larcker (1981). Since the AVE among the customer con-
structs was higher than the relevant SMC, the discriminant validity
was acceptable.
4.4. Hypothesis testing
On the basis of our examination of the structural relationship
between internal and external constructs in the restaurant indus-
try, we believed there would be no problem explaining the causality
between constructs because the model’s goodness of fit was
indicated by 2 = 31.632, df = 27 (p = .246 > .05) GFI = .944,
AGFI = .886, CFI = .997, NFI = .978, TLI = .994, and RMSEA = .042.
With regard to H1, it was found that working environment
(ˇ = .413, p < .01) and teamwork/communication (ˇ = .337, p < .01)
have a significant effect on service ability, while training/evaluation
(ˇ = .168, p > .05) does not. With regard to H2, it was found that
teamwork/communication (ˇ = .489, p < .01) has a significant effect
on service ability, while working environment (ˇ = .031, p > .05)
and training/evaluation (ˇ = .077, p > .05) do not. With regard to
H3 and H4, it was found that service ability has a significant
effect on employee satisfaction (ˇ = .261, p < .05) and organiza-
tional commitment (ˇ = .397, p < .001). With regard to H5, it was
found that employee satisfaction (ˇ = .568, p < .01) has a signif-
icant effect on organizational commitment. With regard to H6,
 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13 7

Table 2
Results of exploratory factor analysis: employee.

Factor loading Eigen-value Proportion (%) Cronbach’s alpha

Working environmenta
IS2. Service manual is equipped.b .743 5.402 25.722 .926
IS1. Necessary facilities for work are set up.b .727
IS4. The appearance of employees is decent.b .724
IS8. Accurate information on work is provided.b .724
IS5. Suitable facilities and atmosphere for work are equipped.b .714
IS7. Accurate information on our store is provided.b .713
IS9. Accurate information on service process is provided.b .694
IS6. Goal of organization (customer satisfaction, sales increase) is clearly provided.b .683

Teamwork/Communicationa
IS15. Employees understand each other’s situation well.b .806 5.026 23.932 .930
IS16. Employees share a common goal with each other.b .775
IS14. Cooperation between departments goes smoothly.b .726
IS17. Information and data between employees are smoothly interchanged.b .717
IS18. The company pays a close attention to deployment and recruitment of .688
employees.b
IS19. The company impartially employs people suitable for the job.b .660
IS13. Suggestion from employees and problem are thoroughly considered.b .644
IS20. I have empowerment to cope with the situation in providing service.b .570

Training/Rewarda
IS23. The company helps employees build up their confidence by acknowledging and .876 3.775 17.978 .871
rewarding for their good performance.b
IS24. The company does the impartial evaluation and reward for the performance of .817
employees.b
IS22. Employees are evaluated by their customer service.b .768
IS28. The manager frequently delivers the goal and expectation of the shop.b .585
IS27. Regular training for better performance is provided.b .551
Total cumulative = 67.633, KMO = .960, Bartlett’s test = 11500.345*** b

Service abilitya
SA3. I think that customers are satisfied with the service I provided.b .901 4.338 72.292 .921
SA2. I provide a high standard service to customers.b .887
SA1. I think that my service ability satisfies customers.b .873
SA4. I have enough knowledge and skill for the job.b .842
SA5. I don’t keep customers waiting long for their service.b .823
SA6. I have enough empowerment for my job.b .768
KMO = .904, Bartlett’s test = 3287.744*** b

Employee satisfactiona
ICS5. I am generally satisfied with present job.b .874 5.452 68.151 .932
ICS7. I am satisfied with the working environment of my workplace.b .851
ICS3. I am satisfied with what I am doing at workplace.b .838
ICS2. I am satisfied with the relationship with senior workers.b .836
ICS4. I have a sense of accomplishment from my job.b .823
ICS1. I am satisfied with the relationship with fellow workers.b .810
ICS6. Considering my qualification and effort, my salary is satisfactory.b .787
ICS8. I think that working here is a helpful to improve myself.b .782
KMO = .921, Bartlett’s test = 4400.195*** b

Organizational commitmenta
OC3. The workplace is precious to me.b .903 4.482 74.702 .932
OC4. I have the strong sense of belonging to my workplace.b .899
OC2. I have strong attachment to my workplace.b .892
OC5. Leaving this workplace is a hard decision for me to make, even if I have to.b .851
OC1. I am a member of employees at my workplace.b .827
OC6. I am certainly the person required in the workplace.b .810
KMO = .919, Bartlett’s test = 3483.452*** b
a
Factors.
b
Variables.

organizational commitment (ˇ = .382, p < .01) had a significant
effect on the perceived value of customer.
With regard to H7 and H8, it was found that perceived value
has a significant effect on customer satisfaction (ˇ = .935, p < .01)
and customer trust (ˇ = .431, p < .01). With regard to H9 and H10, it
was found that customer satisfaction has a significant effect on cus-
tomer trust (ˇ = .542, p < .01) and customer loyalty (ˇ = .598, p < .01).
With regard to H11, it was found that customer trust (ˇ = .352,
p < .01) has a significant effect on customer loyalty. Therefore, H1
and H2 are partially acceptable, and H3 through H11 are fully
acceptable. Fig. 3 shows the tested model with path coefficients.
4.5. Indirect effect between constructs of the Service Profit Chain
This study examined the indirect effect between the constructs
of the Service Profit Chain (see Table 6). In terms of internal
service quality, the direct effect of the working environment on
employee satisfaction was not significant, yet the indirect effect
of the working environment was significant through service abil-
ity. Working environment and teamwork/communication had a
significant indirect effect on organizational commitment, and the
customer’s perceived value, satisfaction, trust, and loyalty; how-
ever, training/evaluation did not have a significant effect. The direct
8 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13

Table 3
Results of exploratory factor analysis: customer.

Factor loading Eigen-value Proportion (%) Cronbach’s alpha

Perceived valuea
PV2. I paid reasonable price for the food and service I got.b .933 3.429 85.735 .944
PV1. The food and service provided are worthy for the money and time spent.b .931
PV4. The food and service was worthy enough for the money I spent.b .920
PV3. I enjoyed myself much with money and time I spent.b .920
KMO = .859, Bartlett’s test = 3679.214*** b

Customer trusta
CT2. This restaurant is honesty.b .946 3.507 87.668 .953
CT3. I trust the style of management in this restaurant.b .939
CT1. This restaurant is reliable.b .934
CT4. I overall trust this restaurant.b .926
KMO=.869, Bartlett’s test = 4068.884*** b

Customer satisfactiona
CS2. This restaurant meets my expectation.b .948 2.672 89.080 .939
CS3. I am satisfied with almost everything in the restaurant.b .944
CS1. I am more satisfied with this restaurant than others.b .940
KMO = .770, Bartlett’s test = 2554.847*** b

Loyaltya
BL2. I will recommend this restaurant to my friends.b .942 3.315 82.863 .928
BL1. I will pass good words about this restaurant to people around me.b .929
BL3. I will revisit this restaurant.b .921
BL4. I want to keep visiting this restaurant even if food price goes up.b .847
KMO = .846, Bartlett’s test = 3399.276*** b
a
Factors.
b
Variables.

Table 4
Confirmatory factor analysis results of employee constructs.

Std. loadings S.E. C.R. CR AVE R2

Working environment (5.264)

IS2 .738 .043 22.025 .849 .693 A–B = .576
IS4 .705 .044 20.751 A–C = .427
IS8 .872 .040 27.546 A–D = .450
IS7 .839 .040 26.084 A–E = .400
IS9 .834 .040 25.884 A–F = .336
IS6 .798 – – B–C = .450

Teamwork/communication (5.155)
IS16 .817 .045 23.093 .820 .615 B–D = .394
IS14 .734 .048 20.451 B–E = .425
IS17 .801 .046 22.582 B–F = .409
IS18 .820 .048 23.188 C–D = .311
IS13 .781 .050 C–E = .276
IS20 .754 – 21.918 C–F = .424
– D–E = .434

Training/evaluation (4.967)
IS22 .667 .050 17.675 .620 .564 D–F = .438
IS28 .793 .046 21.121 E–F = .583
IS27 .788 – –

Service ability (5.120)

SA1 .875 – – .854 .685
SA2 .885 .031 33.652
SA3 .900 .029 34.795
SA4 .768 .034 26.009
SA6 .693 .041 22.190

Employee satisfaction (5.149)

ICS2 .792 .046 20.883 .816 .649
ICS3 .836 .047 22.035
ICS4 .816 .047 21.502
ICS5 .863 .048 22.741
ICS8 .717 – –

Organization commitment (5.001)

OC1 .785 .043 22.624 .846 .698
OC2 .875 .043 25.762
OC3 .896 .043 26.507
OC4 .885 .044 26.098
OC5 .804 .046 23.272
OC6 .759 – –

Model goodness of fit: 2 = 1111.689, df = 419 (p < .001), GFI = .910, AGFI = .894, NFI = .939, CFI = .961, RMSEA = .047, TLI = .957. CR, Composite reliability; AVE, Average variance
extracted.
 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13 9

Table 5
Confirmatory factor analysis results–customer constructs.

Std. loadings S.E. C.R. CR AVE R2

Perceived value (5.303)

PV2 .907 .023 44.104 .906 .809
PV1 .908 .024 44.251
PV3 .889 .023 42.057
PV4 .896 – –

Customer satisfaction (5.316)

CS1 .901 – – .898 .830 A–B = .664
CS2 .916 .021 47.295 A–C = .700
CS3 .917 .020 47.401 A–D = .643

Customer trust (5.418)

CT1 .915 .023 46.032 .925 .835 B–C = .714
CT2 .924 .021 47.229 B–D = .677
CT3 .919 .022 46.486 C–D = .703
CT4 .899 – –

Loyalty (5.351)
BL1 .921 – – .872 .777
BL2 .932 .020 51.518
BL3 .892 .021 45.400
BL4 .773 .029 32.695

Goodness-of-fit: 2 = 325.218, df = 84 (p < .001), GFI = .957, AGFI = .939, CFI = .986, NFI = .982, TLI = .983, RMSEA = .054. CR, Composite reliability; AVE, Average variance extracted.

and indirect effects of service ability on organizational commit-
ment were significant, and the indirect effect of service ability on
customers’ perceived value, satisfaction, trust, and loyalty was sig-
nificant. Employee satisfaction had a significant indirect effect on
customers’ perceived value, satisfaction, trust, and loyalty. In addi-
tion, organizational commitment had a significant indirect effect
on customer satisfaction, trust, and loyalty. Customers’ perceived
value had a significant indirect effect on trust through satisfaction,
and on loyalty through satisfaction and trust. Customer satisfaction
had a significant indirect effect on loyalty through trust.
5. Discussion
The results for H1 show that the factor that has the
greatest effect on service ability in a restaurant is the work-
ing environment, followed by teamwork/communication among
employees and departments. The results for H2 show that
teamwork/communication has the greatest effect on employee
satisfaction. However, the effect of training/evaluation is not sig-
nificant according to the results for H1 and H2. The results
for H1 and H2 partially support the Service Profit Chain the-
ory discussed by Heskett et al. (1994). We understand that the
effect of training/evaluation is relatively diminished as the effect
of the working environment and teamwork/communication fac-
tors in internal service quality is controlled. In other words,
working environment and teamwork/communication play a more
important role in improving the service ability of employees than
training/evaluation. These results partially support Kang et al.’s
(2002) findings that internal service quality has a significant effect
on the perceived service quality of customers. In addition, it sup-
ports the findings of Heskett et al. (1997) that internal service
quality plays a decisive role in the service delivery of employees,
and that of Bruhn (2003) and Hallowell et al. (1996) that internal
service quality has a significant effect on employee satisfaction.
The results for H3 and H4 show that the service ability of
restaurant employees has a positive effect on the satisfaction level
of employees and their commitment level to the organization.
This result supports Heskett et al.’s (1997) finding that employee
capability has an effect on employee satisfaction, Schlesinger and
Zomitsky’s (1992) finding that service ability has a positive cor-
relation between employee satisfaction and service quality, Bush
et al.’s (1990) finding that personal ability has an effect on sale
performance, and Burke’s (1997) finding that improving capability
increases employee satisfaction and productivity.
The results for H5 and H6 show that improving employee
satisfaction increases organizational commitment and improving
organizational commitment increases customer value. This result
supports Williams and Hazer’s (1986) finding that job satisfaction
causally precedes organizational commitment and Heskett et al.’s
(1994) finding that employee retention and productivity are con-
nected with the value perceived by customers. However, this result
diverges from Silvestro and Cross’s (2000) finding that there is no
significant correlation between employee loyalty and customers’

Fig. 3. The tested model with path coefficients. The dashed lines represent non-significant paths. * p < .05; ** p < .01.
10 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13

Table 6
Effect size analysis.

Path Direct effect Indirect effect Total effect

Working environment → Service ability .413** – .413**

Teamwork/communication .337** – .337**
Training/evaluation .168 – .168

Working environment → Employee satisfaction .031 .108* .139

Teamwork/communication .489** .088* .577**
Training/evaluation .077 .044 .121

Working environment → Organization commitment – .243* .243*

Teamwork/communication – .462** .462**
Training/evaluation – .136 .136

Working environment → Perceived value – .093* .093*

Teamwork/communication – .176** .176**
Training/evaluation – .052 .052

Working environment → Customer satisfaction – .087* .087*

Teamwork/communication – .165** .165**
Training/evaluation – .048 .048

Working environment → Customer trust – .087* .087*

Teamwork/communication – .165** .165**
Training/evaluation – .049 .049

Working environment → Loyalty – .083* .083*

Teamwork/communication – .157** .157**
Training/evaluation – .046 .046

Service ability → Employee satisfaction .261* – .261*

Organization commitment .397** .148* .546**
Perceived value – .208** .208**
Customer satisfaction – .195** .195**
Customer trust – .195** .195**
Loyalty – .185** .185**

Employee satisfaction → Organization commitment .568** – .568**

Perceived value – .217** .217**
Customer satisfaction – .203** .203**
Customer trust – .204** .204**
Loyalty – .193** .193**

Organization commitment → Perceived value .382** – .382**

Customer satisfaction – .357** .357**
Customer trust – .358** .358**
Loyalty – .340** .340**

Perceived value → Customer satisfaction .935** – .935**

Customer trust .431** .507** .938**
Loyalty – .890** .890**

Customer satisfaction → Customer trust .542** – .542**

Loyalty .598** .191** .789**

Customer trust → Loyalty .352** – .352**

*
p < 0.05.
**
p < 0.01.

service value. The different finding of Silvestro and Cross (2000)
may be because their study did not have sufficient data.
The results for H7 and H8 show that customer satisfaction
and customer trust rise as the value perceived by customers of
the restaurant increases. These results support Heskett et al.’s
(1994) finding that the customers’ service value, that is, the service
received relative to the total expenses in the Service Profit Chain
model, is somehow related to customer satisfaction. The results
from Cronin et al. (2000) and Bolton and Drew (1991) also show that
there is a significant relationship between value and satisfaction.
The results for H9 and H10 show that improvement in cus-
tomers’ perceived satisfaction levels causes trust and loyalty in the
restaurants to increase. This finding supports finding of previous
studies (Anderson and Weitz, 1989; Ganesan, 1994; Morgan and
Hunt, 1994; Ulaga and Eggert, 2006) and proposes that satisfaction
precedes trust. Moreover, this finding supports not only Heskett
et al.’s (1994) suggestion that customer satisfaction is linked to loy-
alty, but also the results of previous studies (e.g., Eggert and Ulaga,
2002; McDougall and Levesque, 2000) that show satisfaction has
an effect on repurchasing, word of mouth, and loyalty.
The results for H11 show that customer trust in the restau-
rant causes loyalty to rise. This result supports findings of previous
studies (e.g., Mayer et al., 1995; Morgan and Hunt, 1994) that
show that customer trust is related to loyalty, Foster and Cadogan’s
(2000) finding that trust significantly affects loyalty, and Doney
and Cannon’s (1997) finding that trust has a significant effect on
repurchase intention.
Finally, the value emphasized by Heskett et al. (1994, 1997) is
confirmed to be an important construct in this study as well. This
study confirms the strong effect of perceived value. The direct effect
of perceived value on customer satisfaction is .935, the total effect
(direct and indirect effects) of perceived value on customer trust is
.938, and the indirect effect of perceived value on loyalty is .890.
This finding supports that of Silvestro and Cross (2000) that there
is a strong correlation between service value and output quality,
productivity, and customer satisfaction. Moreover, this finding also
 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13
supports that of Heskett et al. (1994) and Heskett et al. (1997) that
emphasizes the importance of service value.
This study examined the structural relationships between
employee constructs such as internal service quality, service ability,
satisfaction, and organizational commitment, along with customer
constructs such as perceived value, satisfaction, trust, and loyalty in
the Korean restaurant industry. These constructs were previously
stressed upon by Heskett et al. (1997).
The results of our analysis of the relationship between
employees’ and customers’ perceived constructs have shown that
customers’ perceived value plays a very important role in increas-
ing satisfaction, trust, and loyalty in the Service Profit Chain model.
Heskett et al. (1997) found that customers’ service value, that is,
the core elements of financial performance, affected customer sat-
isfaction and loyalty, and could be obtained by increasing employee
satisfaction, employee loyalty, productivity, and job capability.
The results of this study suggest that the importance of service
value should be linked to customer satisfaction, which is a crit-
ical concept in management and marketing in the restaurant
industry.
6. Conclusion
This study shows that working environment plays a cru-
cial role in increasing the service ability of employees, and
teamwork/communication increases employee satisfaction. Fur-
thermore, working environment and teamwork/communication
have an indirect effect on employees’ organizational commitment,
and customers’ perceived value, trust, satisfaction, and loyalty.
However, teamwork/communication is shown to directly and
indirectly affect employee satisfaction and organizational commit-
ment. Thus, these results suggest that restaurants should upgrade
and supplement working environments to improve the service abil-
ity of employees and pay careful attention to promoting an internal
working environment that encourages teamwork, communica-
tion, and cooperation among employees. Restaurants should make
efforts to improve communication between the kitchen, supply,
and dining room departments, and other areas where employees
encounter customers. This study supports the finding of Heskett
et al. (1997) that internal service quality includes the employees’
emotions toward their jobs, colleagues, and workplaces.
Another finding of this study is that good employees are likely to
be satisfied and devoted to the organization. Moreover, customers’
perceived value, trust, satisfaction, and loyalty increase when there
are dedicated employees. Based on these findings, we recommend
that new employees should only be recruited after sufficient exam-
ination of the seamless communication among existing employees.
In addition, restaurants should invest more to improve their inter-
nal service quality and the service ability of employees.
This study also shows that employees with a high level of job
satisfaction level also display more organizational commitment
and productivity. These employees indirectly improve customers’
perceived value, satisfaction, trust, and loyalty.
Restaurants should prioritize increasing employee satisfaction,
organizational commitment, and employee productivity while also
making concerted efforts to improve teamwork and communi-
cation, factors that play definitive roles in increasing employee
satisfaction.
For employees who are absorbed in the organization they are
working for, other constructs such as customers’ perceived value,
satisfaction, trust, and loyalty in the restaurant indirectly increase
as well. This result suggests that the restaurant owners should
attempt to raise the organizational commitment of employees
by improving working environments, teamwork/communication,
service ability, and employee satisfaction.
11
This study shows that satisfaction and trust in the restaurant
increases as the value perceived by the customer increases. In this
case, there appears to be a strong indirect influence of perceived
value on loyalty. Therefore, restaurants should develop ways to
communicate with their customers to understand their needs,
as also stated by Heskett et al. (1997). For example, a restau-
rant could enhance communication with customers by creating
a website or smartphone application. Rewards should be pro-
vided, such as by turning customer into active consumers, or the
so-called producer-consumer or “prosumer”, to encourage cus-
tomers’ voluntarily participation. Fancy food pictures in the menu,
exaggerated advertisements, and excessive packaging can drive
up customers’ expectations, but when the actual food customers
receive falls short of these expectations, their satisfaction, trust, and
loyalty toward those restaurants are negatively affected. Restau-
rant managers should continuously pay attention to customers’
needs and the value they expect, while also maintaining reasonable
prices.
Our findings indicate that high levels of customer satisfaction of
a restaurant raise trust and loyalty. Customers are satisfied when
the expectation they had before visiting restaurant is fulfilled; these
satisfied customers then develop trust in and loyalty to the restau-
rant, and spread positive word of mouth and revisit. However, lack
of cleanliness in restaurant facilities such as with the floors, tables,
and toilets, and in tableware used to serve customers can nega-
tively impact customer trust. Hence, in addition to managing food
and service quality, restaurant owners or managers should ensure
cleanliness to boost customer trust. Our study’s results suggest that
restaurants should continue to improve the perceived values that
play a decisive role in increasing customer satisfaction, trust, and
loyalty.
Finally, this study applied the Service Profit Chain model pre-
sented by Heskett et al. (1994) to the restaurant industry in Korea
and, in doing so, verified the structural rigidity of the model. Restau-
rants should therefore design management strategies based on
the Service Profit Chain model. Restaurants should try to improve
customer loyalty to raise profitability, and improve customer sat-
isfaction and trust to increase loyalty. This study shows that
customer trust is improved through customer satisfaction and
perceived value, and in turn, customer satisfaction is improved
through perceived value. Customers’ perceived values are influ-
enced by organizational commitment, which, in turn, affects the
level of affection employees have toward their jobs, the degree
to which they accept the goals and values of the organization,
and their ability to provide better service. Organizational com-
mitment can be improved by raising the service ability and level
of satisfaction employees feel about their workplace. In addition,
service ability and employee satisfaction are improved by enhanced
working environments and more effective teamwork and com-
munication with colleagues and other departments. Therefore, to
maximize profit, restaurant owners or managers, as a first step,
should improve the internal service quality provided to employees.
Owners or managers should focus not only on creating profit but
also on creating an atmosphere in which employees can provide
courteous service to customers. To do so, owners or managers
should emphasize seamless communication and teamwork among
internal members and departments.
From my discussion with restaurant owners and managers, it
was found that the most common sources of problems in restau-
rants are difference in workload between employees in the kitchen
and those in the dining room, mistakes in order taking, and mistakes
in food preparation. These problems can be solved in many ways.
For example, the restaurant can organize social events, workshops,
or training for employees where they can learn to understand each
other’s different workloads and situations. Owners or managers can
also attempt to determine problems in communication between
12 G.-J. Kim / International Journal of Hospitality Management 36 (2014) 1–13
employees by meeting with each employee privately. To minimize
mistakes in order taking and food preparation, restaurants should
develop or regularly develop manuals on the order taking and food
preparation. Through these kinds of efforts, restaurants can mini-
mize the conflict between employees and improve service quality
to customer.
7. Limitations and future research recommendations
Although this study made efforts to overcome the limitations
of previous studies that applied the Service Profit Chain model to
restaurants, it has a few limitations.
First, this study is limited in the measurement of performance.
Profitability was not included as a measure because financial
performance was based on past performance. Rather, this study
focused on constructs such as customer loyalty, which affects
future performance and but is a nonfinancial aspect. Further,
this study only took into account attitudinal loyalty rather than
behavioral loyalty, and this loyalty was measured based on revisit
frequency. Including financial performance and behavioral loyalty
could change the results, and thus should be included in future
studies.
Second, this study focuses adopts a cross-sectional research
approach. However, the internal service quality provided to
employees and the organizational commitment of employees could
vary depending on the situation. Customers’ perceived value, sat-
isfaction, trust, and loyalty could also change depending on the
situation. Therefore, future studies should investigate the structural
relationships of the Service Profit Chain model through a longitu-
dinal study design.
Third, this study assumes that restaurant employees as a whole
could directly and indirectly affect the quality of service provided to
customers. However, future studies should differentiate between
the employees in the dining room who work directly with cus-
tomers and the employees in the kitchens who do not interact with
the customers.
Fourth, the study’s results show that employee satisfaction
indeed has indirect positive effects on customer satisfaction, but
this is only a stochastic explanation. In other words, customers are
more likely to be satisfied when employees are satisfied. Future
studies should consider the possibility that increasing customer
satisfaction could decrease employee satisfaction, for example, if
employees are forced to make sacrifices for customer satisfaction.
To address this issue, future studies should perform cluster analyses
using the constructs of the Service Profit Chain model to clas-
sify restaurants where the influence of employee satisfaction on
customer satisfaction is positive and those where the influence is
negative.
Finally, this study has a limited sample. To study restaurant
employees and customers, a massive amount of data was required.
For this study, we consulted with the KRA to ensure a representative
sample, and conducted additional sampling through the snowball
method with restaurant owners who had finished the survey. How-
ever, these strategies relied on nonprobability sampling methods,
which means the generalizability of the results is limited. Therefore,
future studies should use probability sampling to produce more
generalizable results.
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