CHAPTER I

INTRODUCTION

1.1Background of the Study

A restaurant is a business that prepares and serves foods and drinks to customers in
exchange for money, either paid before the meal, after the meal, or with an open account.
Meals are generally served and eaten on premises, but many restaurants also offer take-
out and food delivery services. Restaurants vary greatly in appearance and offerings,
including a wide variety of the main chef's cuisines and service models.

In the world, the living styles of peoples are different to each other. As Nepal is an
agriculture country, many people want to go bed early because of hard work but young
generations are not like that. They want to go restaurant with their friends and family.
Nepalese people have started to go in restaurant to have different meals and enjoy late
night programs. In city or tourist area restaurants are opened until late night. Nowadays,
people have started to open new different type of restaurant in Nepal. They have started
to give different taste of food and also different environment of restaurant. So we will get
different taste and environment in the various restaurants. In Nepal, some restaurants
provide folk song with food. So we can also have food with dancing & listing Nepalese
song with our friends and family as well. Therefore, restaurants are expanding and
improving in the type of food and with taste. Mostly we can enjoy Nepali food/meal,
Indian Food, Mexican food, Chinese food, Korean food, Thai Food, Japanese food etc.

Customers are the actual agents or stakeholders for determining or best judging the
success of any product or service. Customer satisfaction is a marketing term that
measures how products or service supplied by a company meet or surpass a customer’s
expectation. Customer satisfaction is important because it provides marketers and
business owners with a metric that they can use to manage and improve their businesses.
In a survey of nearly 200 senior marketing managers, 71percent responded that they

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found customer satisfaction metric very useful in managing and monitoring their
businesses. Following are the reasons why customer satisfaction is important:

 It’s a leading indicator of customer repurchase intentions and loyalty.

 It’s a point of differentiation.
 It reduce customer churn.
 It increases customer lifetime value.
 It's reduces negative word of mouth.
 It's cheaper to retain customers than acquire new ones.

Crossroads restaurant cafe is situated in Chipledhunga, Pokhara. Crossroads

restaurant cafe is very popular among the people of Pokhara as it is situated in the heart
of Pokhara. Crossroads restaurant cafe was founded by a group of friends together so we
can say that Crossroads restaurant cafe is opened in partnership. Crossroads restaurant
cafe has almost reaches its 5 years anniversary. The mission of this restaurant is ‘we
serve to satisfy your taste buds’ in cheaper and reasonable price.

The restaurant consists of three parts. The front part of the restaurant cafe consists of
coffee, ice-cream and bakery. After that part there is bar side where the liquor items are
kept whereas the last part has its kitchen where the delicious food items are cooked. The
front part is ‘No smoking as well as no alcoholic zone’ because they think people who
dislike these things may have problem with all this things and the children may also get
affected.

For the Crossroads restaurant cafe, every customer is valuable but they mainly focus
to the Nepalese people. There are 15 to 20 workers in this restaurant where the workers
works as waiters, cooks, cleaners and receptionist. The employees of the restaurant are
friendly as well as responsible towards their customer. The food in also served at short
notice. Birthday, parties, get together are organized properly in Crossroads restaurant
cafe. It has also the facility of packaging as well as home delivery. For all kind of bakery
items, they specialized in birthday cakes, anniversary cakes, doughnuts, pastries, muffins
and many more. The bakery items are also very delicious.

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 Recently, Crossroads restaurant cafe is trying to make a thin crust pizza soon that
taste just like pizza found in abroad.They are trying their best so that the customer would
like it and give some feedback to them. If the customer will like the dish then surely the
first thin crust pizza will be made in Crossroads restaurant cafe. Similarly, Crossroads
restaurant cafe has recently opened its branch in lakeside in last 2 to 3 months ago where
the promotion of that restaurant is still left. They hope they will provide the same
facilities and will make people enjoy their valuable time in the restaurant with their food
items.

The major concern of my study is to determine the level of satisfaction of the

customers towards the products and services provided by the restaurant.

1.2Statement of the Problem

A problem statement is a description of a difficulty or lack that needs to be solved or

at least researched to see whether a solution can be found. It can also be described as
either the gap between the real and the desired or a contradiction between principle and
practice.

Restaurants are very popular as well as common in Nepal. There are many restaurants
in chipledhunga, which are providing satisfaction to its customers by providing their
good quality food items, services and environment. It seems that restaurants are battling
hard to win the heart of the customers to secure the market position and Crossroads
restaurant cafe is also of them who have been able to capture the attention and win the
heart of its customers. The problem toward which it is directed is to identify the products
and their satisfaction view from the customers in Crossroads restaurant cafe. This
research report is going to answer the following research questions:

 Whether the customers are regular or not?

 Which items does the customer prefer the most?
 What are the prices of the products?
 What time the customers prefer to come?

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  What is the environment of the restaurant?
 Whether the price of the items matches to its quality or not?
 Whether the customers are satisfied with the product or not with available
facilities?
 What is the view of the customers towards the service time provided by the
restaurant?

1.3Objective of the Study

Objective of the study is required to formulate a plan and develop a framework so

that the study can be more effective. The general objective of the study is to find out the
customer satisfaction of the Crossroads restaurant cafe and also about the price, quality,
services and environment. The study has attempted to specify the following objectives.
The objective of the study is given below:

 To analyze whether the customers are regular or not.

 To determine which food items the customers prefer.
 To analyze at what time the customers prefer to come.
 To evaluate if the price of the food items matches the quality of the food or not.
 To determine the environment of the restaurant.
 To determine the level of satisfaction of the customer.
 To analyze the view of the customers towards the service time provided by the
restaurant.

1.4 Literature Review

The process of studying different educational materials is known as review of

literature. In simply, review of literature means to collect the information about the
selected topic of the research through the different sources.The review of literature
establishes a point of departure for future research; it avoids duplication of expensive
research effort and also reveals the field of needed research. In our research we have

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chosen different types of variables i.e. dependent variable and independent variables.
This chapter includes the conceptual overview and review of related studies.

1.4.1 Theoretical overview

In the world of multicultural, westernization and globalization where all people

involved in restaurants business, it wants to satisfy their customers and make profit in the
business process. They find very difficult to compete with the competitors and face
challenges with sustaining their business. So, this research will try to analyze the price,
quality and quantity, environment, customer satisfaction of Crossroads restaurant cafe.
The major emphasis of this research will be towards studying customer satisfaction on
Crossroads restaurant cafe. However, there are certain limitations and drawbacks on this
research will be further improved after necessary feedback.

1.4.2 Review of previous studies

S Saad Andaleeb, C Conway, 2006 – the main purpose of the study was to determine
the factor that explains customer satisfaction in the full service restaurant industry. He
used factor analysis and regression model to test the model. The regression model
suggested that the customer satisfaction was influenced most by the responsiveness of the
front-line employees, followed by the price and food quality. The physical design and the
appearance of the restaurant have no significant effect. He concludes that full service
restaurants should focus on three elements for customer satisfaction and i.e. service
quality, price and food quality.

Y Namkung, SC Jang 2007 did a research on “Does Food Quality Really Matter in
Restaurants? It’s Impact on Customer Satisfaction and Behavioral Intentions”. According
to him, the fundamental component to satisfy the customers is food quality. However, it
has been often overlooked in restaurant service quality and satisfaction studies. The
primary objective of his study was to investigate how food quality is perceived in relation
to satisfaction and behavioral intentions in mid to upscale restaurants. The study has also
tried to identify which attributes among food related qualities are critical in improving
satisfaction and heightening revisit intention. He says that the overall food quality
significantly affects the customer satisfaction and the behavioral intentions of the

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customer and the relationship between food quality and customer behavioral intention
because of the satisfaction. Subsequent regression analyses demonstrated that taste and
presentation were the two greatest contributors to customer satisfaction and behavioral
intentions. Thus, the managers should pay attention to the key food quality attributes that
elicit customer satisfaction and enhance return visits in the restaurant business.

Hong Qin, Victor R. Prybutok, (2009) has conducted the survey on "Service quality,
customer satisfaction, and behavioral intentions in fast‐food restaurants”. The main
purpose of the study was to explore the potential dimensions of service quality, and
examine the relationship among service quality, food quality, perceived value, customer
satisfaction and behavioral intentions in fast‐food restaurants (FFRs). According to the
study, there are five significant dimensions that is (i.e.) tangibles,
reliability/responsiveness, recovery, assurance, and empathy where service quality and
food quality were two main determinants of customer satisfaction and the insignificance
of perceived value is potentially due to the homogeneous nature of the construct within
the fast-food restaurants group rather than the importance of the perceived value
construct within food services.

K Ryu, H Han -2010- This study examined the relationships between three determinants
of quality dimensions (predictors: food, service, and physical environment), price
(moderator), and satisfaction and behavioral intention (criterion) in quick-casual
restaurants. Despite the importance of foodservice quality, academics and managers
know relatively little about how the combined effects of quality (food, service, and
physical environment) elicit customer satisfaction which, in turn, affects behavioral
intention. Hierarchical multiple regression analysis with interactions showed that quality
of food, service, and physical environment were all significant determinants of customer
satisfaction. In addition, perceived price acted as a moderator in the satisfaction
formation process. Finally, the results indicated that customer satisfaction is indeed a
significant predictor of behavioral intention. The findings may provide restaurateurs with
a guideline for enhancing customer satisfaction and behavioral intention level.

D Pandey, PR Joshi - 2010 conducted a study on “A study in the Hotel Industry” where
they determine the Service Quality and Customer Behavioral Intentions. The purpose of

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this paper is to examine the relationship among the constructs of service quality,
customer satisfaction and behavior intentions in the hospitality industry. The study
reviews a proposed model of service quality and its relationship with customer
satisfaction and behavior intentions: service quality is positively related to satisfaction,
and behavioral intentions. Similarly, customer satisfaction works as mediator between
service quality and behavioral intentions of the customers. The model is tested
empirically with the data from a survey among 243 Asian, European and American
customers who stay in five star hotels in Nepal. The four hypotheses establish the fact
that service quality and behavioral intentions of the customer in the hotel industry are
positively associated. Service quality has no relationship with customer satisfaction.
Customer satisfaction has direct relationship with behavior intentions of the customer, but
customer satisfaction has worked as a mediator between customer service quality and
behavior intentions of the customer in the hotel industry.

1.5 Conceptual Framework

Conceptual framework are simply defined as the base upon which the research is
study. There is the general perception that, the happier the customers are with the food
items available in the restaurant the higher is the level of satisfaction of the customers.
Nowadays, the level of satisfaction can’t be determined by a single factor but through
different factors. Similarly, the factors affecting the customer satisfaction of Crossroads
restaurant cafe consists of 5 different factors which are also known as the independent
variables. These independent variables are price, quality, service, environment and time.

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Independent variables Dependent variables

Price

Quality
Customer
satisfaction

Service

Environment

Time

Fig 1.1: Factors affecting Customer satisfaction

As shown in the figure 1.1, we can understand that customer satisfaction is the dependent
variable whereas price, quality, service, environment and time are the independent variables that
influence the level of satisfaction of the customers.

1.6 Research Methodology

The process used to collect information and data through the entire study is known as
research methodology. The research methodology includes the research design, nature
and source of data, population and sample, data collection procedures, data processing
and analysis.

1.6.1 Research design

Research design is the plan, structure and strategy of investigation conceived so

as to obtain the answers of research questions. There are several research designs such as
descriptive, comparative, qualitative, interventional research design. However, this study

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is descriptive in nature. Its focus is on finding the products in Crossroads restaurant and
cafe.

1.6.2 Nature and sources of data

Primary data are the first hand data that are collected from informal queries and
interviews conducted with the concerned authority. Secondary data are those data which
are already been used or published.

This study applies both qualitative and quantitative approaches to achieve the
research objectives. Under qualitative research, the questionnaire is prepared. However,
the data collected for the study are primary and qualitative in nature. The data are
collected through a standard structured questionnaire.

1.6.3 Data collection procedures

The major method that was used to collect the data was Questionnaire.
Questionnaire has been used as the primary tool of collecting data. It is prepared and
distributed to the customers of Crossroads restaurants cafe. In questionnaire, 18 questions
with 2 open ended and 16 close ended are included which includes personal information
and other working information. Direct interview with the respondent was also taken for
gaining more internal views of customers.

1.6.4 Population and sample

.Customers of Crossroads restaurant cafe was taken as the population of the

research. Sampling is the process of selecting a number of elements from the population.
So that, an effective study of the sample and understanding of its properties would make
it possible for use to generalize such properties to the population. For this study, we used
customers of Crossroads restaurant cafe as the population and applied the method of
convenience sampling. A sample of 66 respondents was selected from the population

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1.6.5 Methods of Data Processing and Analysis

After gathering the data, different methods were used to process the available data.
The data collected from the questionnaire will be edited, coded and tabulated. They will
be thoroughly checked and presented into appropriate table. Data analysis and
interpretation will be done descriptively as well as statistically. SPSS software, Ms-Excel,
tables, charts, graphs and other descriptive tools will be used.

1.7Significance of the Study

Every study has its own importance. This study is conducted to know about the
customer satisfaction on ‘Crossroads restaurant and cafe’. Therefore this study will help
to analyze the price, quality, satisfaction, choice, taste, environment of the restaurant.
Similarly, it will help to the researcher of the restaurant of Pokhara as well as the
upcoming researcher to study more on the topic.

1.8Limitation of the Study

Like all other research, this research might also contain certain limitations that it
cannot address. It is specific to the customers of the Crossroads restaurant cafe only.
Some of its key limitations are as follows:

 Only New road branch of Crossroads restaurant cafe is taken under

consideration.
 The data focus only on the customer satisfaction of Crossroads restaurant
cafe.
 For the study, data are taken of one month.
 The findings may not be realistic as it is for learning process.

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 1.9Organization of the Study

The first chapter comprises background of the study, introduction of the study,
statement of the problem, objective of the study, significant of the study, limitation of the
study. The second chapter contains the review of the literature. The third chapter
describes the methodology of the study which comprises the research design, nature and
sources of data, data collection procedure, population and sample, data processing and
analysis. The fourth chapter elaborates the data analysis part that includes summary,
conclusion and recommendation of the study. At the end, the bibliography and appendix
are presented.

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