CHAPTER II

REVIEW OF RELATED LITERATURE

This chapter endeavors to give a detailed discussion of past literature and studies review
from documented sources. This presents the critically reviews of previous related literature
obtained from different professional journals and books.

Related Literature

Consist of comprehensive review of the existing literature pertaining to current state of fast
food industry internationally and locally as well as the concept of mix and match, the review
includes journals, article, and news reports.

Foreign Literature

Global Fast-Food Industry

Fast-food industry is one of the major drivers of global economy. The global fast-food
market size was valued at USD 529.5 billion in 2020 and is expected to grow at a compound
annual growth rate (CAGR) of 4.6% from 2021 to 2028 (Grandview Research, 2016). The
increasing demand for quick and convenience food was heathen up by the re-opening of global
economy and loose health and government protocols. According to the IBIS World Global Fast
Food Restaurant Industry- Marketing Research Report, despite the recent volatility in commodity
prices and the recent global shutdown caused by the COVID-19 (coronavirus) pandemic,
consumers are expected to increase spending on small luxuries, such as eating out.

Mix and Match

Although mix and match strategy are relatively new in the fast-food industry, its concept
is no longer new and a range of different options have been offered across industries from
electronic goods to fashion industry, that include color, pattern, material, and flavor. The mass
customization concept was first coined by Stan Davis in 1987 and later developed by Pine II in
1993, mass customization implies a shift of design and production paradigm from "made-to-
stock" to "made-to-order", The key feature of mass customization is the capability to integrate
the product varieties
derived from the individual customer's needs with repetition of modularity and the efficiency of
mass production, so that the products are affordable due to low product cost achieved by the
scale of economy in production (Tseng et.al, 2017). Eric Schlosser's book, "Fast Food Nation:
The Dark Side of the All-American Meal," explores the emergence of menu customization in fast
food. Menu customization began with condiment bars, allowing customers to add preferred
condiments to their burgers and sandwiches. Burger King's "Have It Your Way" campaign in the
1970s popularized individualized ordering, letting customers specify their burger preferences.
McDonald's introduced combo meals, simplifying ordering but limiting personalization.
However, McDonald's later adapted to consumer preferences by introducing the "Create Your
Taste" platform, allowing customers to personalize burgers with various toppings and sauces,
aligning with the trend of greater menu customization in the fast food industry (Schlosser, 2001).

Local Literature

Fast-food Industry in the Philippines

According to Marasigan (2019), there is no stopping in the fast–food growth. The fast–
food category is predicted to post the highest growth rate in the years to come expanding by 12%
year on year. Interestingly, fast–food sales inside convenience stores will grow at a more
phenomenal rate of 32%, thanks to their improving quality and democratic price. Fast–food
chains are seen to expand their product offerings to sustain demand even if it encroaches on other
food concepts. For instance, Filipinos would soon see burger chains offering pizza, chicken
chains offering salads, and pizza chains offering rice meals. This increase can be attributed to the
expansion undertaken by fast–food restaurants in terms of branch network.

In a 2014 country report of Euromonitor International, the market in the fast food
sector is the largest and fastest growing of the industry of foodservice (Raquel & Alonzo,
2019). As it currently stands, Jollibee controls over 50 per cent of the Philippine fast food
market The firm posted upwards of P2.146 billion ($45.5 million) in net income for 2006.
These corporate earnings surpass the previous year’s high of P1.69 billion ($35.6 million).
Jollibee’s system wide sales increased by 13.5 per cent at this time, while net income as a per
cent of revenue rose from 5.8 per cent in 2005 to 6.4 percent in 2006 (Cuevas, 2020). Such
strong growth over the years has allowed Jollibee to shore up its dominant position with the
recent acquisition of rival homegrown chains Greenwich Pizza and Chowking. Perhaps more
notably, Jollibee is now ranked as one of Southeast Asia’s most profitable corporations, with
dozens of overseas outlets spread across the Asia-Pacific and beyond (Conde, 2018).

Mix and Match

Recently, McDonald’s introduced McSavers Mix and Match to the public and gained so
much popularity. This allows customers who is on a tight budget to customized and personalized
their own combo meals, customers are able to choose one main and one side from a variety of
options available whether it be a spaghetti and sundae or burger and coke float (ABS CBN,
2022). Jollibee, the most well-known fast-food restaurant chain in the Philippines, is well aware
of Filipinos; desire for inexpensive yet filling cuisine, and they just unveiled a solution with its
Mix & Match Combos, which let you design your own tasty and reasonably priced meal
combinations. You have the option to create your own Sulit-Sarap combination from a
customizable combo lineup that costs only PHP 75 and features some of Jollibee most delectable
goods (Must See Philippines, 2023).

Related Studies
Scholarly cited sources from theses, dissertations and research studies substantially
characterized by the presence of the following parts: research problem, hypotheses, objectives,
related literature, methodology, findings, conclusions, recommendations and bibliography were
used to present comprehensive review on the research problem.

Foreign Studies
Customer satisfaction and profitability

The widely accepted satisfaction-profit chain framework suggests that profits stem
from customer retention that arises from high levels of customer satisfaction, which is
achieved by delivering quality product or service (Anderson and Mittal, 2020). The
conceptual logic underlying the satisfaction-profit chain stems from the idea that by
improving product or service attributes or quality, customer satisfaction should increase.
When customer satisfaction increases based on attributes of the restaurant experience, this in
turn will lead to greater profitability, revisit intentions, customer traffic, and sales (Gupta et
al., 2007). A high degree of customer satisfaction offers numerous advantages for the brand,
including better brand recognition, higher customer loyalty, less price elasticity, positive
word-of-mouth, and a decreased propensity to switch (Anderson et al., 2015)

Factors affecting customer satisfaction

Determinants of customer satisfaction in fast food have been identified in various

literature, such as promotion (Huang, 2018), physical environment (Lim, 2015), social influence
based on culture, traditions, beliefs. Moreover, all of these factors must come in to play, studies
have shown that high quality services, strong brand image, and food quality results in high
customer retention (Rajput, 2020). Fast food chains and numerous limited-service restaurants
should take considerations of these factors to ensure customer retentions and yield significant
revenue (Saleh, 2017).

A customer’s decision on what to eat is entirely based on the food’s quality

(Haynasha, 2016). Food smell is a crucial factor for consumers to consider when assessing the
quality of food (Im and Qu (2017). Customers frequently think that the cuisine is of worse
quality if it differs from what is on the menu (Chathoth et al. (2016). Based on the
aforementioned studies, it can be concluded that customers evaluate the quality of food by
tasting it, smelling it being prepared, and seeing if it is being served according to the menu
that is being displayed.

There is a considerable agreement among a number of scholars that food quality plays an
important role in determining customer loyalty and brand image. In other words, superior food
quality is a key marketing tool that can be employed to satisfy and retain customers and further
ensure their positive purchase experience. Food quality represents the foremost important criteria
in consumer's overall evaluation of a restaurant (Vangvanitchyakorn, 2000). Furthermore, Peri
demonstrated that food quality is an important ingredient that should be provided by restaurants
in order to meet the needs and satisfaction of customers (Peri, 2006). An extensive review of past
literature indicates that the common characteristics of food quality emphasize that it comprises
several elements such as: the presentation of food, taste, diversity of choices, healthy options,
freshness, and temperature.

Another factor to look at is brand image, the primary factor contributing to a brand's
success is its influence on the customer satisfaction level and how it affects the client's
purchasing choice, which led them to to stay devoted to the brand, and they will recommend it to
their family members and groupings (Michael et al., 2015). If the consumer had a positive
experience with a brand, this could result in a positive association with the brand (Khan et.al,
2021).

Food pricing is another important factor affecting customer satisfaction. Price is an

element that customer pays directly. The satisfaction therefore depends on customer’s perception
on food prices (Yeh et al., 2019). Pakurar et al. (2019) noted that the price of food varies from
restaurant to restaurant. If the price of food is determined by the service fee. As a result, the level
of customer satisfaction decreases.

Customers’ degree of satisfaction decreases if they have a negative experience with the
restaurant’s service (Kim et al., 2019). Customers who have negative experiences with a
restaurant’s level of service are unlikely to go again. Additionally, these customers tell other
potential customers about their depressing experience. As a result, the restaurant’s reputation
suffers considerably, and business steadily declines. Therefore, it is important for restaurant
operators to understand how customers judge the quality of their services.

Local Studies

Factors affecting customer satisfaction

Word of mouth strategy is one of the factors influencing customer satisfaction, it is

described as a positive or negative statement made by probable, actual or former customers
about a product or a company, which is made available through offline or online channels
(Curina et.al, 2020). WOM has substantial impact on consumer’s purchasing decision;
therefore, a vital marketing strategy is to initiate positive WOM (Moliner-Velázquez, 2015)

Rodríguez-López et al. (2020) added that the consumers will associate themselves
with the fast food restaurant considering that there is a high significant level of authenticity
towards the brand’s food and environment. Pakurar et al. (2019) noted that the price of food
varies from restaurant to restaurant. If the price of food is determined by the service fee. As a
result, the level of customer satisfaction decreases.
 According to Barbosa et al. (2020), the quality of the services provided also has a
significant impact on customer satisfaction necessitating the use of strategies. Customers’
degree of satisfaction decreases if they have a negative experience with the restaurant’s
service (Kim et al., 2019). Customers who have negative experiences with a restaurant’s level
of service are unlikely to go again. Additionally, these customers tell other potential
customers about their depressing experience. As a result, the restaurant’s reputation suffers
considerably, and business steadily declines. Therefore, it is important for restaurant operators
to understand how customers judge the quality of their services.

Thus, this indicates that the market has still room for expansion (Flores, 2014). If this is
the case, it is imperative therefore, for the management of the different fast–food chains to
determine what effective promotional practices can be applied for the upgrade of their programs
to sustain their market share (Flores, 2014). Many in the business, however, are not aware of the
extent to which advertising or other promotional strategies can help to achieve the decision on
how to fit the product, pricing, place and the promotion strategies into a marketing program.

Fast–food brands seem to strike the balance between letting customers feel like they’re getting a
deal while still allowing them to make some choices on their own. In a way, the recent
resurgence in fast–food combo meals are the result of an expansion of the product portfolio and
category. Now they’re being sold as a bundle, and when that happens it’s considered a combo
meal (White, 2016). Dishes from the menu combos are the best-selling items at the restaurants
and the most often choice of the guests that’s why people are fond of eating in fast–food chain
stores. Moreover, the managers strongly agreed that the fast–food chain introduces new products
to its consumers in different seasons to attract new customers and keep hold of the existing
customers by offering/adding something new to their menu as one of their promotional practices.
The fast–food industry is one of the industries that relies on its food promotion to increase sales.
It uses many strategies for this purpose, including sales discounts, coupons, new goods, and
various offers to attract its customers. According to Maze (2019), for fast–food chains, pricing
and discounts are a balancing act. Quick–service concepts do need some form of low–priced
offers to get customers in the door. It is a fact of life for a sector that has a high percentage of
younger and lower–income consumers.