RESEARCH PROJECT REPORT

ON

A STUDY OF CONSUMER PERCEPTION OF FAST FOOD OUTLET IN DELHI & NCR

SUBMITTED FOR THE PARTIAL FULFILLMENT TOWARDS THE AWARD OF THE DEGREE IN MASTER OF BUSINESS ADMINISTRATION (MBA) OF UTTAR PRADESH TECHNICAL UNIVERSITY, LUCKNOW

BY: SATISH KUMAR PUNDIR ROLL NO.0613370049 MBA-(4th) SEM 2006-2008

UNDER THE SUPERVISION OF Mr. PANKAJ CHAUHAN

DEPARTMENT OF MANAGEMENT STUDIES NOIDA INSTITUTE OF ENGINEERING & TECHNOLOGY GREATER NOIDA [U.P.]

STUDENT DECLARATION

I Satish Kumar Pundir Roll no. 0613370049, a student of MBA-IV Semester of Noida Institute of Engineering And Technology (NIET), Greater Noida hereby declare that the Research project report titled A STUDY OF CONSUMER PERCEPTION OF FAST FOOD OUTLET IN DELHI & NCR is my original work and the same has not been submitted for the award of any other diploma or degree

Place: Date: (Satish Kumar Pundir)

PREFACE

Customers have become more and more aware of their requirements and demand higher standards of services. Their perceptions and expectations are continually evolving. The key lies in improving the service selectively, paying attention to more critical service attributes/dimensions as a part of customer service management. It is imperative to understand how sensitive the customers are to various service attributes.

This study is an attempt to explore the relative importance of service quality dimensions for fast food restaurants that differ in their country of origins. The objective of this study is to analyze customer expectation and perception of different fast food joints and if they differ on the basis of their country of origin.

The study also analyses if customer satisfaction and overall service quality differ with country of origin. Five service quality dimensions have been employed in the study and the variables defined in the study have been measured using these fiveservice quality dimensions.

The statistical tool used in the study is questionnaire and data was collected from the consumers who had been to a fast food restaurant.

The service quality dimensions have been measured using ZOT concept.

the service quality dimensions are important to customers visiting any fast food restaurant; the relative importance of service quality dimension is different with respect to an International and an Indian fast food joint; there is a significant difference in consumers expectations for services offered by an International and an Indian fast food restaurant. There is a difference in consumer perception of services provided by an international or Indian fast food restaurant. The service performance in relation to the expectations is poor in respect of nearly all the dimensions for both fast food joint, and The overall service quality satisfaction is high for the international fast food as compared to Indian fast food restaurant.

ACKNOWLEDGEMENT

I, Satish Kumar Pundir, owe enormous intellectual debt towards my faculty guide Mr. Pankaj Chauhan (Faculty guide), who has augmented my knowledge in the field of A Study of Consumer Perception of Fast Food Outlet in Delhi & NCR, helping me learn about the process and giving me valuable insight into the subject.

I am obliged to her for being extremely patient, giving me sufficient time for discussions and guidance at all stages through the course of this research. My increased spectrum of knowledge in this field is the result of his constant supervision and direction that has helped me to absorb relevant and high quality information.

I would like to thank him for her guidance and enriching my thoughts in this field from different perspectives.

SATISH KUMAR PUNDIR

]TABLE OF CONTENTS

S.no 1. 2. 3. 4. 5.

Contents Introduction to the topic Introduction to the Organization Objective of the study Literature review Conceptual framework:

Page no. 10 11 36 37 39

6.

Methodology Pre test Measurement

46

7. 8. 9. 10. 11.

Data collection Analysis of data Conclusion Bibliography Appendix

48 50 61 64 65

LIST OF TABLES

S.no 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Contents Frequency of Arriving at Any Restaurants Which Restaurants do you go Drivers of Approaching to the Restaurants Time of taking Order Time taken in delivering the order Views about Services Satisfaction level of customers Reason for preferring this Restaurants Evaluation of McDonald and Pizza hut Cleanness score Employees behavior score Space management score

Page no. 51 52 53 54 55 56 57 60 62 63 64 65

LIST OF GRAPHS

S.no 1. 2. 3. 4 5 6 7. 8. 9. 10

Contents Frequency of Arriving at Any Restaurants Which Restaurants do you go Drivers of Approaching to the Restaurants Hospitality Satisfaction level Service problem Service preference Cleanness score Employees behavior score Menu evaluation

Page no. 50 51 52 53 54 55 56 57 58 59

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

It makes me clear about Fast Food Industry

This study introduces us about fast food products or services offered to the public by MacDonald, Pizza hut, Nirulas and Dominos. We are using the fast food frequently in our daily life. So it is crucial to think in a dynamic world while using these types of products or services.

A project is an outcome offer of sincere labor and curious mind. Its worth depends not necessarily on the status of the maker but on practice and profession. Given the level of treatment there is no essential dichotomy between quality and brevity that together must go into construction of project.

The each and every fast food company (outlets) aims to cover a large market area with efficient market infrastructure and though better services. My project report has been prepared on the topic A STUDY OF CONSUMER PERCEPTION OF FAST FOOD OUTLET IN DELHI & NCR.

By studying this concept, we can come to know the actual performance of providing services to customers by different companies mentioned above.

10

INTRODUCTION TO THE TOPIC

11

INTRODUCTION TO THE TOPIC

The topic of this research project report isA STUDY OF CONSUMER PERCEPTION OF FAST FOOD OUTLET IN DELHI & NCR

The study introduces us to identify the importance of service quality dimensions in the fast food restaurant Industry in India and if they differ with country of origin.

To analyze customer expectations (would- should) for fast food restaurants and if they differ on the basis of their country of origin

To understand how perception of service quality dimensions are related to overall service quality and customer satisfaction.

12

INTRODUCTION TO THE ORGANIZATION

13

INTRODUCTION TO THE ORGANIZATION

INTRODUCTION The Indian Fast Food Market The traditional dhabas, potential restaurants in the customers colony and some restaurants in a five star hotel predominantly dominated Upto the year 1995 Indian food market. Having fast food i.e., burgers, pizzas etc., was considered to be an option for eating out. It was not at all synonymous with the American concept of fast food as a quick takeaway bite or a substitute for lunch. Apart from fast food being available at the local colony restaurants and at some five star restaurants, Nirulas was the only fast food chain existing in the country with its restaurants expanding with every passing year since its inception. It has been almost 50 years now since its set up and there is hardly any one who doesnt know that Nirulas exists. Nirulas was the first one to bring fast food to India back in the 50s since then it has evolved into an eating place with a tremendous brand equity and brand recognition. It proved to be a perfect eating place for an average middle class who wants to eat out at an affordable price who cant afford the fivestar restaurants and would not want to go to the local dhabas. Nirula.s almost had a monopoly for decades due to the way it has been placed. It is a place where a person from an average middle class group to upper class group can go to eat out. Its popularity has increased over the decades. With the trends changing and the incomes rising almost anybody who can afford to eat out could go for a snack at Nirulas. However the year 1995-96 witnessed a drastic change. 1996 is considered to be the year of Indias entry into the world food market. International giants such as

14

McDonalds, KFC, TGIF, Dominos, Pizza Hut all bombarded the Indian food market. Before these, UK-based joint called Wimpys had established its chain in the country in 1990. By year 1996 it had about three to four joints established in Delhi. However it did not pose much of a threat to Nirulas reason being lack of variety and that Wimpys was looked at more of a hang-out place rather than eating out with the family. Its been the American international giants i.e., McDonalds, Pizza Hut etc., who have targeted their restaurants to the families. Apart from the foreign and Indian fast food chains setting up shop, there are a range of specialty restaurants offering varied fare such as Chinese, Mexican, French, Italian etc. These places however offer range of items different from burgers, pizzas etc, but they definitely are competition to both foreign and Indian fast food chains. However, restaurant business is such which is surrounded by threat from everywhere be it Indian joints or foreign joints. It is only these international joints and specialty restaurants which are gradually coming up and some Indian restaurants which have made up the food market. Prior to this it was only the local restaurant which became visible while passing by or through local banners etc., and the five star restaurants were for the elite class out of reach by the average middle class customer. There was hardly any awareness or promotion to beat competition. Each of the foreign food joints that have come into the country have their own strategy lined up to differ from the rest. Each of these studied the Indian tastes and style and thereby targeted the Indian customer. An average Indian restaurant goer is no convenience eater, unlike the Americans.

15

If he is paying, he is paying for food that tastes good (Spicy, soft, savory etc.), not for how pleasantly the stuff is served or how spotless the widows are. He wants food for that can make him come back to the restaurant. An Indian food joint owner would definitely understand this but an American company which comes and places itself directly without knowing the customer is definitely in for trouble. Customer loyalty in a restaurant business is essentially low. A customer when he comes to a restaurant usually looks at the quality of food, variety, ambience, speed of delivery and the location. The variety would influence the frequency of visits since taste is a dominating factor to the Indian customers. Almost all the fast food chains both Indian i.e., Nirulas and foreign i.e., McDonalds etc., are targeting the families. This serves to be an advantage because the turnaround time is short and family has higher propensity to spend because different members order larger variety of dishes. Each of these restaurants deliver quality, value and services in its own way through its line of strategies. The emphasis is on the value that the restaurant is delivering to the customers.

OVERVIEW OF THE PIZZA INDUSATRY IN INDIA In India nowadays so many fast food joints are opened and people are turning more towards the pizzas and they try to go to the best pizza parlor opened in their area of living. There are many different companies, which have come up the major players in this category are: PIZZA HUT DOMINOS PIZZA

16

PIZZA EXPRESS PIZZA CORNER

PIZZA HUT Tricon global; restaurants which owns the Pizza hut Franchisee has become very very popular in India in the Indian Pizza Market. The first Pizza Restaurant was opened in 1958 in Wichita, Kansas Under the name Pizza hut and features a variety of pizzas with different toppings as well as pasta, salads, sandwiches and other food chains . For the last ten years Pizza hut was named as the worlds best pizza chain in America and in India also it has captures most of the market share. Pizza hut is the largest pizza restaurant company in the world. It has 12,000 outlets in the 90 countries, employing more than 300,000 people. Pizza hut is the largest pizza restaurant company in the world. It has 12000 outlets in 90 countries, employing more than 30000 people. Pizza Hut has an aggressive expansion plan for India. It intends to have 100 outlets by the end of 2004. Pizza Hut will consolidate its presence in cities where it is already existing as an endeavor to create a major share of these profitable markets first before spreading to other markets. Pizza Hut has more than 12,500 units across 90 countries making it one of the largest pizza brands. Further, all new outlets in India would be franchisee owned resulting from the smooth functioning of the existing stores which are all franchisee owned. Hence, the same arrangement will be followed in the future to ensure growth-oriented results Pizza hut have 19 stores across 10 cities including Mumbai, Delhi, Bangalore, Chennai, Ahmedabad, Hyderabad, Pune, Chandigarh, Agra and Jaipur. By the end

17

of this year we will scale it up to 35 stores. In Mumbai alone we plan to have five stores by the end of the year they want to become the most preferred pizza brand by offering great tasting pizzas for all the usage occasions at our place (table service) as well as yours (home service) Pizza Hut has more than 12,500 units across 90 countries making it one of the largest pizza brands. Further, all new outlets in India would be franchisee owned resulting from the smooth functioning of the existing stores which are all franchisee owned. Hence, the same arrangement will be followed in the future to ensure growth-oriented results

DOMINOS PIZZA The company started in the year 1960 ,Tom Monaghan and brother James purchase "DomiNick's," a pizza store in Ypsilanti, Michigan. Monaghan borrowed $500 to buy the store. Then in the year 1961 James traded his half of the business to Tom for a Volkswagen Beetle. Then in the year 1965 Tom Monaghan became the sole owner of company, and renames the business "Domino's Pizza, Inc." In the year 1967 The first Domino's Pizza franchise store opens in Ypsilanti, Michigan. Company headquarters and commissary are destroyed by fire. First Domino's store outside of Michigan opens in Burlington, Vermont. In the year 1975 Amstar Corp., maker of Domino Sugar, institutes a trademark infringement lawsuit against Domino's Pizza. The 200th Domino's store opens on the year 1978, then in theyear 1980 Domino's first international store opens in Winnipeg, Canada.

The 1,000th Domino's store opens. Then in the year 1985 Domino's opened 954

18

units, for a total of 2,841, making Domino's the fastest-growing pizza company in the country. 2000Domino's Pizza International opens its 2000th store outside the United States. Domino's Pizza celebrates 40 years of delivering pizza and innovation to homes around the world. During the past four decades, Domino's has paved the way for businesses involved in food delivery, employing practices that have set the standard in the industry. Domino's Pizza announces record results for 2000. Worldwide sales exceed $3.54 billion. Revenues increased 5.3% over 1999. There are many outlets opened in India also and it is specializing in the home delivery they have less of sitting arrangement and more of home delivery. In December 1998, investors, including funds managed by Bain Capital Inc., a leading private equity investment firm, together with management and others, acquired a 93% stake in the Company, which was formerly owned by founder, Thomas Monaghan and his family. Domino's Pizza has been dedicated and committed to quality service, product and delivery excellence for more than 40 years, making it the world leader in pizza delivery. Domino's is the largest privately-held restaurant chain, and the eighth largest of all restaurant chains in the world. Domino's Pizza offers Crunchy Thin Crust, Ultimate Deep Dish and Classic Hand Tossed pizzas with a number of regional toppings. Side items include Domino's Bread Sticks, Double Cheesy Bread, CinnaStix and Buffalo Wings. Beverages consist of icy cold Coca-Cola products Domino's Pizza operates a network of 6,977 owned and franchised stores in the United States and 64 international markets.

19

Over 120,000 associates are employed by Domino's around the globe. 15,000 of those are corporate employees, of which 550 work at the worldwide headquarters in Ann Arbor, Michigan. Each Domino's store employs 15-30 part-time and full-time individuals. Total worldwide corporate and franchise store sales were $3.54 billion, a 5.3% increase over 1999. Domino's Pizza, founded in 1960, is the recognized world leader in pizza delivery. Domino's Pizza operates a network of company-owned and franchise-owned stores in the United States and international markets. But Domino's isn't just about delivering, it's also about giving back to the community. Domino's Pizza believes that an essential component of its corporate responsibility is to provide support to charitable organizations that benefit the communities where our employees and customers work and live. Headquartered in Ann Arbor, Michigan, Domino's is committed to supporting initiatives and causes in its hometown while also participating in national programs that align with our vision, guiding principles and strategic focus.

20

Key Players

Mcdonalds

a). An Overview History and Background In 1955, Ray Kroc, a 52-year old salesman of milkshake mixing machines, became interested in a string of seven restaurants owned by Richard and Maurice McDonald. These two founded the quick service restaurant industry when they converted their barbecue drive in with car hops into the worlds first Macdonalds limited menu, self service drive-in in 1958, in California. Kroc liked their fast-food restaurant concept and bought the Chain for $2.7 million. He opened his first McDonalds in Illinois in April 1955 and founded the company that evolved into McDonalds Corporation. He decided to expand the chain by selling Franchises, and the number of restaurants grew rapidly. Worldwide Operations There are more than 23,000 McDonalds restaurants in III Countries (as of Jan. 1998). McDonalds 1997-year end system wide sales were $ 33,368.3 billion. McDonalds is the largest and the best known global food service retailer. Its global market potential is enormous seeing the member of restaurants it has. On any day McDonalds serves less than one percent of the worlds population. Its outstanding brand recognition. (It is one of the most recognised brands all over the world), experienced management, high quality food, site development, high quality food, site development expertise, advanced operational systems and unique global infrastructure position it to capitalize on global opportunities.

21

McDonalds Vision is to dominate the global food service industry. Global dominance means setting the performance standard for customer satisfaction and increasing market share and profitability through successfully implementing convenience value and exception strategies. In order to expand its operation McDonalds goes by a simple thumb rule to estimate haw many outlets it wants: One restaurant for every 25,000 people with new markets sprouting in so many parts of the would, the chain is expanding at a breathtaking pace of one restaurant every three hours. This can be known from the following: Period Jan. 1997 Jan 1998 No. of outlets 19,400 23,000 Countries 95 111 Sales $ 30 billion $ 33 billion

McDonalds franchises restaurants in many international markets, and decisions relating to the selection of candidates are made local by the management in the country where the restaurant is located. McDonalds India A locally Owned Company McDonalds India is a locally owned company managed by Indians. In Mumbai Amit Jatias Company, Hard castle restaurants Pvt. Ltd., owns and manages McDonalds restaurants. In Delhi, McDonalds restaurants are owned and managed by Vikram Bakshis Connaught Plaza restaurants Pvt. Ltd. Both these individuals are responsible for the running of McDonalds India. Local Sourcing is Key for Truly Indian Products Around the world, McDonalds traditionally operates with local partners or local management. In India too, Macdonalds purchases from local suppliers.

22

McDonalds constructs its restaurants using local architects, contractors, labors and - where possible - local materials. McDonalds hires local personnel for all positions within the restaurants and contributes a portion of its success to communities in the form of municipal taxes and reinvestment. Its 98% of the inputs are obtained domestically. McDonalds sources food products from local companies. mutton patties are supplied by Al-Kabeer, Hyderabad, Andhra Pradesh; fresh lettuce comes from Pune, Ooty, Maharashtra and Dehradun; cheese from Dynamix Dairies, Baramati, Maharashtra; sesame seed buns and sauces from Cremica Industries Phillaur, Punjab, and pickles from VST Natural Foods, Hyderabad, Andhra Pradesh. Setting Up of an Extensive Food Chain For three years before the opening of the first McDonalds restaurant in India, McDonalds and its international supplier partners worked together with local Indian companies to develop products that meet McDonalds vigorous quality standards. These standards also strictly adhere to Indian Government regulation on food, health and hygiene. Part of this development involves the transfer of state-ofthe-art food processing technology which has enabled Indian business to grow by improving their ability to compete in todays international markets. For instance, Cremica Industries worked with another McDonalds supplier from Europe to develop technology and expertise which allowed Cremica to expand it business from baking to also providing breading and batters to Macdonalds Indian and other companies. Another benefit is expertise in the areas of agriculture, which allowed McDonalds, and its suppliers to work with farmers in Ooty, Pune and Dehradun and other regions to cultivate high quality lettuce. This includes sharing advanced agricultural technology and expertise like utilization of drip irrigation

23

systems, which reduce overall water consumption, and agricultural management practices, which result in greater yields. In some cases, these Indian suppliers had the technology - but no market for the products they produced. For example, Dynamics Dairies -- through its relationship with McDonalds was introduced to a large customer of milk casein and other milk derivatives. The two companies entered into a business relationship resulting in an initial export order of approximately US $ 12 million per year - with the potential to increase. McDonalds local supply networks through Radhakrishna Foodland, to get products from the various suppliers to restaurants in Delhi and Mumbai. Respect for the Indian Customers and Culture McDonalds worldwide is well known for the high degree of respect to the local culture. McDonalds has developed a menu especially for India with vegetarian selections to suit Indian tastes and culture. Keeping in line with this McDonalds does not offer any beef or pork items in India. McDonalds has also re-engineered its operations to address the special requirements of a vegetarian menu. Vegetable products are prepared separately, using dedicated equipment and utensils. This separation of vegetarian and non-vegetarian food products is maintained throughout the various stages of procurement, cooking and serving. An Employer of Opportunity McDonalds India is an employer of opportunity, providing quality employment and long-term careers to the Indian people. the average McDonalds restaurant employs more than 100 people in 25 different positions - from cashier to restaurant manager. McDonalds world-class training inputs to its employee could be seen in the present close to 1000 employees currently in Mumbai and Delhi. Community Partnership

24

McDonalds believes in giving back to the communities it serves. Wherever McDonalds goes it becomes a part of the community it operates in and contributes towards the development of the locality. For example, McDonalds has introduced the concept of Litter Patrol - McDonaldss employees go around the immediate vicinity of the restaurant every day, packing up garbage left behind not only by customers from McDonalds restaurants but also by other visitors to the area. The result is a cleaner neighborhood. To commemorate 50 years of Indian independence, on 15 August, 1997, McDonalds Mumbai organised a No Grabage Drive, in association with the Brihan Mumbai Municipal Corporation and five schools in Bandra. Inaugurated by the Municipal Commissioner, this was in support of BMCs Zero Garbage, initiative. Other community activities undertaken by McDonalds in India include the adoption of local public parks for restoration and beautification, thereby providing a play area for children. In fact in Delhi, McDonalds has even addressed the security issues relevant to a particular residential colony. Charities, especially those benefiting children, are often the recipients of McDonalds support - either through the use of the restaurants for meetings or for fund-raising activities. McDonalds International charitable foundation, Ronald McDonald House Charities supports charities around the world. In fact, in 1993, RMHC donated to the Indian Prime Ministers Relief Fund following the devastating earthquake in Maharashtra. Quality, Service, Cleanliness and Value The McDonalds philosophy of QSC & V is the guiding force behind its service to the customers.

25

McDonalds India serves only the highest quality products. All McDonalds suppliers adhere to Indian government regulations on food, health and hygiene while continuously maintaining McDonalds own recognized standards. All McDonalds products are prepared using the most current state-of-the-art cooking equipment to ensure quality and safety. At McDonalds the customer always comes first. McDonalds India provides fast, friendly service - the hallmark of McDonalds,, which sets its restaurants apart from others. McDonalds restaurants provide a clean, comfortable environment especially suited for families. This is achieved through McDonalds stringent cleaning standards, carefully adhered to. McDonalds menu is priced at a value that the largest segment of Indian consumers can afford. McDonalds does not sacrifice quality for price - rather McDonalds leverages economies of scale to minimize costs while maximizing value to customers. McDonalds has a 20-year profitability plan for India and it intends having at least 50 restaurants here by the year 2000. The company has already invested Rs. 50 crore in its Indian operations, and each of the two joint venture partners has invested about Rs. 17.56 crore.

b) Marketing Functions Mc Donalds started its operations in India in October 1996 and by July 1998 it has served about 10 million customers in the country. Mc Donalds marketing philosophy is captured in its motto of Q.S.C.V., which is the guiding force behind its service to the customers.

26

Mc Donalds India serves only the highest quality products. All Mc Donalds suppliers adhere to Indian government regulations on food, health and hygiene while maintaining Mc Donalds own recognized standards. All its products are prepared using the most current, state of the art cooking equipment to ensure quality and safety. At Mc Donalds, the customers always comes first. Mc Donalds India provides fast friendly service the hallmark of Mc Donalds which sets its restaurants apart from others. Its restaurants provide a CLEAN, comfortable environment especially suited for families. This is achieved through Mc Donalds stringent cleaning standards, carefully adhered to. Mc Donalds menu is priced at a VALUE that the largest segment of Indian customers can afford. Its strategy in India is to target the plain and simple mass market. The target consumers for Mc Donalds are the family and the kids. Mc Donalds has been positioned as a Family Restaurant.

c) Product Related Strategies World over Mc Donalds is known for its juicy beef burgers. But in order to settle in India the entire concept of beef burgers had to be changed. India is the only country where Mc Donalds is offering veggie burgers and non-veg burgers without beef (uses mutton instead). This is a classic case of Product Adaptation, where Mc Donalds adapted its product according to the culture and norms of the country in order to position itself in the market.

27

There have been other products adaptations too. McDonalds sells a spicier Maharaja Mac in India as its flagship product in place of the globally famed Big Mac. It also has a large capacity for vegetarian burgers, the production and serving of which is separated in such a way that the customer can actually see it. Mc Donalds product line is almost similar to other burger chains in the country. Burgers Desserts Beverages/shakes Assorted items.

Burgers (in variety) 12

Pizzas (in variety) -

Ice

Creams Additional variety)

(in Meal Combos

(in variety) 2

2 (French fries and 7 veg nuggets)

Product standards, packaging, quality, processing are all the same like at any other Mc Donalds outlet in the world. The quality standards are so stringent that nowhere, not even is its rawest state, is any of the food touched by hand. The typical burger undergoes 54 checks before it is served. The menu at Mc Donalds has remained more or less the same over the past 2 years except a couple of additions in the burgers variety and inclusion of couple of items in the dessert variety.

28

Mc Donalds even has the calorie count carefully worked out for its burgers. A veg burger offers 418 calorie, 10 gm of protein, 22gm of fat and 48 gm of carbohydrate. All Mc Donalds menu items fit into a balanced diet and it offers certain items that fit well within a low fat diet (option of burger with or without cheese). Pricing Strategies Worldwide Mc Donalds is known for its Purchasing power pricing. The ability to pay-of a large section of customers has been the sole criteria. This was assessed through market research. It wanted to price its products in such a way that it can even be accessible to a child. For this it examined Indian spending on snacks and other foods before setting on the prices. Price variations from 1996 to 1998 for a couple of items are as follows: Item Mc Burger Maharaja Mac Entrylevel (1996) Rs. 12 Rs. 412 (1998) Rs. 14 Rs. 46

The company continued with the 1996 prices for about a year in order to meet its one million-target audience. One look at the restaurant and it doesnt seem that the prices of its products would be this low. Reason being that Mc Donalds gets the materials (55 per cent of an outlet running expenses) at very cheap rates. Therefore this is one of the reasons that Mc Donalds products are priced reasonably. It buys its supplier from 35 suppliers who sell at incredibly low prices. Products at Mc Donalds are neither elitist in its pricing nor at the dhaba level, they are average in its pricing.

29

Mc Donalds was offering a softie at a price of Rs 6/- about a year back during the festive season. Today this softie costs only a rupee more at Rs.7/-. No restaurant of this caliber offers a product at this rate. Mc Donalds recently has come up with Eco-meals, in which one can afford to have a burger and coke for as little as Rs. 29/- and at max for Rs. 49/- (In store pamphlet enclosed) Mc Donalds keeps on coming up with such meals almost every month such that almost anyone can afford to have a Mc Donalds product. Promotional Strategies Mc Donalds ad line goes like: Food Family Fun Mc Donalds had started its promotional activity with local area banners and posters and now it has moved on to movie hall commercial. Its commercial is a 60second close up which focuses on a burger being prepared in slow motion tantalizing the audience as though its a strip tease. It has even started advertising through local channels such as siti cable. Mudra is the ad agency which puts up publicity banners in Delhi and Mumbai and takes up the local T.V. commercials. Newspapers such as Delhi times are also being used for local advertising. McDonalds plans to advertise in national newspapers such as Hindustan Times and Times of India in another couple of months. In addition to this Mc Donalds also has a public relation agency handling its account that takes care of publicity and press releases. McDonalds keeps on coming up with sales promotion schemes every now and then.

30

During World Cup Soccer it came up with this soccer game for Rs.11/- with every meal combo ordered. Since kids are the prime targets by the restaurant, it has come up with happy meals especially for the kids along which a game is free. Also, for the kids Mc Donalds is the most happening place for birthday parties kids love the place due to all the attention and knick-knacks they are showered with. The restaurant even has playpens displayed especially for the kids. McDonalds also comes up with special schemes during the festive season Last month i.e. September, during Navratras it came up with special Shudh Shakahari Meal where a meal for two was for Rs. 99/- and a meal for four was for Rs. 199/- (In store pamphlet enclosed). Another way through which Mc Donalds is promoting its image is via community services. There are Mc Sermons on maintaining parks, conducting litter patrols and putting up public trash cans. At majority of McDonalds restaurants, the management emphasizes on developing parks for the kids as a play ground for them. E.g. At McDonalds G.K. restaurant there is a play ground developed for the kids in front of the restaurant. The management has put boards at these parks to put across certain messages for the community as a whole, such as: If you see someone without a smile, give them one of yours Children are the light of our future etc. In addition to all these promotional measures, McDonalds has boards put all over the roads to show directions to their restaurant. These boards are put almost two to three kms before the location of the restaurant. This makes it easier for the customer who is not familiar with McDonalds restaurant location. Distribution Strategies

31

Till date Mc Donalds has 11 outlets in India out of which six are in Delhi and five in Mumbai. In 1997 there were about 3 outlets in Delhi and only three more outlets have been added to the list by 1998. By the year 2000 Mc Donalds plans to have about 50 outlets in the country. At Mc Donalds, while opening a restaurant the emphasis is, to choose a site whereby 150-200 seating capacity can be available. This is to attract as many people as possible into its premises. Customer Demand The factors influencing customer demand for McDonalds menu items are as follows: McDonalds world wide is known for its quality burgers. This world wide name for burgers has influenced the demand for it in the Indian market. This can be known from the fact that within two years it has served about 10 million customers at its restaurants. The factor that influences customer demand for the organizations product to a great extent is the offering of highest quality product, providing services which is fast friendly and accurate, creating a restaurant atmosphere which is always clean, comfortable and ideally suited to India families and children. The maximum number of Indian consumers offers McDonalds products at a value which can be affordable. The Chain of restaurants provides a variety of comfortable seating arrangement to accommodate different size groups of people from individuals to large families.

32

McDonalds Customer Base In 1997, Mc Donalds 3 outlets received about 15,000 customers daily. A Mc Donalds restaurant with about 150-200 seating capacity serves about 40,000 customers per month. By July 1998, Mc Donalds has served 10 million customers in the country. c) comparitive analysis A comparative analysis for the three food chains has been made on the following five parameters: Performance Variety Price Accessibility Service Performance Nirulas started its operations in the country as early as in 1930s but its first fast food restaurant came up around in 1950s. This means that the chain is about five decades old. Mc Donalds just two years old. Each of these chains has its own reputation and name in the market. Nirulas being in the country for so long still has its distinguished fan following and is surviving in the market despite the coming in of the international chains such as Mc Donalds and Wimpys. Nirulas is considered to be more of a dinein eating place than a fast food joint like the other two. Most of the time the customers coming in at Nirulas are not in a hurry to leave, they want to relax and enjoy their meals. In contrast Mc Donalds and Wimpys are considered to be a place to grab a bite or a quick take away fast food joint. McDonalds in US is a lunch time place from

33

which customers keep away in the evening. Nirulas on the other hand is packed after dusk with carloads of families to have dinner. Despite Mc Donalds being placed as a comfortable family eating restaurant, a person would come to the restaurant to have a quick meal for lunch or dinner alone or with his family. Nirulas had about 11 outlets all performing well, serving a wide variety of items from thaalis to hotdogs to pizzas. When Mc Donalds came up in locations where Nirulas was already established, it affected the restaurant drastically in the initial few months. But as and when the customers had tried the Mc Donalds product, they returned back, happy that Nirulas offers a wider choice and tastier food. Hence, Nirulas is still performing well in the market despite the coming in of Mc Donalds. as far as Mc Donalds is concerned , its worldwide brand recognition is enough to make it sustain in the market.

Variety The range of items that each of these joints has can be seen in the following table. Name Burger (in variety) Nirulas 15 12 30 Pizzas (in Variety) Ice creams Additiona (in variety) (includes items) 5 assorted

Mc Donalds

12

No. of Meal Combos Nirulas 15

34

Mc Donalds

The range of items given in the above table and no. of meal combos are standard items which the restaurant has. In addition to this Nirulas comes up pizza of the month and ice cream of the month. Mc Donalds comes up with a meal combo also almost every month. For all the product lines Nirulas takes the cake vis--vis other two joints. The customer has a range of items to choose from at Nirulas. He is just not restricted to a few items in the menu list. One has every thing from Indian to Western food at most of its joints; Wimpys too has a variety of items in the list, but nowhere near to what Nirulas is offering. Though McDonalds has the least variety of items in its menu, it is surviving in the market because of its world wide brand recognition. The fact that McDonalds burger is famous all over the world is what that is making it sell like hot cakes in India. However if one wishes to just grab a bite one could go to McDonalds but if one is looking for variety then Nirulas is the place to go to. From the market research study conducted to know consumer preferences, Nirulas is the most preferred eating place and variety is one of the unique attributes for Nirulas which attracts customers to its restaurant. In the burgers category Nirulas has the maximum variety, Mc Donalds has the least variety. For Pizzas Nirulas has more variety and for ice creams too Nirulas has maximum variety. Price Each of the products at Nirulas and Mc Donalds are priced so as to suit everyones pocket.

35

When Mc Donalds opened its first restaurant in the country it adopted a price strategy whereby all its products were priced lower than the domestic counterparts. It had priced its chicken burger at Rs. 39, a rupee below Nirulas equivalent in 1996. Today, the burger is priced at Rs. 43 and Nirulas burger is for Rs. 49. Though their veg burger prices are the same at Rs. 34/- each, 1998 prices of each of the three restaurants for there chicken and veg burgers are: Chicken Burger (Rs.) Nirulas Mc Donalds 49 43 Veg Burger (Rs) 34 34

The prices of its products are very much competitive with a rupee or two below or above. Another interesting feature of these restaurants is the meal combos that they serve. All the food joints offer these meal combos with a combination of burger + Pepsi + fries. Basic idea behind this is to offer meals at a very economical rate. The meal combo rates of each of the three joints can be depicted from the following table: Veg Meal Combo Non-veg Meal Combo

(Veg Burger + Coke+ (Chicken Burger + Coke + Fries) Nirulas McDonalds Rs. 51 Rs. 65 Fries) Rs. 72 Rs. 74

Again for these meal combinations too the prices are competitive for all the three restaurants. Nirulas offers these meals at the most economical rates compared to McDonalds

36

However, from the market research study conducted price is considered to be the fifth most important variable while selecting a fast food joint. The emphasis is more on quality of food, cleanliness, variety and speed of delivery. Therefore price becomes an in significant characteristic to the extent that the product is affordable by the consumer. Accessibility Every restaurant has to be placed at the right location such that it attracts the maximum number of customer into its premises. All these restaurants in the city are located at the most frequently visited places by the customer. Nirulas started with its expansion plan by opening a joint in C.P. (the most frequently visited place in the city). Soon more and more joints followed and all of them are located at either the most popular markets in the city or cinema complexes or bowling alleys. This way anybody going for shopping, watching a movie or just playing some games doesnt have to go to another part of the city to have meals. McDonalds opened its first restaurant in Vasant Vihar Complex to be accessible to the movie watchers coming there. How ever, Nirulas has an added advantage in terms of accessibility vis--vis the other two joints due to its home delivery services. Although the services are restricted to the locality where the restaurant exists, still it has an advantage because the customer if he does not feel like going to the restaurant and have a meal he can still consider it if the home delivery services are made available. Amongst the three restaurants Nirulas has the maximum no. of outlets in and around Delhi. This is mainly due to amount of time for which it has been into the business.

37

However, these entire restaurants are located at the most frequently visited places by the people such as shopping areas, cinema halls, bowling alleys etc. Service McDonalds takes the share on this attribute for providing the customer with fast and friendly services. At Mc Donalds you get your order usually within 60 to 90 seconds from the time it is placed. Providing the customer with fast and friendly services is under the philosophy of McDonalds. This is one big advantage Mc Donalds has over Nirulas pizza hut dominos is that MCD placed your order between two the three min. but this is not by other three . It is not a standard rule everywhere, but at Mc Donalds it is at every restaurant. On this attribute, Nirulas has a disadvantage. Once a order is placed it normally takes about 10 to 15 min. to get the order. This is probalcly because of the fact that the kind of food served and the production facilities used by Nirulas differs from the production facilities used by McDonalds McDonalds have an assembly line approach to fast food where a certain number of orders are already prepared/cooked, the idea is that as soon as the payment is made at one counter, the food can be picked from the next almost instantly. On the other hand at Nirulas the order is dealt with after it has been placed. But whatever may be the case, provision of fast and friendly services to the customer is very important for any fast food restaurant. In the market research study services is the unique factor for McDonalds that attracts the customer to its restaurant. The customer prefers being serviced by a friendly counter assistant than someone who is arrogant and least interested in entertaining the customer proper.

38

e) ANALYSIS PRODUCT McDonalds is a specialist in burgers. Though McDonalds is famous throughout the world for its juicy Beef Burgers, McDonalds in India keeping in mind the religious sentiments of Indian has come up with a localized menu. It has special offerings such as veg. burgers, for Indian market McDonalds has also introduced coffee, tea, deserts, etc. Pizza Hut is a specialist in Pizzas. It is know for its cheesy, soft pizzas. The recently introduced twisted stuffed crust pizza can be called its USP. Niruals has the targets variety in food items ranging from burgers, pizzas, cholekulcha to Indian dishes. It also has the most variety of desert, ice-creams and pastries. Dominos specialty is its frill cheese pizza and its special 3-topping pizza. Price McDonalds price is affordable and it is most popular among youngsters, kids and middle class customers. Pizza Hut has a comparatively higher price focusing on the premium segment of society. Nirulas prices are also affordable. Its an economical family food joint. Dominos prices are affordable targeting mostly, youngsters and students. Dominos are lowering their prices further. PLACE McDonalds is located at main markets and shopping malls accessibility is very good. Pizza Hut has a less number of outlets and that too only at affluent markets. Nirulas it has the maximum number of affluent and posh markets. Dominos has outlets in posh areas and recent collaboration with Indian Oil Corporation Power Stations.

39

PROMOTIONS McDonalds special emphasis on kids

McDonalds lays a special emphasis on kid customer. So most of its promotional strategies are targeted at them. McDonalds organizes special schemes such as games with prizes, competitions, special birthday parties, play parks, toys and gifts to lure children McDonalds has also opened special parks, e.g. At G.K. I, and also organizes community cleanliness derives e.g. litter patrol drive etc. McDonalds also has special promotional schemes during special occasions such as Diwali, Navrats, Valentines Day, Mothers Day, Fathers Day, independence day etc. McDonalds also calls celebrities at their outlets. McDonalds also offers special discounts, combination meals, free drinks, special packages etc. Pizza Hut is promotional strategy basically centered around youngsters and family. They have special dinners for family, Valentines Day specials for youngsters etc. Recently Pizza Hut has also started paying attention to kid customers with special schemes like Pizza Pooch Birth Day Party, free gifts, toys, crayon etc. Nirulas promotional strategy also identifies children as their target customers. They have special Birthday clubs, Special Menus, Special gifts during festivals e.g. Diwali Dhamaka etc. Dominos target segment is youngsters. So their important promotional strategy is lowering down of prices. It also has special schemes during festivals such card party during diwali, Christmas specials etc

40

Recently Pizza Hut has also started paying attention to kid customers with special schemes like Pizza Pooch Birthday Party, Free gifts, Toys, Crayon etc. Nirulas promotional strategy also identified children as their target customers. They have special birthday clubs, special menus, and special gifts during festivals eg. Diwali Dhamaka etc. Dominos target segment is youngsters is youngsters so their important promotional strategy is lowering the price .it also has a special schemes during festivals such as card playing party during Diwali, Christmas special etc. another important step is that of collaboration with Indian oil corporation.

41

Promotion analysis chart

Contains Product

McDonalds Specialist burger Maharaja Burger, Chicken McGrill

Pizza Hut in Specialist i.e. Pizzas

Nirulas in Variety food deserts

Dominos of Fill and Pizza cheese and

three topping Pizza

Price Place

Affordable Very accessibility

Higher

Affordable

Affordable

good Less out only Less out only Collaboration in in affluent in affluent with stations some area IOC & posh

main market and market shopping mall

market

Promotion

Targeted on kids

Targeted youngsters and family

on Targeted on Targeted kids family and youngsters

on

42

43

OBJECTIVE OF THE STUDY

44

OBJECTIVE OF THE STUDY

Considering the importance of service quality dimensions and quality management in services, the present study is concerned with measurement of service quality dimensions in fast food sector in India. The research examines expectation, perception and overall satisfaction from customers point of view rather than the service provider. It compares the services offered by an International and by an Indian fast food restaurant. It is believed that, service quality has no true existence outside the customers perception. This study would help formulate service quality strategies. It would be of use to regulators and policy makers for the fast food restaurant industry. New entrants can also benefit from this study. The objectives of the study are:

To identify the importance of service quality dimensions in the fast food restaurant Industry in India and if they differ with country of origin.

To analyze customer expectations (would- should) for fast food restaurants and if they differ on the basis of their country of origin

To analyze the difference in consumers perception for fast food restaurants that differs on the basis of their country of origin.

To understand how perception of service quality dimensions are related to overall service quality and customer satisfaction.

To analyze if customer satisfaction differs with country of origin.

45

LITERATURE REVIEW

2.1 Service quality Service quality is a subtle and indistinct concept. Service quality is subjective in nature and hence it is difficult to describe or measure. As a result not many researchers have discussed this concept. There are number of service quality definitions.

Service quality is defined as customers attitude or judgment about the superiority of a service. Service quality is defined as (Lewis and Booms, 1983):Service quality is a measure of how well the service level delivered matches customer expectations. Delivering quality service means confirming to customer expectations on a consistent basis The definition of service quality given by Parasuraman, Zeithmal and Berry, (1985) has been widely adopted. Service quality is defined as the degree and direction of discrepancy between consumers perceptions and expectations in terms of service quality dimensions. From previous studies it has been found that what the firm delivers is entirely different from what the customer perceives. Service quality can be described in terms of seven perceived criteria: Professionalism and skills; Attitudes and behaviour; Accessibility and flexibility; Reliability and trustworthiness; Service recovery; Serviscape; and

46

Reputation credibility Service quality is defined in a three-column format: minimum service level (would expectations), desired service level (should expectations), and perceived performance. Another commonly accepted definition of service quality is the level to which a service meets customers needs or expectations. Three-component structure of service quality identified by Gronroos (1984) is as follows-

Technical quality: actual outcome of the service encounter. Functional quality: interaction between the service provider and the consumer of the service. Reputational quality: consumers perception about the service offered by the organization.

Consumers evaluate service quality as the difference in the service they receive and the service they expect. Service satisfaction is directly related to confirmation or disconfirmation of expectations.

Services are intangible. Service cannot be measured or touched or feel. Service is presentation rather than substance that can be counted. It is difficult to measure service quality as the consumers perception is difficult to evaluate. Standardization of services is difficult as compared to manufactured goods. It is difficult to hide mistakes in case of services and the services have to be provided at the right time. They cannot be stored for later consumption. The services are not returnable in case they are not satisfactory; services are unpredictable. Service attributes are more tentative than

47

products and they tend to be more interpersonal. They also reported that the customer considers services more personal than products.

2.2 Service quality and customer satisfaction Customer service plays a vital role in the service industry especially in fast food restaurants. Service quality and customer satisfaction are two dissimilar constructs. The relationship between service quality and customer satisfaction is not very clear. Service quality is a cognitive, left-brained, evaluation, objective concept while satisfaction is a combination of an effective, right-brained, feeling based, and subjective component.

It is believed that service quality leads to customer satisfaction. Customer service is delivering services to customers in accordance with their expectations. There is a relationship between service quality and satisfaction. Service providers should consistently deliver superior service as compared to their counterparts so that they can position themselves successfully in the market. Service quality is unsatisfactory when the expected service is more than the perceived service. Service quality is satisfactory when expected service is equal to the perceived service. Satisfaction is a function of disconfirmation of performance from expectation.

Service quality is an antecedent of customer satisfaction. Sivadas and Baker-Prewitt (2000) demonstrated the same in their study about store services. Satisfaction/

dissatisfaction is the outcome of perceived service quality, expectations, and disconfirmation.

48

2.3 Customer expectation Customer satisfaction derives from the fact that the service providers must satisfy the consumers expectation. There are several definitional frameworks for consumer expectation that exist, which has resulted in increase in the number of expectation concepts. Some of them are predictive expectation; ideal; equitable deserved experienced- based norm; desired; minimum tolerable.

Service quality is a function of the differences between expectation and performance along the quality dimensions. Predictive and desired expectations concepts are used as would and should respectively. Customers hold two types of expectations: desired, defined as the wished for level of performance, which is a combination of what the customer believes would be and should be i.e., adequate, lower level expectation that can be defined as the level of service the customers will accept under any resource constraints (controllable and

uncontrollable). The adequate service level is always lower than the desired service level because the desired service is less subject to changes as it is influenced by several factors. The extent to which the consumers recognize and are willing to accept this variation is called zone of tolerance (ZOT). Customer expectations are influenced by several factors. These factors are: informal and formal

recommendations, personal needs, past experience, price, elements of promotional mix, corporate image and external communication.

Parasuraman, Zeithaml, and Berry (1993) developed a model called zone of tolerance.

49

The zone of tolerance is the difference between customers adequate (would) and customers desired (should) service expectations. The customer evaluates the service performance on what they desire and what they feel acceptable. If the service performance is below the customers adequate level, then the customer will be annoyed and their satisfaction with the service provider will be destabilized. When the service performance is beyond the customers desired service, customer will be pleased. The range in which customers does not pay any attention to service performance that is zone of tolerance. Zone of tolerance is calculated by subtracting the adequate from the desired service level.

(Teas et al., 1997), In defining desired service, the term can be may mean what is feasible for a company to provide, or it may refer to some evaluations of what a company can provide based on past experience or an ideal level of performance. The term should be may mean equitable performance based on past performance.

2.4 Customer perceived service quality Overall service quality is determined by perception. Perception is defined as selection, organization and interpretation of marketing and environment stimuli into a coherent picture (Assael, 1995). Customers feeling about the service provided to them is viewed as perceived service quality. Perceived service quality has been viewed as a global judgment, or attitude, relating to the superiority of the service.Perceived service is used to determine the service quality.Service quality is a function of ideal and perceived performance regarding quality dimensions. The overall quality perception is dependent on these service quality dimensions. Babakus

50

and Boller (1992), Cronin and Taylor (1992), and Brown et al. (1993) have also discussed this viewpoint in their research.

2.5 Measuring service quality Service quality dimensions are derived from customers expected and actual service delivered.Ten dimensions of service quality are: tangibles, reliability, responsiveness, communication, creditability, security, competence, courtesy, understanding the customer, and access. These ten dimensions were later revised into five dimensions: Tangibles: equipment, appearance of employees, physical facilities Reliability: dependability, sincerity and ability to perform the promised service.

Responsiveness: willingness to help consumers and to provide prompt service. Assurance: safety, trust, confidence, and courtesy Empathy: attention, caring, operating hours.

Modifications were made to the service quality dimensions identified by Paraguayan (1988). Accessibility/ affordability was added to these dimensions Caring and outcomes were added to these dimensions. Based on these five dimensions, the first and the most popular service measurement device, namely, SERVQUAL was developed. SERVQUAL is used in service industry as a means of measuring service quality. It consists of three parts. The first part has two sets of 22 attributes. These attributes are classified under the above-mentioned five service quality dimension, which aims to determine customers expectation and customers perception in a service organization. The second section deals with measuring the gap between

51

expectation and perception (performance minus expectation). Gap model is discussed below. The third segment of SERVQUAL measures the level of importance of the five dimensions to the customer.

SERVQUAL scale may not be sufficient for measuring service quality across different service sectors. The five dimensions in the scale may not include dimensions required to measure service quality in other sectors. Zeithaml et al. (2001) put forth 11 service quality dimensions: access, ease of navigation, efficiency, flexibility, reliability, personalization, security, responsiveness, assurance/ trust, site aesthetics, and price knowledge. Service quality dimensions in online retailing are: accessibility, communication, credibility, understanding, appearance, and availability. Barnes and Vidgen (2001) proposed WebQual Index, an extension of SERVQUAL scale, with 24-measurement item. Out of theses seven customer service quality aspects are: reliability, competence, responsiveness, access, credibility, communication, and understanding the individual.

Gap model: is shown in figure 1. It shows linkages between the level of satisfaction of the consumers and the service providers.

52

Figure 1: Quality Gap Analysis Model (Parasuraman et al., 1985) Figure 2 is the model of service quality gaps. The gap model is one of the best received and most heuristically valuable contribution to the services literature. The first six gaps (Gap 1, Gap 2, Gap 3, Gap 4, Gap 6, and Gap 7) are the ways in which service is delivered and Gap5 pertains to the customers:-

Gap 1: Customers expectation versus management perceptions: the discrepancy between the management and consumer expectation which results in loop holes in delivering services up to the consumers expectation. Gap 2: Management perceptions versus service specification: customer evaluation will have an impact because of the gap that exists between management perception of consumer expectations and actual specifications established for a service.

53

Gap 3: Service specifications versus service delivery: consumers viewpoint gets affected because of the gap between service specification and the service that is actually delivered. Gap 4: Service delivery versus external communication: consumers perception of service quality gets disrupted because of the discrepancy that exists between service delivery and external communication. External communication includes inadequate information about service delivery aspects that intend to serve consumers up to their expectation and/ or false promises. Gap 5: The discrepancy between customer expectation and their perception of the service: this discrepancy arises because of the short falls on the part of the service provider and hence, customer expectations are not met. Customer expectations are influenced by personal needs, past experience, word of mouth communication, and advertisements by the firm. Gap 6: The discrepancy between customer expectations and employees perceptions: the service providers are unable to meet customers expectation. This gap exists because the service providers are unable to understand customer expectations. Gap 7: The discrepancy between employees perceptions and management perceptions: this gap exists because the management is unable to understand customer expectation.

54

CONCEPTUAL FRAMEWORK
The study undertaken has the following conceptual framework:

Service quality dimensions

Tangibles Reliability Responsiveness Assurance Empathy . Customer satisfaction Overall service quality

Zone of Tolerance (expected shouldexpected would) Customer perception

Country of origin

Indian fast food restaurant- NIRULAS International fast food restaurant- MC DONALDS

55

The study undertaken identifies the important service quality dimensions for fast food restaurants and compares them. The service quality dimensions that have been employed in the study are: tangibility, reliability, responsiveness, assurance, and empathy. These dimensions have been identified . Following variables have been measured using the five dimensions of service quality:

Customer should expectation Customer would expectation Customer perception of service quality

The difference between customers would expectation and customers should expectation is termed as zone of tolerance. This concept is used to identify the relative importance of each service quality dimension for both Mc Donalds and Nirulas. Mc Donalds and Nirulas both are of different country of origin. Customer perceptions and expectations are measured to analyze the difference between the service quality offered by them and identify the difference between them based on their country of origin.

56

RESEARCH METHODOLOGY

4.1 Pre-test A pre-test was conducted with a sample size of 90 consumers using a questionnaire. These 90 consumers were those who often visit fast food restaurants. On a five- point likert-type scale they were asked to rate their perception about fast food restaurant as international or national. The consumers rated nine fast food restaurants on country of origin as international or national. Based on the results, Mc Donalds (USA), Pizza Hut, Dominos and Nirulas (India) were selected for further research and the survey questionnaire was designed. Mc Donalds is one of the most valuable and well-known brand in the world and holds a leading share in the fast food service restaurant segment in virtually every country in which they do business. Nirulas was the first and the only fast food chain existing in India. It has tremendous brand recognition in the Indian fast food segment. Nirulas is priced economically so that an average middle class person can afford to have a meal here. 4.2 Measurement Five factors were used to measure the service quality dimensions in the fast food restaurants. These dimensions as given by Parasuraman et al. (1988) are: tangibles, reliability, responsiveness, assurance, and empathy. These five dimensions consist of 22 items and the final questionnaire was designed based on 18 items. Pilot testing of the questionnaire was done to check the questionnaire. With the result, the 22 attributes were modified to 18-item scale.

57

The final questionnaire consisted of five sets of measures on Customer perception of the service quality being offered to him/her, and customers level of expectation on both should and would parameters. A five-point likert scale was employed as many researchers have recommended it does not increase respondents frustration level and response rate and response quality. All items were likert scale ranging from 1= strongly disagree to 5 = strongly agree With 3 = neutral; neither agree nor disagree.

58

DATA COLLECTION

Data was collected from the consumers who had been to Mc Donalds and Nirulas in one city in India. The research was carried in New Delhi.

A total of 100 questionnaires were distributed to the respondents. The customers were requested to fill questionnaires once the service was provided to them so that they can evaluate the services provide more effectively. Invalid questionnaires were eliminated (including questionnaires that were not answered completely).

A total of 4 invalid questionnaires were obtained out of 100 questionnaires.

The respondents belonging to the age group of 18-25 and were mainly college going students who had more liking for fast foods.

The sample is based on convenience sampling and the survey was carried out in the month of March 2007.

No demographics have been explored keeping in view the objective of the study.

59

ANALYSIS OF DATA

Microsoft Excel 2000 is used to analyze the data. The service quality data was analyzed in two stages.

4.4.1

The raw data on would and should was used to calculate the difference between the two expectation parameters for all service quality dimension. Mean for each of these 18 variables was calculated and the mean of the difference between would and should expectation was also calculated.

4.4.2

These 18 variables were grouped into the five dimensions: tangibles, reliability, responsiveness, assurance, and empathy. The mean for each service quality dimension was calculated.

60

Analysis of Data has been done on the following basis:-

1. How frequently do you go to restaurants?

Attributes Holidays Special occasion Weekends Everyday

Score in % 32 46 16 6

visit frequency

6% 16% 32% holidays special occasion weekends everyday

46%

FINDINGS: We can see from the graph that out of 96 respondent majority near about 46% visit a restaurant only on special occasion 32% respondents prefer to visit in the holidays

61

2. Which restaurants do you go to?

Attributes McDonalds Dominos Pizzahut Nirula's

No of Respondents 37 17 32 10

visit frequency

10% 39% McDonalds Dominos 33% 18% Pizzahut Nirula's

FINDINGS: Inside Delhi 39% people prefer McDonalds whereas 33% prefer Pizzzahut 17% prefer Dominos and rest of the 10% prefer Nirulas.

62

3. What drives you to go to this restaurant?

Attributes Quality Better Service Homely atmosphere

No of Respondents 59 27 14

Driving Factor

14%

Quality 27% 59% Better Service Homely atmosphere

FINDINGS: Majority of the respondent visit the fast food joints due to good quality of food and the percentage in the near about 59% and 27% of the people prefer better service in the fast food restaurants.

63

4. What is your view about the hospitality provided by these Restaurant?

Rank Avg. Good Very Good Excellent

Score in % 6 54 31 9

Hospitality at Mcdonalds

9%

6% Avg. Good Very Good 54% Excellent

31%

FINDINGS: 51% said that in McDonalds the hospitality shown by the employees of McDonalds is good .9% of the respondent said that the hospitality in McDonalds is excellent. 31% said that the hospitality is very good. So customers come and go with a good image of McDonalds in mind.

64

5. your satisfaction level is highest with ?

Restaurant McDonald Pizza hut Nirulas Dominos Others

Score in % 34 29 21 10 6

Hospitality at Mcdonalds

10%

6% 34%

Extremely Satisfied Moderately Satisfied Moderately Dissatisfied Extremely Dissatisfied

21% 29%

Satisfied

FINDINGS: 32% of customers are satisfied with McDonalds and

others are

moderately satisfied and there are very few who are dissatisfied with McDonalds.

65

6. What is the level of understanding of service problems of the customers?

Restaurant McDonalds Dominos Puzzahut Nirula's Other

Score in % 34 21 29 10 6

Understanding of service problems of customers

10%

6% 34% McDonalds Dominos Puzzahut Nirula's other 21%

29%

FINDINGS: The employees and authorities of McDonalds understand the service problems as describes by customer. That is the reason why customers have given very good remarks for this reason.

66

7. Why do you prefer these restaurant?

Attributes service differentiation product differentiation Price Promotion

McDonalds 19 33 64 38

Dominos 16 13 12 22

Pizza hut 35 27 8 30

Nirula's 26 23 12 6

reasons for prefering

70 60 50 40 30 20 10 0 Mcdonalds Dominos Pizzahut Nirula's 19 22 16 13 12 8 38 33 35 27 30 26 23 12 6 service differentiation product differentiation price promotion 64

67

8. Cleanliness Score (Cumulative)

Attributes McDonalds Dominos Pizzahut Others

Score in % 28 25 28 19

Cumulative

19%

28%

McDonalds Dominos Pizzahut Others

28% 25%

FINDINGS: Out of 96 respondent Majority 28% prefer Pizza hut and McDonalds in cleanliness both have better cleanliness then other fast food Joints.

68

9. Employee Behavior score (cumulative)?

Restaurant McDonalds Dominos Pizzahut Others

Score in % 29 24 24 19

Cumulative

19%

29%

McDonalds Dominos Pizzahut Others

28% 24%

FINDINGS: From the employee Behavior point of view 29% people said that Mcdonalds is better then others. 28% said Pizza hut is better. Shows the big competition between Both the fast food joint.

69

10. Menu Composition Score (cumulative)?

Restaurant McDonalds Dominos Pizzahut Others

Score 24 26 22 24

Cumulative

28%

24% McDonalds Dominos Pizzahut Others

22%

26%

FINDINGS: Menu composition wise the other restaurants like Agarwal and sons the local restaurants are having more flexibility then the other fast food joints like 70 McDonalds, Nirulas and Pizza hut.

70

CONCLUSION

Inside Delhi 39% people prefer McDonalds whereas 33% prefer Pizzzahut 17% prefer Dominos and rest of the 10% prefer Nirulas.(It is with reference to the analysis of response of question no.7 find this question in questionnaire attached in annexure)

54% said that in McDonalds the hospitality shown by the employees of McDonalds is good .9% of the respondent said that the hospitality in McDonalds is excellent. 31% said that the hospitality is very good. So customers come and go with a good image of McDonalds in mind. (It is with reference to the analysis of response of question no.4 find this question in questionnaire attached in annexure)

The employees and authorities of McDonalds understand the service problems as describes by customer. That is the reason why customers have givenverygood remarks for this reason. (It is with reference to the analysis of response of question no.6 find this question in questionnaire attached in annexure)

71

Out of 96 respondent Majority 28% prefer Pizza hut and McDonalds in cleanliness both have better cleanliness then other fast food Joints. (It is with reference to the analysis of response of question no.7 find this question in questionnaire attached in annexure)

Menu composition wise the other restaurants like Agarwal and sons the local restaurants are having more flexibility then the other fast food joints like McDonalds, Nirulas and Pizza hut. (It is with reference to the analysis of response of question no.11 find this question in questionnaire attached in annexure)

72

BIBLIOGRAPHY

Books & journal:

Philip Kotler (Marketing Management) Christopher Lovelock (Marketing of services) Zeithmal (Marketing of services) Sechiffman, LeonG.(Consumer Behavior) C.R. Cothari (Research Methodology)

73

APPENDIX ANNEXURE

1. How frequently do you go to restaurants? a. Holidays b. Special occasion c. Weekends d. Eeryday 2. Which restaurants do you go ? a McDonalds b. Dominos c. Pizza hut d. Nirulas 3. What drives you to go to this restaurant? a. Quality b. Better service c. Homely atmosphere 4. What is your views about the hospitality provided by this Restaurant? a. Avg. b. Good c. Very good d. Excellent

74

5. your satisfaction level is highest with ? a. McDonalds b. Pizza Hut c. Dominos d. Nirulas 6. What is the level of understanding of service problems of the customers? a. Excellent b. Very good c. Average d. Poor 7. why do you prefer this restaurant? a. Service differentiation b. Product differentiation c. price d. Promotion 8. How do you evaluate this restaurant cleanliness wise? a. McDonalds b. Dominos c. Pizza hut d. Nirulas 9. How do you evaluate these restaurants employee behavior wise? a. McDonalds b. Dominos c. pizza hut d. Nirulas

75

10.How do you evaluate these restaurants menu composition wise? a. Mcdonalds b. Dominos c. Pizzahut d. Nirulas

76