IMPACT OF SERVICE QUALITY AND RESTAURANT

AMBIANCE ON CUSTOMER LOYALTY: MEASURING THE

MEDIATING EFFECT OF CUSTOMER SATISFACTION
Tabish Ansari*
Lecturer
College of Business Management,
IoBM Korangi Creek, Karachi, Pakistan
([email protected])
Mobile: 03200297158

Dr. Tariq Jalees

Associate Professor and HOD Marketing
College of Management Sciences,
Karachi Institute of Economics and Technology
PAF-KIET Korangi Creek, Karachi 75190, Pakistan
([email protected])
Mobile: 03008207019

Abstract
In the 21st century, the customer has become more dynamic than before, even preferences of
the customer have been changing on everyday bases that’s why it has become a challenge to
meet customers’ expectations and satisfy them, otherwise, a dissatisfied customer can take
away ten more potential customers from the business. Making a customer loyal in order to
satisfy them can be a good strategy for a firm in this competitive era because attaining a new
customer is five times costly than retaining the old one. The purpose of this study is to check
the service quality and restaurant ambiance as a predictor of customer loyalty, for the fast
food industry in the Pakistani context, while customer satisfaction is playing a mediating role
between them. Profuse literature supports these theoretical concepts in western context but
little attention has been given to these concepts in sub-continental particularly in Pakistan. A
survey was carried out by taking a sample of 400 fast food and restaurant customers from
Karachi. The questionnaire consists of 36 questions that are related to four constructs.
Exploratory factor analysis and Confirmatory factor analysis verified the construct validity
while Cronbach's alpha confirmed the reliability of data. Regression analysis has been used to
examining the research hypothesis and hypothesized model. The hypothesis that customer
satisfaction has a significant mediating effect on service quality, restaurant ambiance and
customer loyalty have been measured through the method proposed by Judd & Kenny (1981).
The result of the study indicates that the prediction of customer loyalty by service quality and
restaurant ambiance through direct effect has been decreased in the presence of mediating
variable customer satisfaction. The results are showing partial mediation between service
quality, restaurant ambiance and customer loyalty through customer satisfaction that highlight
the importance of customer satisfaction in order to achieve customer loyalty.
Keywords: Restaurant ambiance, Service quality, Customer satisfaction, and Customer
loyalty.

Introduction and Purpose

Service quality is one of the most important factors in determining the customer satisfaction
and customer loyalty which have a direct impact on organization’s success. That is the reason
many organizations are focusing on service quality in order to enhance customer satisfaction
and get a high level of purchase intention towards the customer. When perceived value of
performance meets from the customer expectations then customer get satisfied, and when
perceived value of performance doesn’t meet from the customer expectations then customer
get dissatisfy which is not in the favor of business. (Tat, Sook-Min, Ai-Chin, Rasli, & Hamid,
2011)
Customer loyalty is essential in the restaurant industry, but customer loyalty can only be
achieved by customer satisfaction in the restaurant industry, research work has also explored
the factors like customer preference, customer trust, service quality with customer
satisfaction and customer satisfaction with customer loyalty. The trend of outing is becoming
the part of our life, taking lunch and dinner outside is normal now so the need of restaurant is
also increasing and there are many restaurant opening in city, they are trying to satisfy their
customers by providing better services quality and better quality food in order to achieve
customer loyalty. . (Upadhyaya, Hakeem, & Chavan, 2013)
Retention of customers has become a prime concern of a business, different drivers of
customer loyalty has been studied for a long time by researchers like quality, price, physical
environment etc. only to retain customer, because if a business is continuously acquiring new
customers every day but it losses the old one customer every then the ultimate result would
be zero, that’s why this is very important to hold old customer while you are acquiring new
one. (Terblanche & Boshoff, 2010)

Literature review
In twenty-first century one of the leading marketing strategies is to provide value to the
customer. Providing such products or services to your customer that is providing superior
value to the customer as a competitor do (Chen & Hu, 2010). A satisfy customer can play a
very positive role in especially service industry like fast food or restaurant because one
satisfy customer can bring more ten customers only by spreading positive word of mouth,
while a dissatisfied customer is very dangerous for business because it can away more than
ten customers from your business only by spreading negative word of mouth until or unless
determine that customer and take away his complaint (Ryu, Han, & Jang, 2010).
Retention of customers has become a prime concern of a business, different drivers of
customer loyalty has been studied for a long time by researchers like quality, price, physical
environment etc. only to retain customer, because if a business is continuously acquiring new
customers every day but it losses the old one customer every then the ultimate result would
be zero, that’s why this is very important to hold old customer while you are acquiring new
one. (Terblanche & Boshoff, 2010)
Customer satisfaction and customer loyalty are strongly correlated with each other, customer
satisfaction have a significant impact on customer loyalty, both of the variables are very
important to any business, to assure the customer loyalty a firm must have to assure the
customer satisfaction. If a restaurant gets success to achieve customer loyalty through
customer satisfaction then it can enjoy long-term benefits, and that is the only reason due to
which restaurants are giving special attention to customer satisfaction and customer loyalty
nowadays. A restaurant has to consider not only customer satisfaction and customer loyalty
but all the factors that are related to them like product attributes and service attributes.
(Ibrahim, 2013)
Customer loyalty is essential in the restaurant industry, but customer loyalty can only be
achieved by customer satisfaction in the restaurant industry, research work has also explored
the factors like customer preference, customer trust, service quality with customer
satisfaction and customer satisfaction with customer loyalty. The trend of outing is becoming
the part of our life, taking lunch and dinner outside is normal now so the need of restaurant is
also increasing and there are many restaurant opening in the city, they are trying to satisfy
their customers by providing better services quality and better quality food in order to achieve
customer loyalty. (Upadhyaya, Hakeem, & Chavan, 2013)
Due to the globalization and high speed of economic development competition in fast food
restaurant industry has become very intensive, where you have to must satisfy your customer
by providing them a better quality of services, because a competitor can beat you or capture
your customer by providing better services than you. There is a significant impact on service
quality and customer satisfaction especially in restaurant and fast food industry not only
impact but there is also found a positive relationship between service quality and customer
satisfaction, because as much better services provide by service provider the customer will be
most satisfactory, the poor the service provided will make customer dissatisfy, so that can be
said service quality has a great impact on customer satisfaction and as well on fast food
restaurant industry. (Rashid, Abdullah, Yusuf, & Shaari, 2016a)
Customer loyalty is very important and plays a vital role in the restaurant industry, but
customer loyalty can only be achieved by customer satisfaction in the restaurant industry,
research work has also explored the factors like customer preference, customer trust, service
quality with customer satisfaction and customer satisfaction with customer loyalty. The trend
of outing is becoming the part of our life, taking lunch and dinner outside is normal now so
the need of restaurant is also increasing and there are many restaurant opening in city, they
are trying to satisfy their customers by providing better services quality and better quality
food in order to achieve customer loyalty (Upadhyaya, Hakeem, & Chavan, 2013). Service
quality has a significantly positive relationship with customer satisfaction, and ultimately impact on
customer loyalty, so through improvement in service quality you can improve customer loyalty,
positive comments by customers also play a vital role in restaurant industry, because comments
shows satisfaction or dissatisfaction or the degree and level of satisfaction that a customer gets from
providing services.( Ping-Kuo, 2015)
Service cannot resemble like physical goods because physical goods are tangible while
services are intangible heterogenic and inseparable from its supplier that’s why it is difficult
to measure the concepts of service quality, unlike quality concepts of production sector,
service quality concepts developed by using consumer behavior model. Voice of the customer
is considered very important in service quality because the service quality is the difference
between the expectations and performance (Kim, 2011).
 Now service quality has become a great success factor for restaurant and fast food sectors.
Restaurants manager are focusing to improve the service quality in their restaurants
continuously along with the service quality the context of the service quality is also
important. Many studies show that service quality is positively correlated with customer
satisfaction and customer loyalty but instead of that companies do not focus on service
quality sometimes (Leisen Pollack, 2009).

Conceptual Framework and Hypothesis Development

There has been seen a strong and positive relationship between restaurant ambiance and
customer satisfaction, the Physical environment of a restaurant has a positive impact on
consumer behavior. By improving the physical environment of a restaurant not only customer
satisfaction can be enhanced but a restaurant can increase its profit as well. The ambiance of a
restaurant can be a tool for satisfying the customer and maximizing the profit (Jin, 2015).
That has been seen that there is a strong influence of service quality on customer satisfaction
and customer loyalty, even each dimension of service quality like assurance, tangibility,
empathy, reliability, and responsiveness has a significant impact on customer loyalty, better
services provided by a restaurant can make a customer satisfaction and loyal (Polyorat &
Sophonsiri, 2010).

RESTAURANT
SERVICE AMBIANCE
QUALITY
Reliability
H2
H1 CUSTOMER H4
CUSTOMER
SATISFACTION LOYALTY

H3
Service quality and Customer satisfaction
In fast food industry to get customer loyalty there is no other way but only through customer
satisfaction, and customer satisfaction only can be achieved by providing better services
quality, restaurant can get edge only by providing superior service quality and can compete
for their competition and can get competitive advantage by providing better quality of
services (Rashid, Rani, Yusuf, & Shaari, 2015). Some authors have studied the impact of
service quality on customer satisfaction alone but they measure the impact of three elements
on customer satisfaction and customer perceived value, and these three elements are service
quality, food, and physical environment, customer satisfaction customer perceived value can
be driven by service quality, food, and physical environment. (Ryu, Lee, & Gon Kim, 2012)
Customer satisfaction can drive by service quality as well as the dimensions of service quality
and these dimensions are assurance, tangibility, reliability, empathy, and responsiveness,
these service quality dimensions along with the image of restaurant has a great impact on
customer satisfaction and also has a strong relationship between them (Wu, 2013). In the era
of intense competition among fast food restaurant and beverage industry, these industries are
getting privilege by providing remarkable services to their valuable customers and getting
customer loyalty in order to obtain more and more customer satisfaction, if a restaurant is not
able to differentiate itself by food it is providing then it differentiate itself by providing better
and remarkable service quality. (Mee, Ariffin, & Rahman, 2014)
H1- Perceived service quality is positively associated with customer satisfaction.

Restaurant ambiance and Customer Satisfaction

Along with the service quality and food quality, physical environment of a restaurant is also
plays an important role in building restaurant image and enhance the satisfaction of a
customer, these elements are also called food service quality dimension that can impact on
customer perceived value, restaurant image and customer satisfaction as well as (Ryu, Lee, &
Gon Kim, 2012). It is also seen even there is an impact of restaurant environment on
customer’s consumption, if the environment of a restaurant is not good and healthy then it
can impact on customer’s consumption and customer satisfaction, to reduce this risk a
restaurant has to provide a better physical environment in order to remain his customer
satisfy. (Visschers & Siegrist, 2015)
The physical environment of a restaurant can even impact on the emotions of a customer, the
environment can effect on the behavioural intention of the customer, the physical
environment of a restaurant can emotionally satisfy a customer, physical environment can
bring change in the behavioural intention of the customer. If a customer gets emotionally
disturbed with the physical environment then a restaurant cannot satisfy it only by food and
service quality (Ryu et al., 2012). This research is a concern with the relationship between
physical environment quality, personal interaction quality, and behavior intention on the
customer satisfaction that will be the ultimate reason to get customer loyalty, this research
also explores the impact of store ambiance on customer satisfaction and retaining and
attracting customers. (Chen, Chen, & Lee, 2013)
H2- Restaurant ambiance is positively associated with customer satisfaction.

Service Quality and Customer Loyalty

There is a huge impact of service quality, customer satisfaction and customer loyalty on
restaurant industry, there is a conceptual model between service quality, customer
satisfaction, and customer loyalty and the analyst has confirmed that there is a positive
relationship between service quality and customer loyalty, the mediating role of customer
satisfaction also confirm the effect of service quality on customer loyalty (Kuo, Chang,
Cheng, & Lai, 2011). Service quality could be the reason for returning a customer again in
the same restaurant and not only returning to the same restaurant but recommend to the other
persons to go into the same restaurant. A customer who satisfies with the services of a
restaurant can be the reason of bringing four other customers but a customer who dissatisfies
with the restaurant services can be the reason of taking away ten customers from the
restaurant. (Barringer, 2008)
To identify the attributes that can influence customer satisfaction and can determine the
relationship between service quality and customer loyalty are including service quality, food
quality, price and the physical environment of a restaurant, customer satisfaction plays a
mediating role between service quality, food quality, price, physical environment and
customer loyalty. (Pratama, 2011)
H3- Perceived service quality is positively associated with customer loyalty.

Customer Satisfaction and Customer Loyalty

There has been strongly observed a relationship between customer satisfaction and customer
loyalty, in case of restaurant to satisfy your customer is very essential and necessary because
if you don’t satisfy your customer then your customer will not come back so retaining your
customer and to make them loyal with restaurant, a restaurant has to satisfy its customer by
service and food (Adiningsih, Nurmalina, & Djamaludin, 2015). Customer satisfaction is a
mediocre between service quality and customer loyalty researchers found a significant
relationship between service quality, customer satisfaction, and customer loyalty, basically
first of all service quality exerts an impact on customer satisfaction then customer satisfaction
creates customer loyalty. (Ni, 2015b)
It is also observed that higher the customer satisfaction will lead to the higher customer
loyalty, while lower the customer satisfaction will lead to the lower customer loyalty, that’s
mean the level of customer satisfaction determines the level of customer loyalty, chines
restaurants are trying to create higher level of customer loyalty through higher customer
satisfaction (Lim, Ahn, & Lim, 2013). Results show that there are a strong relationship and
correlation between customer satisfaction and customer loyalty, customer satisfaction has a
positive impact on customer loyalty and this correlation has a great implication in restaurant
industry that’s why restaurants are continuously trying to improve their product quality as
well as service quality to satisfy their customers retain them loyal. (Pham Thi, 2013)
H4- Customer satisfaction is positively associated with customer loyalty.
Methodology
Sample Size
For this research 415 questionnaires were distributed among them 400 were received. All
participants taking part in this research is voluntary. The response rate was 96%. A sample
size of this research study is higher than the suggested minimum sample size by in the
literature. In terms of gender (205, 51%) were male and (195, 49%) were female and their
age ranged from 18 to 60 years. In terms of marital status, (388, 97%) were single and (12.
3%) were married. In terms of education, (226, 56.5%) had education up to Intermediate,
(147, 37%) had Graduated, (24, 6%) had Masters, (2, 0.5%) had MS/MPhil degrees. In term
of income, (6, 1.5%) had less than 21 thousand income, (12, 3%) had the range between 21
thousand to 30 thousand, (14, 3,5%) had the range between 31 to 40 thousand, while (368,
92%) had more than 41 thousand income.
Sampling Technique
Sampling technique that is used in this research is convenience sampling that is derived from
non-probability sample technique; gather all the data from this particular sample technique.
For non-randomly inclusion in the sample, convenience sampling is used very commonly in
non-probability sample technique (Passer, 2014). In small-scale researches, convenience
sampling is frequently used for collecting data from one or two firms. Convenient sample
technique is less expensive and less complicated for the population difficult to access either
because of time and resource constraints (Cohen, 2007). So convenience sample technique is
more appropriate and justifiable for this study with all the limitations.

Instrument Development
The instrument, that is used in this research is developed by a valid construct that has been
derived from the valid questionnaire, the instrument consists of 36 items, as these items
comprise 4 constructs, and all the items are based on 7 points Likert scale. In the section
below questions in the scale as per construct are discussed. The range of the scale is from 1,
which stands for strongly disagree to 7, which stands for strongly agree. Reliability of the
instrument has been established by earlier researchers in the past literature, it will be re-
established in the context of the current research and demographics.
The instrument is divided into several parts namely; demographics, service quality, customer
satisfaction, customer loyalty, and restaurant ambiance.
Service Quality
Service quality has been measured from the scale proposed by Parasuraman, Zeithaml, and
Berry (1986, 1988). The scale contains 5 dimensions and each dimension contains four to
five questions, that has been measured on seven points Likert scale. The five dimensions of
scale are reliability, responsiveness, assurance, empathy, and tangibility. These items have
been measured on seven points Likert scale. The range of the scale is from 1, which stands
for strongly disagree to 7, which stands for strongly agree. These items are simple and cover
the entire concept. The total scale estimates of internal consistency reliability for a linear
combination ranged from 0.87 to 0.90 (Parasuraman, & Zeithaml, 1986; Berry, 1988).
Restaurant Ambiance
Restaurant Ambiance has been measured from the scale proposed by Piyush Sharma (2016).
The scale contains 3 dimensions and each dimension contains 3 questions, that has been
measured on seven points Likert scale. The 3 dimensions of scale are music, light, and
employees. These items have been measured on seven points Likert scale. The range of the
scale is from 1, which stands for strongly disagree to 7, which stands for strongly agree.
These items are simple and cover the entire concept. The total scale estimates of internal
consistency reliability for a linear combination ranged from 0.39 to 0.75 (Dickson, 1977;
Summers, 2001; Morin, 2005).
Customer Satisfaction
Customer satisfaction has been measured from the scale proposed by Rijsdijk, Hultink, and
Diamantopoulos (2007) containing three items. Evidence of validity is provided from a series
of analysis testing hypothesized relationship. Previous studies show that service quality was
found to have, as predicted, a positive relationship with a measure of customer satisfaction
(Rijsdijk et al. 2007). These items have been measured on seven points Likert scale. The
range of the scale is from 1, which stands for strongly disagree to 7, which stands for strongly
agree. These items are simple and cover the entire concept. The total scale estimates of
internal consistency reliability for a linear combination ranged from 0.84 to 0.90 (Ryu, Han,
& Jang, 2010; Tat, Sook-Min, Ai-Chin, Rasli, & Hamid, 2011)
Customer Loyalty
Customer Loyalty has been measured from the scale proposed by Yoo, and Walsh (2000,
2009) containing six items. These items have been measured on seven points Likert scale.
The range of the scale is from 1, which stands for strongly disagree to 7, which stands for
strongly agree. These items are simple and cover the entire concept. The total scale estimates
of internal consistency reliability ranged from 0.90 to 0.94(Yoo, 2000; Walsh, 2009).
 Data Analysis
Descriptive Analysis
Mean Std. Dev. Skewness Kurtosis
Service Quality 4.19 0.66 0.34 2.56
Customer Satisfaction 4.38 1.43 -0.24 -0.48
Restaurant Ambiance 4.57 1.19 -0.46 0.03
Customer Loyalty 3.96 1.34 -1.97 -0.60

In the above Table Customer Loyalty (Mean=3.96, SD= 1.34) has the lowest skewness (-
1.97), and Service Quality (Mean = 4.19, SD=0.66) has the highest skewness (0.34). The
Kurtosis for only two item is positive while all the other items have a negative kurtosis, the
highest for Service Quality (Mean = 4.19, SD=0.66) is 2.56 and the lowest kurtosis is for
Customer Loyalty which is (Mean=3.96, SD= 1.34) is -0.60. Since all the construct is within
the range of ±3.5, therefore, it can be assumed that the data has a normal tendency (Hair Jr. et
al, 2010).

Reliability of the constructs

Constructs Cronbach’s Cronbach's

Alpha Alpha on No
Mean S.D
standardized of items
item
Service Quality 0.79 0.79 22 4.19 0.66
Restaurant Ambiance 0.84 0.84 5 4.57 1.19
Customer Satisfaction 0.83 0.83 3 4.38 1.43
Customer Loyalty 0.83 0.83 6 3.96 1.34

The above Table shows that the reliability of Restaurant Ambiance is the highest (α=0.84,
M=4.38, SD=1.43) while the reliability for Service Quality is lowest (α=0.79, M=4.19,
SD=0.66). Reliabilities of the all the constructs were greater than 0.7 which are within the
acceptable range indicating that the respective items have reasonable internal consistency and
reliability (Leech, 2008).

Correlation

Summarized Correlation Results

Construct SQ CS RA CL
Service Quality 1
Customer Satisfaction 0.32 1
Restaurant Ambiance 0.22 0.37 1
Customer Loyalty 0.31 0.68 0.38 1

The correlation of Customer Satisfaction (M = 4.38, SD = 1.43, N = 400) and Customer

Loyalty ((Mean=3.96, SD= 1.34, N = 400) with r (400) = 0.68, p = 0.0<0.01, was strongest
while the weakest was with Service Quality (Mean = 4.19, SD=0.66, N = 400) and Restaurant
Ambiance (M = 4.57, SD = 1.19, N = 400) with r (400) = 0.22, p = 0.0<0.01. Additionally
correlation tells that the variables are unique and distinguishing (Hair Jr. et al, 2010).
Overall Model
Hypothesized Results
Hypothesis 1: Service Quality and Customer Satisfaction

Variables Standard
Unstandardized Coefficient Coefficient
B Std Error Βeta T Sig.
(Constant) 1.47 0.45 3.29 0.01
Service Quality 0.69 0.11 0.32 6.62 0.00

Dependent Variable: Customer Satisfaction, Independent Variable: Service Quality, R2 =

0.100; Adjusted R2= 0.98, P<.05, F = 44
The results of the regression indicate that the predictor Service Quality explains 98% of the
variance (R2=0.98, F= 44, p<.05. It was also found that Service Quality (ß = 0.32, p<.05)
significantly predicts Customer Satisfaction which according to Cohen(1998) is a large effect.
Hypothesis 2: Restaurant ambiance and Customer satisfaction

Variables Unstandardized Standard

Coefficient Coefficient
B Std Error Βeta T Sig.
(Constant) 2.36 0.27 8.82 0.000
Restaurant Ambiance 0.44 0.56 0.37 7.79 0.000

Dependent Variable: Customer satisfaction, Independent Variables: Restaurant ambiance, R 2 =

0.135;Adjusted R2= 0.133, P<.05, F = 61
The results of the regression indicate that Restaurant ambiance explains that 13.3% of the
variance (R2=0.135, F = 61, p<.05). It was also found that Restaurant ambiance (ß = 0.44,
p<.05) significantly predicts Customer satisfaction which according to Cohen(1998) is a large
effect.

Hypothesis 3: Service Quality and Customer Loyalty

Variables Unstandardized Standard

Coefficient Coefficient
B Std Error Βeta T Sig.
(Constant) 1.28 0.42 3.08 0.002
Service Quality 0.64 0.98 0.31 6.49 0.000

Dependent Variable: Customer Loyalty, Independent Variables: Service Quality, R 2 = 0.96,

Adjusted R2= 0.94, P<.05, F = 42
The results of the regression indicate that the predictor Service Quality explains 94% of the
variance (R2=0.96, F = 42, p<.05). It was also found that Service Quality (ß = 0.31, p<.05)
significantly predicts Customer Loyalty which according to Cohen(1998) is a large effect.
Hypothesis 4: Customer Satisfaction and Customer loyalty

Variables Unstandardized Standard

Coefficient Coefficient
B Std Error Βeta T Sig.
(Constant) 1.18 0.16 7.37 0.000
Customer Satisfaction 0.63 0.04 0.67 18.19 0.000

Dependent Variable: Customer loyalty, Independent Variables: Customer Satisfaction, R2 =

0.455 Adjusted R2= 0.454, P<.05, F = 331, p<0.
The results of the regression indicate that the predictor Customer Satisfaction explains 45%
of the variance (R2=0.455, F = 331, p<.05). It was also found that Customer Satisfaction
(ß=0.63, p<.05) significantly predicts Customer Loyalty which according to Cohen(1998) is
a large effect.

Hypothesis 5: Customer satisfaction has significant mediating effect between service

quality and Customer loyalty

Direct Effect
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) .212 .426 .497 .620
SQ_Total .491 .096 .238 5.103 .000

Dependent Variable: Customer loyalty, Independent Variables: Customer Satisfaction,

R =0.196 Adjusted R2= 0.192, P<.05, F = 48, p<0.05
2

The results of the regression indicate that the predictor Customer Satisfaction explains
19.2% of the variance (R2=0.196, F = 48, p<.05). It was also found that Customer Satisfaction (ß
= 0.491, 368 p<.05) significantly predicts consumer purchase intention which according to
Cohen(1998) is a large effect.

Mediation Effect
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t
1 (Constant) -.047 .344 -.136 .892
SQ_Total .201 .080 .097 2.509
CS_Total .558 .038 .593 14.589 .000
 Dependent Variable: Customer loyalty, Independent Variables: Customer Satisfaction and
Service Quality R2 = 0.482 Adjusted R2= 0.478, P<.05, F = 120, p<0.05
The results of the regression indicate that the predictor Customer Satisfaction and Service
Quality explains 47.8% of the variance (R2=0.482, F = 48, p<.05). It was also found that
Customer Satisfaction and Service Quality (ß = 0.675, p<.05) significantly predicts consumer
purchase intention which according to Cohen(1998) is a large effect.

Since the prediction of customer loyalty by service quality (β=0.491, P< 0.05) through direct
effect has been decreased in the presence of mediating variable customer satisfaction
(β=0.558, P<0.05). The results are showing partial mediation between service quality
(β=0.201, P<0.05) through customer satisfaction (β=0.558, P<0.05) as significant value is
still less than P<0.05 with decreased β coefficients.
Implication for Managers and Policy Makers
If a manager of a restaurant wants a customer keep loyal to a restaurant, there is a need to
check the customer view and perception continuously, because with the changing era fast
food industry is becoming more competitive as well as customer is becoming more dynamic
and he is changing his value day by day, so it is very important to trace your customer day by
day as well. Post-purchase responses of the customer are also very important and by them, a
restaurant can evaluate its performance easily. (Qin, Prybutok, & Zhao, 2010)
. Even if a restaurant wants to get success in this competitive era then it has to achieve
customer loyalty through customer satisfaction then it can enjoy long-term benefits, and that
is the only reason due to which restaurants are giving special attention to customer
satisfaction and customer loyalty nowadays. A restaurant has to consider not only customer
satisfaction and customer loyalty but all the factors that are related to them like product
attributes and service attributes. (Ibrahim, 2013)
Many service marketer and intellectuals have found that providing better services to the
customer leads greater profit, if any business wants to survive in today’s world then it has to
maintain strong relationship with customer and to maintain relationship to customer and
organization must be focused on service quality (Wemmerlöv, 1990)
As competition is increasing in the restaurant industry, every restaurant wants to get an edge
on another restaurant, in this era of competition restaurant business can differentiate their
selves by physical restaurant environment, and can create better individual customer value.
The physical environment is not only helpful to retain their customers but it is also helpful to
attract new customers because many of customers are seeking pleasant environment rather
than food and service quality. (Canny, 2013)
Limitation and Future Research
There are numerous limitations with this research that are as follows:
1. Only two variables service quality and restaurant ambiance have been taken
that is effecting on customer satisfaction, there could be more factors that can affect
the satisfaction of a customer.
2. Customer satisfaction is not the only factor that can make a customer loyal to a
particular restaurant.
3. This study is applied to fast food and restaurant industry, but the model of the
study can be applied to other industries as well.
4. The moderating effect of other factors has been ignored in this study, so future
researchers can add some moderating factors as well.
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