Wendy’s Report - A Consumer Behavior Study on Satisfaction Maura Robinson. Alexa Rogers. Keri Starr This report seeks to understand the biggest drivers in customer satisfaction for Wendy’s International, Inc. This report will evaluate which aspects of fast food restaurants are the most important to customers and how customers compare variables between Wendy’s versus the competition.
MK 726: Term Project April 23, 2015
Table of Contents SECTION 1: INTRODUCTION ................................................................................................................ 1 PROJECT DESCRIPTION............................................................................................................................................1 RESEARCH QUESTIONS ............................................................................................................................................1 STRATEGY ..................................................................................................................................................................1 SECTION 2: LITERATURE REVIEW ..................................................................................................... 3 INTRODUCTION .........................................................................................................................................................3 INFORMATION CURRENTLY KNOWN ABOUT THIS TOPIC .................................................................................6 GAPS THAT STILL REMAIN IN THE LITERATURE ................................................................................................8 HOW OUR RESEARCH WILL CONTRIBUTE TO THE EXISTING LITERATURE ...................................................8 SUMMARY ..................................................................................................................................................................8 SECTION 3: METHODOLOGIES ............................................................................................................. 9 ANALYTICAL APPROACH .........................................................................................................................................9 DESCRIPTION OF THE DATA ...................................................................................................................................9 DESCRIPTION OF THE VARIABLES .........................................................................................................................9 STATISTICAL TECHNIQUES .....................................................................................................................................9 SECTION 4: RESULTS ........................................................................................................................... 10 DRIVERS OF FREQUENCY ..................................................................................................................................... 10 DRIVERS OF CUSTOMER SATISFACTION ............................................................................................................ 11 IMPORTANCE OF FAST FOOD RESTAURANT ATTRIBUTES.............................................................................. 11 PROFITABILITY, PRICE AND CONVENIENCE ...................................................................................................... 13 OVERALL OPINIONS OF BURGER KING, MCDONALD’S & WENDY’S ............................................................. 16 SATISFACTION BASED ON RANKING................................................................................................................... 17 SECTION 5: DISCUSSION ..................................................................................................................... 20 DATA INTERPRETATION....................................................................................................................................... 20 FURTHER RESEARCH RECOMMENDATIONS ...................................................................................................... 22 DESIGN OF THE STUDY ......................................................................................................................................... 22 SECTION 6: SUMMARY AND CONCLUSIONS ................................................................................. 24 RECOMMENDATIONS ............................................................................................................................................ 25 REFERENCES ........................................................................................................................................... 26
Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Section 1: Introduction Project Description This project will seek to identify the drivers of customer satisfaction at Wendy’s International, Inc. (herein Wendy’s) in comparison to two other fast food industry leaders: Burger King Corporation (herein Burger King) and McDonald's Corporation (herein McDonald’s). The dataset to be analyzed in this study is the result of a questionnaire distributed by Wendy’s Market Department. The questionnaire was distributed in several stores, but this particular data was collected at a single Wendy’s location. The sample was a “mall intercept” style, with no attempt to monitor which customers received a questionnaire. The surveys were, therefore, distributed to all willing customers, so long as they met the minimum age requirement of 16 years old. Of 611 questionnaires distributed, 402 were accepted as viable data. The majority of questions were rated on a five-point Likert scale. Through the analysis of the dataset, we seek to determine drivers of customer satisfaction for Wendy’s and compare them to drivers for the company’s two largest competitors: Burger King and McDonald’s. The reason for selecting this topic is that the fast food industry has many fascinating aspects as it pertains to customer service and customer satisfaction. In fact, the article “The High Price of Customer Satisfaction” that we read for class pegged most fast food restaurants (like Wendy’s and McDonald’s) as having high market share but low customer satisfaction, given that high market share is a possible indication of a mass-appeal brand/product line. (Keiningham, Gupta, Aksoy, & Buoye, 2014) Due to this, there is a great interest from our group to investigate whether customer satisfaction is actually a reflection of overall market share. This study will help us to understand more about the fast food industry as a whole and, more specifically, Wendy’s.
Research Questions
What are the biggest drivers of customer satisfaction? What variables do consumers value most in a fast food experience? What attributes of the business are most important to customers? How important is price for customer satisfaction? How important is convenience for customer satisfaction? How does Wendy’s compare with the competition?
Strategy In order to answer the research questions above, we will first conduct a literature review to determine what is currently known about our topic and to identify any gaps that may exist. It is possible some of our questions have been previously answered. Based on our findings from the literature review, we will refine our research questions, if necessary. Then, using the information provided from the dataset, we will manipulate the data using
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr SPSS in order to analyze and answer the remaining research questions. The overall goal of this study is to build upon previous research about drivers of customer satisfaction in the fast food industry as a whole and, more specifically, Wendy’s. The statistical techniques we will utilize to analyze the data and draw our conclusions include: Logistic regression analysis Correlation analysis Decision tree analysis Frequency distribution analysis Mean & standard deviation analysis
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Section 2: Literature Review Introduction The following literature review examines existing research on the drivers of customer satisfaction in the fast food industry. This section includes a brief description of three recent studies conducted in the realm of customer perception, a synopsis of industry research relating to the common drivers of satisfaction, and an explanation of how this research study will contribute to current findings in the field. Recent studies have been published that have yielded findings that are reflective of customer satisfaction variables in the fast food industry. In the follow paragraphs, three of the most useful studies will be assessed. Study 1: Impact of Different Determinants on Customer’s Satisfaction Level in Fast Food Restaurants (Nasir, Ahmed, Nazir, Zafar, & Zahid, 2014) Introduction In 2014, a group of researchers launched this study in order to determine the most important factors that arise in customers’ perceptions when selecting a restaurant in which to dine. Objectives The objective of this study was to pinpoint which factor (among the five common elements that determine customer perception) had the most significant impact on the satisfaction levels of restaurant customers. The factors that were included in the study are comprised of: price, quality, environment, exceptional employee service and security services. Description of the Data The data was collected from respondents through questionnaires that measured responses using a five-point Likert scale. The first portion of the survey gathered demographic information about respondents, while the second portion centered on customer behavior, consumption patterns of fast food, and weighting the importance of various factors when selecting a restaurant in which to dine. A total of 225 questionnaires were collected in order to perform the analysis. Primary data was gathered using online responses and through the collection of printed questionnaires. Analytical Procedures The data collection process yielded a total of 225 useable questionnaires, resulting in a response rate of 75%. Multiple linear regression was utilized in the analysis of the data. Researchers also employed ANVOA analysis and T-tests to determine correlation between factors.
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr Key Findings The analysis determined that price is the most considered factor when visiting a fast food restaurant, and, as such, is the ideal determinant for increasing the satisfaction level of fast food restaurant consumers. Limitations of the Study The selected sample size was 300 but only 225 responses were collected. Also, many of the respondents were hesitant to participate in the study, and it is suspected that not all responses were selected out of true behavior tendency but rather out of convenience in rushing to finish the survey. A geographical limitation also comes into play, as the survey was only administered in two cities, limiting the diversity of the respondent pool. Study 2: Determinants of Customer Satisfaction in the Fast Food Industry: A Study of Fast Food Restaurants Peshawar Pakistan (Khan, Hussain, & Yaqoob, 2013) Introduction In 2013, this study was conducted in order to evaluate several factors that contribute to customer satisfaction in the fast food industry. Objectives The objective of the study was to determine which factors have the greatest influence on customer satisfaction. The seven factors tested include: Promotion Service quality Customer expectations Brand Physical environment Price Taste of product Description of the Data The data collected originated from the customer base of four major fast food restaurants: KFC, Chief, Pizza Hut and Arabian Chick. A questionnaire was developed in order to measure responses to the seven variables listed above in the format of a five-point Likert scale. A total of 120 questionnaires were collected and analyzed, consisting of approximately 30 participants per chain. The respondents were selected at random within the restaurants in execution of non-probability sampling procedures. Analytical Procedures Multiple linear regression was employed as a means of analysis in order to determine the impact of the seven independent variables on customer satisfaction.
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr Key Findings The analysis showed that each of the seven factors was highly correlated with customer satisfaction, making each factor relevant in the consideration of customer satisfaction from the perception of the customer. Service quality and brand were the most influential, followed closely by price. Thus, these factors were deemed the most important in achieving customer satisfaction. Limitations of the Study The biggest limitation of the study lies in highly skewed demographics of the sample population. 78% of the respondents were male, while 22% were female. In addition, 73% of respondents were in the age group of 20-30 years old. This is not exemplary of the entire target population for fast food chains and could have heavily skewed the results of the study. Study 3: Measuring customer satisfaction in the fast food industry: a cross-national approach (Gilbert, Veloutsou, Goode, & Moutinho, 2004) Introduction In 2004, this study was launched in order to address the growing concerns around accommodating the differing needs of global consumer groups and the differing requirements of customer satisfaction that vary per market. Objectives The objective of the study was to provide a cross-cultural comparison of service satisfaction of fast food establishments in four English-speaking countries. The 18 factors tested include: Provider courtesy Security within the organization Timely service Security outside the organization Competent employees Prompt help Easy to get help Service costs reasonable Convenient operating hours Fair treatment Neat and clean place Organization delivers what it promises Treatment received Helpful personnel Easy access to service Organization backs up its promises Employees listen Overall, product and service quality Description of the Data The data was collected using a customer satisfaction survey that consisted of a Likert scale, with (1) signifying “strongly disagree” and (5) signifying “strongly agree.” The survey was administered to patrons of six international fast food franchises including: Burger King, Checkers, Kentucky Fried Chicken, McDonald’s, Taco Bell and Wendy’s. Researchers went to the fast food establishments and administered the survey to randomly selected
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr patrons. The sampling procedure was based on a systematic probability sampling approach. A total of 5,136 customers were sampled in this cross-national, Englishspeaking study: Jamaica (1,581), Scotland (585), USA (2,399) and Wales (571). Analytical Procedures Factor analysis was employed in this study to identify which variables within the customer satisfaction survey could be combined to form common constructs and which could be dropped from further analysis. Key Findings The analysis found that among the four English-speaking countries sampled, personal service and service setting were the two factors most suitable for measurement of customer satisfaction. Personal service includes items related to the customers’ interaction with the employees and the service quality, followed by the ease of getting help and the treatment received as the second most highly weighted factors. Limitations of the Study This study faced the challenge that not all fast food restaurants were available in each of the surveyed countries, resulting in some comparisons to be unfair and not completed on an “apples to apples” basis.
Information Currently Known About This Topic In addition to the information found above, there is a great deal of other research available concerning the drivers of customer satisfaction in the fast food industry. Specifically, a lot of research conducted has focused on determining the drivers of satisfaction in the fast food industry. Why is customer satisfaction such a widely researched topic? This is because research on customer satisfaction has shown that increased customer satisfaction leads to customer loyalty, along with an increase in positive word of mouth, which is often valued as the most reliable form of organic marketing (Ryu, Lee, & Kim, 2012). This makes customer satisfaction a critical factor in ensuring the profitability and growth of a business in this industry. Research has yielded several common elements that can affect a customer’s perception and degree of satisfaction in relation to a product or service, and can contribute to customer satisfaction and perception of value within markets. These factors include: price, quality, food, environment, convenience and service. Price is often cited as the most heavily weighted factor for customers considering a purchase decision. This was exemplified in the case listed above, “The Impact of Different Determinants on Customer’s Satisfaction Level in Fast Food Restaurants” which found that price was the biggest determinant of customer satisfaction. There are two facets of price that should be considered when discussing this attribute in the context of customer perception. The first is objective price, which is the actual monetary value of a product or service in the market. The second is the perceived price, which is the value of a product Page 6
Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr as translated from the perception of the consumer (Jacob & Olson, 1977). Consumers often correlate quality with price, perceiving high priced items as higher quality, while lower priced items indicate inferior quality (Woodside & Olsen, 1977). In fact, quality is another major determinant of customer satisfaction. Research from Parasuraman and Berry (1985) proposes there are five dimensions of service quality as perceived by the consumer: assurance, empathy, tangibles, responsiveness and reliability (Parasuraman, A., & Berry, 1985). Organizations in every industry should be cognizant of these components in the evaluation of quality from the customer perception. In the restaurant industry, there are three major factors of quality that are considered in relation to customer satisfaction: service, food and atmosphere (Jang & Namkung, 1989). The quality of the food, in terms of tastiness and presentation, has also been noted as a heavily weighted determinant of customer satisfaction in the perception of the quality of a restaurant (Jang & Namkung, 1989). The environment of a restaurant also plays a role in the consumer satisfaction of a restaurant. According to Andreassan and Lindestad (1998), cleanliness and an appealing store layout builds an improved brand image and leads to positive customer buying intentions (Andreassen & Lindestad, 1998). An appropriate and convenient location has also been found to positively impact customer satisfaction (Ryu, Lee, & Kim, 2012). Correspondingly, service attributes impact customer satisfaction. This was shown in the third case study discussed previously in this writing, “Measuring Customer Satisfaction in the Fast Food Industry: a Cross-national Approach” which found that quality of service and interaction with employees were two of the top three determinants of customer satisfaction in a cross-national study. Empathy of policy and reliability of service are two service traits that have also been shown to yield positive customer satisfaction ratings (Eggert & Ulaga, 2002). Bitner, Booms and Mehr (1994) have defined service quality as “the consumer’s impression of inferiority or superiority of an organization’s services” (Bitner, Booms, & Mohr, 1994). Another definition describes service quality as a result of the differences between a customer’s expectations and the company’s performance in the delivery of the service (Parasuraman, A., & Berry, 1985). Each of these industry definitions place emphasis on the customer’s perception and expectations of a service in relation to its quality. Our study considers each of the factors that emerged in the research of customer satisfaction. This includes: price, food quality (herein taste of food), service quality (herein speed of service), physical quality of the environment (herein cleanliness), and convenience (herein location convenience). Our study also measures the variety of menu and popularity with children due to cultural factors that are at play in the current United States fast food market, for example products and services offered to target children such as McDonald’s Happy Meals.
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Gaps That Still Remain in the Literature There are not many visible gaps in the current research of drivers of customer satisfaction in the fast food industry. However, due to the nature of the industry, which must respond to the ever-changing needs and preferences of the target market, continuous research is required in order to measure and identify which factors are weighed most heavily in producing customer satisfaction. An example of this would be an increasing preference for healthy food options. In the future, one of the drivers of customer satisfaction may be health impact, healthy choices or quality ingredients.
How Our Research Will Contribute to the Existing Literature Our research contributes to existing literature by offering a granular study on the drivers of customer satisfaction for Wendy’s, while also considering Burger King and McDonald’s in comparison. Our analysis explores frequency as a measure of satisfaction, which is inline with the school of thought on customer satisfaction from a business definition perspective, which explains customer satisfaction as, “the degree of satisfaction provided by the goods or services of a company as measured by the number of repeat customers.” (Business Dictionary, 2014)Our study also focuses on locations in the United States, as opposed to various studies conducted in Pakistan, which drew large interest from researchers as the result of a rapid growth of the fast food industry. The study will contribute by developing an independent report which identifies the largest drivers of customer satisfaction specifically at Wendy’s and in comparison to two other fast food chains: McDonald’s and Burger King.
Summary In summary, there are several key findings that emerged from the literature review of research for the determinants of customer satisfaction within the fast food industry. The research findings from the three studies revealed that price, service quality and environment are the most often considered factors in customers’ perceptions of satisfaction. A review of field research supported these insights and added additional variables to the list of biggest determinants of customer satisfaction including: convenience and food quality. Knowledge gaps will continuously emerge in this area due to the ever-changing needs and preferences of the fast food target market. Our research will contribute substantially to the existing literature by delivering a descriptive and granular report that identifies the drivers of customer service distinctively at Wendy’s and in comparison to two other fast food chains: McDonald’s and Burger King.
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Section 3: Methodologies Analytical Approach Through the analysis of this data set, we seek to identify the drivers of customer satisfaction at Wendy’s in comparison to two fast food industry leaders: Burger King and McDonald’s. Our analysis will consider frequency as the cardinal indicator of satisfaction achieved.
Description of the Data The dataset to be analyzed in this study is the result of a questionnaire distributed by Wendy’s Market Department. The questionnaire was distributed in several stores, but this particular data was collected at a single Wendy’s location. The sample was a “mall intercept” style, with no attempt to monitor which customers received a questionnaire. The surveys were, therefore, distributed to all willing customers, so long as they met the minimum age requirement of 16 years old. Of 611 questionnaires distributed, 402 were accepted as viable data. The majority of questions were rated on a five-point Likert scale.
Description of the Variables The questionnaire includes data on: Usage and frequency of visiting fast food restaurants Familiarity with brands Consumer perception of brands in several categories including: o Taste of food o Cleanliness o Location convenience o Price o Speed of service o Popularity with children o Variety of menu General behavior and preferences Channels to receive information Spending habits Demographics
Statistical Techniques Using SPSS, the following statistical techniques will be conducted: Logistic regression analysis Frequency distribution analysis Correlation analysis Mean & standard deviation analysis Decision tree analysis
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Section 4: Results Drivers of Frequency When considering our overall goal to develop a deeper understanding of customer satisfaction at Wendy’s (in comparison to Burger King and McDonald’s), it was essential to identify to what customer satisfaction would translate given the questions provided in the survey. As such, we determined ‘frequency of visit’ implies the amount of satisfaction achieved from a particular fast food restaurant. Therefore, each analysis is based on either the responses of the overall dataset or the responses of two different frequency groups: a high frequency group (those that go 5 times or more per month = 1) and a low frequency group (those that go less than 5 times per month = 2). When evaluating the biggest drivers for high frequency, various tests were run in order to understand what variables contributed to the high or low frequency of a customer and, essentially, overall satisfaction. As seen in the logistic regression output below, it is evident that there are only two significant variables that help to predict high or low frequency of a respondent: Q22 (price) and Q23 (having a drive-thru window), both with P-values less than .05. Variables in the Equation
Step 1a
B
S.E.
Wald
df
Sig.
Exp(B)
q16
-.041
.174
.056
1
.812
.959
q17
.102
.109
.879
1
.348
1.108
q18
-.021
.076
.078
1
.780
.979
q19
.352
.411
.731
1
.393
1.421
q20
-.165
.236
.488
1
.485
.848
q21
-.208
.387
.288
1
.591
.812
q22
-.283
.138
4.212
1
.040
.754
q23
.179
.084
4.550
1
.033
1.196
q24
-.176
.150
1.370
1
.242
.839
q25
.053
.119
.196
1
.658
1.054
q26
.313
.227
1.895
1
.169
1.367
Constant
-1.399
.786
3.170
1
.075
.247
a. Variable(s) entered on step 1: q16, q17, q18, q19, q20, q21, q22, q23, q24, q25, q26.
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Drivers of Customer Satisfaction After understanding what may drive high or low frequency, the variable was recoded into a 0 (low frequency) or 1 (high frequency) in order to run a decision tree to help determine what variables predict customer satisfaction. This allowed for easy interpretation of the data. As seen below, Q2 (frequency of going to a fast food restaurant) and Q107 (the ranking of Wendy’s compared to the competition) are both predictors in overall frequency (satisfaction) of going to Wendy’s.
Importance of Fast Food Restaurant Attributes During evaluation of the dataset, it was important to compare the average responses of fast food restaurant attributes in terms of frequency group: the high frequency group versus the low frequency group. This was conducted in order to compare how satisfaction is affected by respondents’ opinions of various attributes of a fast food restaurant. The chart on the following page displays the average response to questions regarding how important certain restaurant attributes are (Q16 - speed of service, Q17 - variety of menu, Q18 - popularity with children, Q19 - cleanliness, Q20 - location convenience, Q21 - taste of food overall, Q22 - price, Q23 - having a drive-thru window, Q24 - friendliness of staff, Q25 - taste of french fries, and Q26 - taste of hamburgers). As seen in the chart, both the high frequency group and the low frequency group value Q19 (cleanliness), Q21 (taste of food overall) and Q26 (taste of hamburgers) as the most important attributes in a fast food restaurant. However, when comparing the two groups, it is evident the low frequency group has a higher average for questions 16, 18, 19, 20, 21, 22 and 24, while the high frequency group finds questions 17, 23, 25 and 26 to be more valuable.
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Mean
Mean by Frequency Group 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0
High Frequency Low Frequency
Question Number (Attributes)
For reference and comparison, the SPSS table below reveals the mean for the same 10 questions. However, this data was analyzed by using the overall responses (the dataset was not split by frequency group). Overall respondents value Q19 (cleanliness), Q21 (taste of food overall) and Q26 (taste of hamburgers) the most. Statistics q16
q17
q18
q19
q20
q21
q22
q23
q24
q25
q26
Valid
402
402
402
402
402
402
402
402
402
402
402
Missing
0
0
0
0
0
0
0
0
0
0
0
N
Mean
4.5871 3.8483 3.0821 4.7338 4.6542 4.7313 4.4279 2.4005 4.3557 4.2562 4.6791
Equipped with the findings of the overall value of specific attributes for fast food restaurants, we then found it important to evaluate how those averages compared to the same attributes specifically for Wendy’s (Q31 - taste of food, Q37 - cleanliness, Q43 location convenience, Q49 - price, Q55 - speed of service, Q61 - popularity with children, and Q67 - variety of menu). As seen in the chart on the following page, the high frequency group rated Wendy’s as having highly positive results versus the low frequency group. However, Q49 is lower for the high frequency group versus the low frequency group, and both groups have the lowest mean for this variable. Page 12
Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Question
Q31
Q37
Q43
Q49
Q55
Q61
Q67
High Frequency Group Mean
4.8602
4.8817
4.2473
2.8387
4.8495
4.5699
3.7742
Low Frequency Group Mean
4.4919
4.7509
3.6699
2.8867
4.5696
4.3722
3.7282
It is important to take the above analysis and understand what percent (by frequency group) ranked each attribute as a 4 or 5 (i.e. felt highly positively about Wendy’s regarding that variable). In the chart below, it is evident that a much higher percentage of the high frequency group felt highly positive (ranked a 4 or 5) about Wendy’s in each of the studied attributes (taste of food, cleanliness, location convenience, price, speed of service, popularity with children and variety of menu) versus the low frequency group. For Q67, regarding variety of menu for Wendy’s, the high frequency group has a lower percentage compared to the low frequency group (61.3% versus 66.6%).
% of High Importance by Frequency and Question % ranked a 4 or 5
120.00% 100.00% 80.00% 60.00%
High Frequency Group
40.00%
Low Frequency Group
20.00% 0.00%
Question Number (Wendy's Attributes)
Profitability, Price and Convenience Given the above analyses, it is important to understand how this information might help determine the profitability of the customer. Q123 is the only question that probes about monetary habits at a fast food restaurant. The question asks the respondent to identify how much they spend per person for an average fast food meal. This question was Page 13
Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr recoded into “spends less” (less than $7.00 – answered 1-3 = 1) and “spends more” (more than $7.00 – answered 4-6 = 2). A frequency count shows the high frequency (HF) group had 32.3% spending “more,” while the lower frequency (LF) group had a 44.7% response rate as spending “more.” SpendMoreLess q126R
1.00 HF
2.00 LF
Valid
Valid
Frequency Percent
Valid Percent
Cumulative Percent
1.00
63
67.7
67.7
67.7
2.00
30
32.3
32.3
100.0
Total
93
100.0
100.0
1.00
171
55.3
55.3
55.3
2.00
138
44.7
44.7
100.0
Total
309
100.0
100.0
Although the above chart reveals that there may be varying profitability by frequency group, this may or may not be an indication of how satisfied a customer is, overall. Therefore, it is essential to understand how the current Wendy’s customer feels about price, in general, and then compare that information with how the customer feels about the price for Wendy’s specifically. Descriptive Statistics q126R 1.00 HF 2.00 LF
N
Mean
q22
93
4.2258
Valid N (listwise)
93
q22
309
Valid N (listwise)
309
Descriptive Statistics q126R 1.00 HF
4.4887
2.00 LF
N
Mean
q49
93
2.8387
Valid N (listwise)
93
q49
309
Valid N (listwise)
309
2.8867
As seen in the table above on the left, the high frequency group rates the importance of price, overall, lower (mean of 4.2258) than the low frequency group (mean of 4.4887), meaning that the high frequency group sees price as less important in a fast food restaurant. Additionally, as seen in the table above on right, the high frequency group’s mean is again less than the low frequency group’s mean as it pertains to their perspective of price at Wendy’s (1 = high priced, 5 = low priced). This means that the low frequency
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr group sees Wendy’s as less expensive while the high frequency group sees Wendy’s as slightly more expensive, on average. With the above information in mind, it is important to look at how respondents compared Wendy’s to the competition in terms of price, especially given how high the price variable is in terms of overall importance. When viewing the entire dataset, as a whole, Wendy’s is seen (on average) as more expensive.
Mean 1 = high price, 5 = low price
Price Comparison 5
4.3109
3.8408
4
2.8756
3
Mean by Company
2 1 0 BK
McDonald’s Company
Wendy’s
Given that Wendy’s is typically seen as having higher prices and less convenient locations, it is important to analyze how the customer perceives these attributes. Above was the analysis on price. Below is an evaluation of how the two frequency groups view convenience at Wendy’s. As seen in the table on the left, the high frequency group views convenience of location, overall, to be less important (mean of 4.5914) than the low frequency group (mean of 4.6731). The table on the right demonstrates how the two groups view Wendy’s in terms of convenience of location. The high frequency group views the location to be more convenient (mean of 4.2473) than the low frequency group (mean of 3.6699). Descriptive Statistics q126R 1.00 HF 2.00 LF
Descriptive Statistics
N
Mean
q20
93
4.5914
Valid N (listwise)
93
q20
309
Valid N (listwise)
309
q126R 1.00 HF
4.6731
2.00 LF
N
Mean
q43
93
4.2473
Valid N (listwise)
93
q43
309
Valid N (listwise)
309
3.6699
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr Similarly to the price variable, overall, respondents viewed Wendy’s to be less convenient (mean of 3.8035) compared to Burger King (mean of 3.9627) and McDonald’s (mean of 4.5448).
Convenience Comparison Mean 1= less, 5 = more
4.8 4.5448
4.6 4.4 4.2 4
3.9627 Mean by Company
3.8035
3.8 3.6 3.4 BK
McDonald's Company
Wendy's
Overall Opinions of Burger King, McDonald’s & Wendy’s The following tables help to demonstrate the differences in overall opinions of Burger King, McDonald’s and Wendy’s (not split by Wendy’s’ frequency). Overall, Wendy’s has the highest average for taste of food (4.5771). Wendy’s is also seen as the cleanest restaurant (4.7811), but is, however, the least convenient (3.8035), the highest in price (2.8756), the least popular with children (4.4179) and has the least variety in menu (2.0765). For speed of service, Wendy’s falls in between McDonald’s and Burger King with a mean of 4.6343. Taste of food Burger King Mean
McDonald’s Mean
Wendy’s Mean
4.3333
4.5224
4.5771
Burger King Mean
McDonald’s Mean
Wendy’s Mean
4.5721
4.7463
4.7811
Burger King Mean
McDonald’s Mean
Wendy’s Mean
3.9627
4.5448
3.8035
Cleanliness
Location Convenience
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr Price Burger King Mean
McDonald’s Mean
Wendy’s Mean
3.8408
4.3109
2.8756
Burger King Mean
McDonald’s Mean
Wendy’s Mean
4.5896
4.7214
4.6343
Burger King Mean
McDonald’s Mean
Wendy’s Mean
4.5846
4.8383
4.4179
Burger King Mean
McDonald’s Mean
Wendy’s Mean
3.7761
3.9229
2.7065
Speed of Service
Popularity with Children
Variety of Menu
Satisfaction Based on Ranking The following output is a logistic regression that helps to predict satisfaction (0 = no, 1 = yes – determined by how frequently a respondent goes to Wendy’s) based on how someone ranks Wendy’s and competitors (Q103-Q108). The only significant variable that helps us to predict satisfaction is Q107, which is the ranking of Wendy’s compared to the competition. For Q107, if the rank of Wendy’s increases by 1 unit (i.e. gets higher and worse in rank) and all other variables in the model are held constant, then the odds of being satisfied are multiplied by 0.479, indicating that there is a negative relationship. As the rank gets higher in number (i.e. worse), a customer is less likely to be satisfied; or as the rank gets lower in number (i.e. higher in rank), a customer is more likely to be satisfied by Wendy’s. Variables in the Equation B
S.E.
Wald
df
Sig.
Exp(B)
q103
.089
.195
.209
1
.647
1.093
Step 1a q104
.051
.198
.068
1
.795
1.053
q105
.080
.193
.172
1
.678
1.084
q106
-.015
.201
.005
1
.942
.985 Page 17
Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Variables in the Equation B
S.E.
Wald
df
Sig.
Exp(B)
q107
-.737
.218
11.412
1
.001
.479
q108
.057
.188
.091
1
.763
1.058
-.731
3.696
.039
1
.843
.481
Constant
a. Variable(s) entered on step 1: q103, q104, q105, q106, q107, q108. The satisfied variable (i.e. the frequency variable recoded into 1 = high frequency, 0 = low frequency) and the ranking question for Wendy’s are negatively correlated meaning that as satisfaction increases, the ranking improves (moves closer to 1, so decreases). Correlations
Pearson Correlation Satisfied
q107
Satisfied
q107
1
-.342**
Sig. (2-tailed)
.000
N
402
402
Pearson Correlation
-.342**
1
Sig. (2-tailed)
.000
N
402
402
**. Correlation is significant at the 0.01 level (2-tailed). When comparing the competition to Wendy’s, it is important to understand how the overall dataset views all companies presented in the survey, not just Burger King and McDonald’s. The following chart is the average ranking for each of the companies (Q103 – Five Guys, Q104 – Jack in the Box, Q105 – Burger King, Q106 – McDonald’s, Q107 – Wendy’s, Q108 – Sonic). When ranking the results from highest rank to lowest rank (1 as the highest ranking), the following list results: 1. McDonald’s (2.2363) 2. Wendy’s (2.5622) 3. Burger King (2.9851) 4. Jack in the Box (4.0896) 5. Five Guys (4.2363) 6. Sonic (4.8060)
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Statistics q103 N
Valid
q105
q106
q107
q108
402
402
402
402
402
402
0
0
0
0
0
0
4.2363
4.0896
2.9851
2.2363
2.5622
4.8060
Missing
Mean
q104
When splitting these results into the high and low frequency groups of going to Wendy’s, we can evaluate how the frequency (or satisfaction) with Wendy’s may affect the ranking of the results. The following lists result for each group: High Frequency Group Rank: Low Frequency Group Rank: 1. Wendy’s (1.6022) 1. McDonald’s (2.1650) 2. McDonald’s (2.4731) 2. Wendy’s (2.8511) 3. Burger King (3.2796) 3. Burger King (2.8964) 4. Jack in the Box (4.2796) 4. Jack in the Box (4.0324) 5. Five Guys (4.3871) 5. Five Guys (4.1909) 6. Sonic (4.8925) 6. Sonic (4.7799)
Descriptive Statistics q126R
1.00
N
Descriptive Statistics Mean
q126R
N
Mean
q103
93
4.3871
q103
309
4.1909
q104
93
4.2796
q104
309
4.0324
q105
93
3.2796
q105
309
2.8964
q106
93
2.4731
q106
309
2.1650
q107
93
1.6022
q107
309
2.8511
q108
93
4.8925
q108
309
4.7799
Valid (listwise)
N
93
2.00
Valid (listwise)
N
309
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Section 5: Discussion Data Interpretation When evaluating the dataset to understand drivers in customer satisfaction, it was important to relate customer satisfaction to frequency of visit to Wendy’s. According to the logistic regression model of the restaurant attributes, price and having a drive-thru window were two variables that helped to predict frequency in going to Wendy’s. Although this is a bit surprising, it seems to make sense that if a fast food restaurant has a drive-thru, that people would be more likely to go to that location (i.e. would go to Wendy’s more frequently). Question 22 (regarding price) has a negative relationship with frequency of visit, meaning that as the importance of price increases by 1 unit and all other variables in the model are held constant, then the odds of having a high frequency rate are multiplied by 0.754. This seems to make sense that as price becomes more important, someone would go to Wendy’s less. When looking at the decision tree analysis of all questions, the two variables that seem to affect satisfaction the most were how often a respondent goes to a fast food restaurant (Q2) and the ranking of Wendy’s compared to the competition (Q107). In terms of predicting satisfaction, someone who ranked Wendy’s as less than or equal to 2.5 (i.e. gave a higher ranking) and someone who goes to a fast food restaurant eight or more times per month is the most likely profile of someone who will want to frequent Wendy’s more often and is more satisfied. This helps to understand the most important attributes in terms of predicting frequency (and essentially satisfaction). When looking at the overall perspective on the importance of various restaurant attributes, it was essential to view results in terms of frequency in going to Wendy’s – to understand how these attributes may or may not affect Wendy’s. Interestingly, both the high frequency group and the low frequency group saw the highest value in Q19 (cleanliness), Q21 (taste of food overall) and Q26 (taste of hamburgers). In support of this, the high frequency group viewed Wendy’s, specifically, as having higher cleanliness (4.88 compared to 4.75) and higher taste of food (4.8602 compared to 4.4919). However, the survey did not directly address the taste of hamburgers in terms of Wendy’s specifically. By no surprise, the high frequency group rated Wendy’s the highest for the attributes that they find to be the most important in a fast food restaurant and, therefore, are likely more satisfied. One could ascertain that if Wendy’s wants to retain more customers, it should improve upon the most important fast food attributes – cleanliness, taste of food and taste of hamburgers. It is important to note that while Wendy’s was ranked fairly high for the studied restaurant attributes, Q49 (price) was around 2.8, on average, for both the high frequency and low frequency groups. What this means is that both groups view Wendy’s as having fairly high pricing. However, the high frequency group viewed price, in general, as less important than the low frequency group and, therefore, it makes sense that the high prices of Wendy’s do not turn off high frequency customers.
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr In order to understand overall satisfaction, it is important to compare how often a respondent goes to Wendy’s with the percentage of each group that ranked “high,” a 4 or 5, each of the studied Wendy’s attributes (Q31, Q37, Q43, Q49, Q55, Q61, Q67). It is no surprise that the high frequency group has a higher percentage of ranking a 4 or 5 for each of the questions, except for menu variety. Given that menu variety is one of the lowest means for both frequency groups (in terms of importance in a fast food restaurant, overall), it makes sense that frequency in Wendy’s is not affected by viewing a restaurant as having more or less menu variety. Interestingly, during interpretation of the findings, it was found that the high frequency group pays significantly less, on average, versus the low frequency group. The low frequency group has 44.7% of the respondents falling into a “spends more” category (i.e. spends more than $7.00 per person per meal). However, the high frequency group has only 32.3% of respondents falling into the “spends more” category. What this suggests is that even though the high frequency group has deemed price to be less important than the low frequency group, they spend less, per person per meal and, interestingly, view Wendy’s as having a higher price compared to the low frequency group – providing additional support for the idea that price does not have a heavy influence for the high frequency group. Comparing Wendy’s to the overall importance of various restaurant attributes is essential in analysis. However, comparing Wendy’s to the competition helps to reveal respondents’ perspectives on how Wendy’s matches up in the marketplace. When considering price, Wendy’s is seen as more expensive (mean of 2.8756) than both Burger King (mean of 3.8408) and McDonald’s (mean of 4.3109) with 1 as high priced and 5 as low priced. With McDonald’s dollar menu, it is intuitive that the perception of Wendy’s in terms of price would be higher. Additionally, Wendy’s often promotes quality of product, which naturally has a higher-priced association, especially compared to Burger King and McDonald’s. Given that the consumer perspective is essential in understanding satisfaction and ultimately, profitability, it is important to evaluate how convenience is viewed in terms of importance and in terms of Wendy’s specifically. The high frequency group found location convenience to be slightly less important than the low frequency group. Interestingly, the high frequency group found Wendy’s to be more convenient than the low frequency group. This suggests that the low frequency group values convenience and does not find Wendy’s to have convenient locations. This interpretation could explain why the low frequency group may not frequent Wendy’s more often. When comparing convenience to that of the competition, it is no surprise that the respondents, overall, viewed Wendy’s as the least convenient restaurant (mean of 3.8035) compared to Burger King (mean of 3.9627) and McDonald’s (mean of 4.5448). When analyzing the overall dataset, it is important to understand how Wendy’s compares to the competition, specifically in terms of the ranking question, which asked respondents to rank each company in terms of preference. By no surprise, when running a logistic
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr regression, the only variable that helps to predict satisfaction at Wendy’s is how the respondent ranked Wendy’s (Q107). In this case, as the rank gets higher (i.e. closer to 1) satisfaction increases. What this means is that as a respondent increases the rank of Wendy’s in terms of preference, they are more likely to go to Wendy’s more often. This is supported by the Pearson Correlation coefficient of -0.342. Interestingly, when splitting the data by frequency, the high frequency group highly ranked Wendy’s as 1.6022, on average, showing that high frequency yields high preference. Interestingly, the low frequency group ranked McDonald’s first in terms of preference, but ranked Wendy’s as a close second. What this suggests is that there is another variable that is deterring a customer from increasing their frequency at Wendy’s and leading that customer to choose McDonald’s instead. Location convenience is important to the low frequency group and is ranked high for McDonald’s, which could, therefore, be another sign that Wendy’s should consider increasing location convenience (either by the location choice or by the number of locations).
Further Research Recommendations It is evident through this analysis that convenience and price play a large role in frequency of visiting Wendy’s. However, it would be of benefit to hone in on these topics in another study that further investigates both convenience and price and their ultimate impact on customer satisfaction. Additionally, though this study was an attempt to understand drivers in customer satisfaction, the survey utilized did not directly ask about satisfaction. Just because a customer frequents Wendy’s more often does not necessarily mean that they are more or less satisfied when they do go to Wendy’s. Therefore, additional studies should focus on customer satisfaction and various ways of measuring satisfaction – is it frequency? Perhaps average price spent? Or maybe how happy a customer is after leaving? There are many ways to evaluate satisfaction and a more holistic viewpoint may help create additional insight.
Design of the Study As mentioned, one of the largest limitations was trying to decide what satisfaction meant and how satisfaction could be measured. This research was aimed at understanding overall satisfaction at Wendy’s and the drivers of this satisfaction, but no survey question directly addressed this. In order to analyze customer satisfaction, frequency of visit was utilized as a means of understanding satisfaction. Typically, a satisfied customer will return more often than an unsatisfied customer. However, this is certainly not a guarantee and, thus, became a limitation to this study.
Context of Previous Research As outlined in Section 2 of our report, customer satisfaction within the fast food industry is a widely researched topic. Findings from past research have shown that price, service Page 22
Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr quality and brand are among the most influential factors contributing to customer satisfaction (Nasir, et al., 2014; Khan, et al., 2013). The evaluation of the dataset in this study uncovered similar results: price and whether the restaurant has a drive-thru window help predict the frequency with which a customer will visit (the cardinal indicator of whether satisfaction is/has been achieved). Because the previous studies did not list “having a drive-thru window” as a possible attribute, we cannot determine whether this is fully in-line with their findings. However, it is possible that “having a drive-thru window” may have been categorized within “service quality” or “service attributes” in the previous studies, and, therefore, the findings are, in fact, consistent. In addition to price, service quality and brand, other factors that emerged in our literature review as drivers of customer satisfaction were food quality (taste of food), physical quality of the environment (cleanliness) and convenience (location convenience). Our look at the overall perspective on the importance of various restaurant attributes found that both the high frequency and low frequency customers value cleanliness, taste of food overall and the taste of hamburgers. However, our research did not find location convenience to be a statistically significant variable to determine the high or low frequency of a customer to a fast food restaurant overall. We did, however, look at location convenience in terms of importance for Wendy’s specifically, and found that the low frequency group found location convenience to be slightly more important than the high frequency group. As a reminder, unlike previous studies that primarily looked at drivers of customer satisfaction for the entire fast food industry, ours was a granular study on the drivers of customer satisfaction for Wendy’s specifically (while also considering Burger King and McDonald’s in comparison). Therefore, most of our findings are specific to Wendy’s and should not be used to make generalizations about the fast food industry as a whole.
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr
Section 6: Summary and Conclusions This study sought to identify the drivers of customer satisfaction at Wendy’s in comparison to two other fast food industry leaders: Burger King and McDonald's. Using frequency as the cardinal indicator of satisfaction achieved, we used logistic regression, correlation, decision tree, frequency distribution, mean and standard deviation analyses to answer our research questions. Our findings for each question are listed below, in brief; for a complete analysis of our findings, see Section 5. What are the biggest drivers of customer satisfaction? Price and having a drive-thru window were the biggest drivers of customer satisfaction at Wendy’s. Further, we found that as price becomes more important to a customer, he/she would go to Wendy’s less often. What variables do consumers value most in a fast food experience? How often a respondent goes to a fast food restaurant and the ranking of Wendy’s compared to the competition were the two variables that affect customer satisfaction the most. What attributes of the business are most important to customers? Both the high frequency and the low frequency Wendy’s customers saw the highest value in cleanliness, taste of food overall and taste of hamburgers. Further, the high frequency group rated Wendy’s the highest for the attributes that they find to be the most important in a fast food restaurant. How important is price for customer satisfaction? As previously noted, price is one of the biggest drivers of customer satisfaction at Wendy’s. The high frequency group viewed price, in general, as less important than the low frequency group. However, both groups of customers view Wendy’s as having fairly high pricing. Interestingly, we also found that the high frequency group pays significantly less, on average, compared with the low frequency group. How important is convenience for customer satisfaction? The high frequency group found location convenience to be slightly less important than the low frequency group. Additionally, the high frequency group found Wendy’s to be more convenient than the low frequency group. How does Wendy’s compare with the competition? When considering price, Wendy’s is seen as more expensive than both Burger King and McDonald’s. When comparing Wendy’s convenience to that of the competition, respondents viewed Wendy’s as the least convenient restaurant compared to Burger King and McDonald’s. Further, based on average ranking, respondents preferred Wendy’s over
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Wendy’s Report - A Consumer Behavior Study on Satisfaction Robinson, Rogers & Starr Burger King, Jack in the Box, Five Guys and Sonic, but fell short of McDonald’s. On the other hand, when looking at high and low frequency respondents, the high frequency group preferred Wendy’s above the others, whereas in the low frequency group, Wendy’s (once again) ranked second.
Recommendations Wendy’s can use the findings from this study to develop future strategies aimed at increasing customer satisfaction. For example, we found cleanliness, taste of food and taste of hamburgers to be the most important attributes to Wendy’s customers. Based on this information, Wendy’s can focus its efforts on improving these attributes in order to increase customer satisfaction and, therefore, customer retention and profitability. Further, we found the low frequency customers of Wendy’s see location convenience as important, but also found that they perceive Wendy’s as having less convenient locations than the competition (such as McDonald’s). If Wendy’s wants to increase its customer base, it should consider increasing its location convenience (either by the location choice geographically or by the number of locations). Finally, Wendy’s is seen as more expensive than both Burger King and McDonald’s, its two closest competitors in terms of ranking. To remain competitive, Wendy’s may want to try lowering its prices, even minimally. Perhaps even creating higher priced bundle deals could result in greater overall profits for the company.
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