FOOD QUALITY AND CUSTOMER RETENTION OF FAST-FOOD

ESTABLISHMENTS IN SAN JOSE, OCCIDENTAL MINDORO

AN UNDERGRADUATE THESIS

Presented to the Faculty of College of Business, Administration, and Management

OCCIDENTAL MINDORO STATE COLLEGE
Main Campus

In Partial Fulfilment of the Requirements for the Degree

BACHELOR OF SCIENCE IN HOSPITALITY MANAGEMENT

JOSE O. CAMUA III

ALANICE F. GONZALES
JOHN NORMAN F. AGAPITO
ALTHEA NADINE C. BALIMBIN
JEZZEL B. BELLONES

May 2022
 CHAPTER I

BACKGROUND OF THE STUDY

Introduction

According to Queen J. (2022), fast food is prepared food that is typically served to

customers quickly and cheaply in a take-out, disposable container from a restaurant,

shop, food truck, or street vendor. To cut down on transaction time and cost for each

purchase, the majority of fast food chains use items that have already been heated up or

prepared and low preparation times. The fast food sector has established itself as a

tremendously lucrative industry, with over 230,000 fast food locations and yearly

revenue of over $190 billion in only America. Restaurants in the fast food sector have

carefully crafted menus with an emphasis on making it simple and quick to prepare the

meal. The majority of the components are pre-packaged, and the cooking equipment is

made to be extremely simple because they don't typically desire food that is so intricate

that actual chefs are necessary. Additionally, they frequently aim for perfect uniformity

so that clients can be sure that anything they buy will always taste the same no matter

which store they visit.

Bashir, Majid, Norkhalid, Zahari, Ismail (2022) stated that because a high level of

customer satisfaction results in a higher number of repeat customers, customer

satisfaction is a crucial area of research for both managers and researchers. Reviewing

customer satisfaction levels and using the results of such analysis are crucial initial steps

in assuring and maintaining competitiveness and long-term client retention.

Amadi (2017) believes that a business with effective customer retention convinces

their clients to stay with the firm. But also, customer retention can be defined through the
number of customers doing business with a firm at the end of a financial year expressed

as a percentage of those who were active customers at the beginning of the year. It is also

true that a restaurant's customer retention rate shows the percentage of clients who are

repeat purchasers. They emphasized that this number should remain consistent or grow

slowly. Customer retention could be seen as the maintenance of continuous trading

relationships with customers over long-term. It is the act of keeping customers resulting

from service quality and customer satisfaction.

Constantino (2022) elaborated that the capacity of a restaurant to keep its current

customers is referred to as customer retention. A customer retention strategy aims to

spend time attracting existing customers back rather than spending all of your time and

money trying to fill seats with new consumers. Furthermore, customer retention is crucial

because it illustrates how well your business makes customers happy and keeps them

coming back or ordering delivery. Retaining customers is one of the most economical

methods to expand your company.

Bujisic et al. (2014) also stated that, food quality is a major factor in determining

consumer happiness and loyalty. Meal quality encompasses a number of factors,

including food appearance, flavor, menu variety, healthiness, and freshness. A high

degree of food quality is a significant marketing strategy for retaining and satisfying

customers, as well as providing a pleasant shopping experience. Customer happiness and

behavioral intentions are both influenced by food quality. Several studies have found that

the quality of food has a beneficial impact on consumer satisfaction.

Nonetheless, the food sector must manage and obtain extremely delicate items,

which is one of the main reasons for maintaining high quality standards. As a result, food

2
quality is critical to ensuring that people are consuming and handling safe foods. It can

safeguard customers from hazards like tainted meals while also assuring that they get the

weight and quality of food they paid for (HQTS, 2020). Moreover, Alshurideh, Masa'deh

and Alkurdi (2012) and Danesh et al. (2012) found that customer satisfaction has a direct

effect on customer retention. For them, service quality and customer satisfaction are

important antecedents of customer retention.

Statement of the Problem

This study was conducted to determine the food quality and retention of

customers in the fast-food industry at San Jose, Occidental Mindoro.

Specifically, this study aims to provide answers to the following questions:

1. What is the extent of food quality of fast-food industry in SJOM in terms of:

a. food safety;

b. nutritional component;

c. sensory characteristics; and

d. physical attributes?

2. What is the level of customer retention of the fast-food industry in San Jose,

Occidental Mindoro in terms of:

a. food;

b. customer service;

c. price;

d. sanitation;

e. location?
 3. Is there a significant relationship between the food quality and customer retention

of fast-food industry in San Jose, Occidental Mindoro?

Objectives of the Study 3

This study aims to find out the food quality and customer retention of the fast-

food industry in San Jose, Occidental Mindoro.

Specifically, this study will address the following:

1. To determine the extent of food quality of fast-food industry in terms of food

safety, nutritional component, sensory characteristics, and physical attributes.

2. To determine the level of customer retention of the fast-food industry in terms of,

food, customer service, price, sanitation, and location.

3. To determine if there is a significant relationship between the food quality and

customer retention.

Significance of the Study

This study will eventually help the following:

Owners. To make them aware that serving each customer with the proper degree

of food quality has a big impact on their retention.

Managers. To instill in them that everyone has needs and wants. This will help

them improve their services and to earn customers loyalty by offering high-quality and

safe food.

Employees. For them to understand that customer is the one who make a job and

will give them a room for improvement in serving their customers.

Customers. This study will give the customers an idea where to eat and will help

them to find the best fast-food store in town.

 Future Researchers. This can be used as a resource item to deliver extra

information to all researchers about the importance of food quality to customer retention.

This study will serve as useful reference to those who will conduct any related study.

Scope and Limitations

The study was focused on the relationship of food quality and customer retention

of fast-food establishment. This study covers the level of the customer retention of fast-

food retention. The respondents are the customers of fast-food establishments which are

Rotonda, I love Milktea, and El Sorbetero in San Jose, Occidental Mindoro.

Conceptual Framework

In the development of the study, the researchers were guided by the conceptual

framework. The conceptual framework shown in Figure 1 shows the food quality and

customer retention of the study wherein the food quality is the independent variable and

the customer retention is the dependent variable.

Independent Variable Dependent Variable

Food Quality Customer Retention

a. Food Safety a. Food
b. Nutritional Component b. Customer Service
c. Sensory Characteristics c. Price
d. Physical Attributes d. Sanitation
e. Location Fig

. 1. Research paradigm.

Operational Definition of Terms

The following terms have been defined operationally for easier understanding of

this study.

Fast-food. Restaurant that serves fast food cuisine and has minimal table service.

5
 Food quality. Crucial aspect that determines purchase intent.

Food Safety. Prevention of food contamination prior to its being released to the

consumer.

Nutritional Component. Chemical compounds in food that are used by the body

to function properly and maintain health.

Sensory Characteristics.  Characteristics of food that can be identified by organs

of sense.

Physical Attributes. The organization and presentation of the food that pleases

the eyes of the customer.

Customer retention. Loyalty in order to increase the organization's financial

efficiency.

Customer service. The pleasant and cordial service from staff that makes the

customers feel very welcome.

Food. Meal that is being served in the establishment.

Price. Amount of money that is being paid for a certain meal.

Sanitation. The process of regularly cleaning all surfaces and lowering the

likelihood that germs or other diseases may spread from an unclean surface to clean

objects like cutting boards or instruments.

Location. The place of the establishment where customer can enjoy the food.

6
 CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents some insight information regarding the strong points and

limitations of the study. This chapter assures to establish familiarity, clarity, and

perspectives of the study. This chapter will also provide an overview of the major

concepts and conclusions with the use of different studies and literature provided by the

authors and the experts in this field of knowledge.

Fast-food Industry

The research paper of Chitnis (2019) shows us that brand prestige is vital in the

restaurant sector. Fast-food is a popular notion that has been around for a long time. In

today's fast-paced world, where expenditures are steadily rising, all members of the

family must work to make ends meet. In order to make a living, many individuals also

relocate to another place away from their families. This type of hectic lifestyle

encourages the consumption of quick, easy-to-prepare, and quickly-served meals, which

we refer to as fast food. This fast-food is also a joy to the tongue because it may be made

in a short amount of time.

Fast food industry expansion in the Philippines can be ascribed to the country's

growing population as well as the changing demographics of Filipino consumers (Flores,

2014). Filipinos have a strong desire to eat. They are also on the lookout for healthy food

that will meet their nutritional requirements, and they are willing to fly across the globe

to find it. Food brings people together, and Filipinos have a true fondness for family

gatherings, which are enhanced by the presence of food on the table.

 As a result of this, the food service business in the Philippines is booming, and

everyone wants a piece of it (Masigan, 2019). Fast food culture is a rapidly growing trend

among young people. Moreover, Marasigan (2019) stated that, the fast food industry will

continue to develop unabated. Fast food is expected to increase at the fastest rate in the

next years, increasing by 12 percent year on year. Fast food sales inside convenience

shops, on the other hand, are expected to expand at a staggering 32 percent, thanks to

improved quality and a more affordable pricing. Even if it means encroaching on other

cuisine concepts, fast food restaurants are observed expanding their product options to

keep up with demand. For example, burger stores will soon provide pizza, chicken chains

will give salads, and pizza chains will offer rice meals to Filipinos.

This growth can be linked to fast food chains' branch network expansion. As a

result, this shows that there is still space for growth in the market (Flores, 2014). If this is

the case, the management of the various fast food chains must identify what efficient

promotional methods may be used to update their programs in order to maintain their

market share (Flores, 2014). Many people in the business, on the other hand, are unaware

of how advertising and other promotional methods might aid in making decisions about

how to fit a product, pricing, location, and promotion strategy into a marketing program.

Food Quality

According to Sulek and Hensley (2014), one of the most important aspects of the

eating experience is food quality. When it comes to restaurant selection, food quality is a

crucial aspect that determines purchase intent. Similarly, it was revealed that meal quality

is the primary factor that encourages people to attend fast food restaurants. Food quality

is seen as an important determinant of customer loyalty in fast food establishments.

8
Hensley and Sulek (2014) acknowledged that food quality is the most important

component of buy intention when the environment components and service quality are

compared by other sectors of the restaurant Furthermore, customers' purchasing

intentions would be influenced by the favourable relationship between meal quality and

satisfaction.

As written findings of Cabriadas et al. (2019), personal cleanliness has a

substantial effect in food sanitation. However, the report also suggested that in order to

reduce food-borne diseases, restaurant owners should enhance and provide access to food

handlers' education, personal hygiene, and hygiene practices on food safety to customers.

Another research advised management to choose healthy and hygienic food handlers and

to guarantee that they are well trained. Furthermore, the study found that food handlers

must be held accountable for personal cleanliness in order for the food they touch to stay

healthy.

Three key elements of service quality have been utilized in studies to study

restaurant service quality: food, service, and atmosphere (Dutta et al., 2014). Moreover,

Kim and Woo (2012) stated that it was able to measure the physical environment and

employee service for this study. The instrument is being used because it has relevant

dimensions for these constructs. Ryu and his associates (2012) further elaborated that in

the restaurant sector, the importance of food quality as a metric of customer happiness

was stressed. As a result, three characteristics of food quality were taken from Ryu et al.

(2012), namely: the food is fresh, the food is tasty, and the food is nutritious.

Food Safety
 Tabak, Mehmet Hakan and Ergün, Özer (2022) further stated that the process of

ensuring food safety begins on farms or in fields and continues all the way to the final

customer. The steps in this process are raw material selection, processing, storage, and

distribution. In this food safety strategy, which is recognized in the EU and the USA, a
9
weak point might result in food poisonings and outbreaks. Because of this, eateries are

required to fulfill prerequisite requirements before putting food safety procedures in

place. These programs cover operational aspects, the design of the processing space,

waste management, the compatibility of the equipment, cleaning and disinfection, pest

control, employee hygiene, reprocessing, product recalls, storage, and distribution, as

well as product traceability.

Nutritional Component

The nutritious component is crucial since it attracts a larger client base. Due to

their hectic work schedules, people frequently dine out and reserve going to restaurants

for special occasions. Some people's dining selections when dining out are limited by

their ignorance about the calorie content of meals. When calories and nutritional

information are listed on menus, picky diners who are concerned about their health no

longer have a small selection of places to choose from. It can also boost revenue at the

same time. Restaurants that post nutritional information may see an increase in customers

ordering marked menu items. This is done so that consumers may place their trust in the

nutritional and calorie contents of the products they order. Additionally, it gives clients

the option to choose foods that will keep them healthy. Restaurants that post nutrition

information encourage customers to make healthier decisions. The overall procedure

encourages patrons to visit the restaurant more frequently and grows business.
Sensory Characteristics

Williams, Lu Ann (2021) stated that in food and drink formulation, texture is

crucial since it might mean the difference between rapid customer aversion and

acceptance. The influence of texture extends beyond mouthfeel. It has to do with a

10
product's taste, look, and even accompanying sound. Consumers are aware that texture

heightens the sensory experience and frequently contributes to a larger feeling of

enjoyment, so keep that in mind at all times.

Ouyang, Yuxia, Behnke, Carl, Almanza, Barbara, and Ghisell, Richard (2017)

says that since food aroma aid in food identification and awareness and since the sense of

smell greatly influences how food tastes, using food fragrance marketing strategies in a

dining environment makes sense. It is possible that food aromas will improve clients'

appetites and affect their purchasing decisions.

It was stated by Lockhart Catering (2018) that colors are essential for the reason

that dishes that stand out frequently include vibrant colors in a variety of tones, which

help us visualize the flavors we're about to taste. However, did you realize that color has

an impact on diners on both a conscious and subconscious level? Red and yellow, for

instance, are recognized for promoting hunger. This is one of the explanations for why

you frequently see fast food restaurants using them on packaging. Since orange is a

combination of red and yellow, in addition to making us feel warm, it is also thought to

pique our appetites. Green conjures up images of sustainability or more nutritious meals.

Black makes us think of excellent quality whereas white suggests something pure and

clean. Brown and other earthy tones give a warm feel to dishes.
 Flavors' major job, according to Flood (2016), is to impart flavor to foods, as they

have no nutritional value. Flavors are available in both natural and artificial forms.

Artificial tastes are chosen with care to create a wider and more diversified range of

flavors. Natural, on the other hand, may use natural ingredients like fruits, spices, and

vegetables to create a wide range of flavors. Natural flavors, too, require a boost. To

generate these flavor combinations, a little amount of synthetic chemicals is frequently

11
utilized in blends. "Both 'natural' and 'artificial' flavorings have a place in the United

States food supply to accommodate customer demand for a variety of safe and tasty

goods," as stated by FEMA. He also added that natural and artificial flavors both

contribute to the deliciousness of our foods and beverages. We wouldn't be able to enjoy

wonderful sweets and delights without many of these flavors (Flood, 2016).

Physical Attributes

Nusra (2019) shows us that if we discuss the physical attributes of the food, this is

referred to as product innovation and is a crucial step in developing a restaurant menu.

You must possess the creativity necessary to ascertain what your customers want. In

running a restaurant, consistency, technique, and quality ingredients are also three

important factors. Because of this, having a successful restaurant depends on having good

food presentation, good cooking techniques, and plated dishes made with fresh, regional

products that are pleasing to the sight. Always bear in mind that cooking is truly an art,

and that the presentation of food influences how much one wants to eat it.

Customer Retention

Customers want a high level of competence and knowledge of numerous

restaurant procedures, and food demand is increasing. The fast-food industry is getting
increasingly misdirected; prompting suppliers to use effective advertising techniques in

order to gain a competitive edge and extend their awareness of customer wants

(Krivcova, 2017). As a result, some fast-food restaurants are already contributing to the

study, analysis, and development of marketing campaigns in order to grab the maximum

market share of consumers and acquire customer retention and loyalty in order to

increase the organization's financial efficiency. Customer service is critical in restaurant

management, even if it is not widely seen as a key factor of repeat business, consumer

engagement, or word-of-mouth recognition (Rao, Raju, and Anjum 2020). The effect of

customer satisfaction on customer retention is incredible and motivating (Rather and

Sharma, 2017).

Food

Himanshu (2021) shows that after oxygen and water, food is the third most

necessary thing for living beings to supply energy and development, to maintain life, or

to drive growth. It is one of the most complex chemical groups. Food has a vital role in

promoting health and preventing disease. It is made composed of vital elements such as

carbohydrates, proteins, lipids, minerals, and vitamins that are taken by an organism and

digested by the organism's cells to maintain health.

Customer Service

Like food quality, service quality plays an important role in restaurant customer

satisfaction. Service quality is a very subjective and emotional factor of overall restaurant

quality. Customers consider that the service staff makes the service personal because the

interpersonal skill of service staffs directly correlate with perception of how good the
service is. For example, impersonal service is very unpleasant while a warm attitude from

service staff makes customers feel very welcome, as well as making them want to reward

the staff for their hospitality (Yia et al., 2018).

According to Britton (2015), restaurateurs, caterers, and fast-food franchise

entrepreneurs will all have one thing in common: a desire to provide excellent customer

service. This is why business owners should consider excellent customer service as a

13
long-term investment. You may only be generating a small profit on a single sale, but if

great word-of-mouth spreads far and wide, this may quickly turn into a large revenue

stream. Providing excellent customer service in the food industry, on the other hand,

should not only benefit your bottom line; it also has the potential to improve employee

morale and attitudes. This is possibly the most effective approach to persuade and

persuade your employees to do all in their power.

Price

Customers seek fairness in terms of benefits and services provided to them. As

with any profit organizations, the main objective of restaurants is to meet customers'

expectations, providing customers a good service and making profit. Pricing is a

challenging but a significant managerial decision since the price of a product or service

affects customers’ behavior significantly. Since restaurants are operating in tourism

industry and tourism industry which is one of the most important industries in terms of

human mobility; restaurants should give importance to service providing and pricing.

Customer satisfaction or dissatisfaction from the products and services offered in

restaurants has various impacts on complaining behavior. In fierce competition

environment, for their standing, restaurants should focus on the impact of customer
perceived price fairness and service fairness on complaining behavior (Chung and

Petrick, 2015).

Sanitation 14

Fung, Wang, and Menon's research (2018). Food is necessary for survival. As a

result, food safety is a human right. Millions of people are at risk of eating contaminated

food. Every year, millions of people become ill, and hundreds of thousands die. Food

safety concerns have not abated in the twenty-first century. Because of the speed and

breadth of product distribution, local outbreaks can quickly escalate into international

crises. Severe foodborne disease outbreaks occurred on all continents. Food safety is

dependent on science and fair law enforcement. New laws and regulations must be

enacted on a regular basis in order to ensure a continuous supply of food products that are

safe and healthy for people's health and well-being (Rahman, et al., 2012).

Termac Corporation (2022) added that one of a restaurant kitchen's top priorities

should be good sanitation. Cleaning the counters, chairs, and tables is not enough.

Making sure your personnel has received cross-contamination avoidance training and

carrying out a variety of cleaning tasks on a daily, weekly, monthly, and annual basis.

Always keep in mind that dirty restaurant kitchens have less dangerous bacteria.

Unhygienic food handling procedures are to blame for the majority of food-related

illnesses. One food poisoning incident linked to your restaurant is all it takes to ruin your

reputation.
Location

Warsi, Shahram (2018) put further emphasis that location serves as an anchor

point for your concept, enabling you to survive in this cutthroat food market. In actuality,

it is the single most crucial thing you can do for your restaurant or food company. It

typically contributes significantly to building brand equity and brand desirability. Owners

of restaurants should be mindful of the community where their brand will develop itself.

Make sure there are enough residents in the region to support your business; this is a
15
requirement. They should also target the regular fast-moving crowds that pass by the area

in addition to the residents. They can figure this out with the use of a site study. A good

location also helps the customer to enjoy the food with you while they dine out. Thus,

having a good street visibility is very essential in order to run your brand successfully.

Ultimately, it’s all about location which matters at last. A great location also makes it

easier for customers to dine out with you and enjoy the meal. Therefore, having strong

street visibility is crucial for the successful operation of your brand. Location is the one

factor that truly matters in the end.

 CHAPTER III
16
RESEARCH METHODOLOGY

This chapter presents a description of the locale of the study, respondents of the

study, research design, sampling technique, research instrument, data gathering

procedure, and data analysis.

Locale of the Study

The study was conducted at San Jose, one of the municipalities of Occidental

Mindoro. There are fast-food establishments in San Jose. Three of those establishments

are El Sorbetero, Rotonda Café, and I Love Milktea, which are located at Poblacion,

Barangay 6.
 Fig. 2. Vicinity map of San Jose.

Respondents of the Study

The researchers selected forty-five (45) customers of different fast-food

establishments in San Jose, Occidental Mindoro as respondents determined through

random sampling.

Research Design

The researchers used descriptive-correlational study. Descriptive-correlational

studies are used to describe variables and the natural correlations that exist between and

among them. Since the study's primary interest is to describe the food quality and

customer retention and to determine if there is a significant relationship between the two,

the descriptive correlational design is the most suitable design to be used. Through this,

researchers will able to determine the relationship of the food quality and retention of the

customers of fast-food industry in San Jose, Occidental Mindoro.

Sampling Technique

This research used random sampling, wherein the researchers will look for the

following respondents that can correspond to the objectives of the study and to their

willingness to respond to the questions.

Research Instrument

The study used a self-made questionnaire. The self-made questionnaire is a two-

part questionnaire, designed to measure the food quality and customer retention of fast-

food industry in San Jose, Occidental Mindoro.

Data Gathering Procedure

The researchers prepared a consent letter to be addressed to all fast-food

establishments, managers or owners requesting the permission to conduct the study. The

researchers will administer the questionnaires to the respondents and will be conduct an

interview with them. To gather the information needed from respondents where they will

be answering questions regarding of the food quality in terms of appearance, flavor and

texture. The researchers will help the respondents to understand the question in order for

the researchers to have the best answers from them. After they finished answering, the
18
researchers will collect the questionnaires. All the respondents will be given the

assurance that their answer will be kept confidential and will be used for research purpose

only.
18

Data Analysis

After the data gathering, the researchers encoded the data using Microsoft Excel.

The encoded data was treated statistically using weighed mean to determine the

relationship of food quality in the retention of customer. Mean was used to identify the

average of respondents who are satisfactorily dining in fast-food.

 CHAPTER IV

RESULTS 19
AND DISCUSSION

This chapter presents the statistical analysis and interpretation of the gathered

data. The results are discussed based on the arrangement of the research questions stated

in Chapter I.

RELATIONSHIP BETWEEN THE FOOD QUALITY AND CUSTOMER

RETENTION IN THE FAST-FOOD INDUSTRY
This section discusses the results of the correlation analysis between food quality

and customer retention in the fast-food industry. In examining the correlation between the

said variables, the Kendall rank correlation coefficient was utilized. As shown in the

table, there is a significant relationship between food quality and customer retention in

the fast-food industry. Moreover, the value of the correlation coefficient (r=0.01)

indicated a positive relationship between food quality and customer retention in the fast-

food industry. This positive relationship implies that food quality has something to do

with customer retention of the customers in the fast-food industry. The high quality of the
food, the more customer will stay in the fast-food industry. The findings also support the

claim of Sulek and Hensley (2014), that one of the most important aspects of the eating

experience is food quality. When it comes to restaurant selection, food quality is a crucial

aspect that determines the purchase intent. Moreover, Ramaraj (2017) revealed that good

food quality can influence consumers' decisions to buy and their loyalty to the restaurant's

goods and services. It reveals how fundamentally consumer satisfaction, customer

retention, and behavioral intentions are impacted by food quality in general. The results

also revealed that introduction and high-quality flavor were the two main contributors to

customer satisfaction and behavioral intentions. The consistency and quality of your

dishes must be maintained if you want to live up to client expectations and win their

loyalty. Therefore, both chains and independent eateries need it. Importantly, their

research suggests that food quality is seen as an important determinant of customer

loyalty in fast-food establishments. Even though further research is needed to fully

elucidate the effects of food quality on customer retention, the present studies suggest

that, when it comes to customer retention in the fast-food industry, food quality is one of

the factors.

Table 3. Relationship between the food quality and customer retention in the fast food
industry.

Food Customer Overall

Quality Retention
Kendall's tau- Correlation
1.000 .598** .777**
b Coefficient
Food quality
Sig. (2-tailed) . .000 .000
N 44 44 44
Customer Correlation
.598** 1.000 .835**
retention Coefficient
Sig. (2-tailed) .000 . .000
 N 44 44 44
Correlation
.777** .835** 1.000
Coefficient
Overall
Sig. (2-tailed) .000 .000 .
N 44 44 44
**. Correlation is significant at the 0.01 level (2-tailed).

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