Exploring the Impacts of Service Guarantee Strategy in the Casual Restaurant Sector

Abstract

This study examined the impacts of service guarantees in terms of consumers' perceived risks, loyalty, and word-of-mouth intent in the casual dining restaurant segment. In addition, the study investigated what type of service guarantee consumers preferred. A total of seven research hypotheses were developed on the basis of relevant literature review. In an effort to test the research hypotheses, a scenario method was developed. A total of seven research scenarios were created based on the Virginia Tech web survey system, which allows subjects to complete the survey online. The subjects of the study were Virginia Tech Faculty. The scenarios were sent to faculty members via e-mail during the month of September. The results of the study are striking: 5 research hypotheses are supported, 1 research hypothesis is partially supported, and only 1 research hypothesis is rejected. The results of the study suggest that a well-executed service guarantee could reduce consumers' perceived risks, raise consumers' intent to complain, and increase positive word-of-mouth and loyalty. Furthermore, the results of the study indicate that a specific service guarantee is much more effective in reducing consumers' perceived risks, and increasing consumers' intent to claim initial service failures, in comparison to those of an unconditional service guarantee in the casual dining restaurant industry. On the other hand, a service guarantee which was executed poorly resulted in reducing consumers' loyalty and increasing consumers' negative word-of-mouth. In addition, the results of the study suggest that a service guarantee offered by independent restaurants could be a competitive advantage over a brand restaurant not offering a service guarantee. Overall, the results of the study suggest that a carefully designed, specific service guarantee could be a competitive advantage for independent restaurant operators in the competitive business environment.