Service standards and restaurant revenue

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Thesis Project

Service standards and restaurant revenue

Through the concept of customer satisfaction

Client: Waldorf Astoria Hotel in Shang Hai Author: Leo Su 331460

First Examiner: Mr. Gerrit Schreiber Second Examiner: Ms. Kim Meijer Research Teacher: Ms. Adrienn Eros

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Nowadays many hospitality companies focus on the service standards because of a competitive market environment. The client of this project, the Waldorf Astoria Hotel in Shang Hai, is not an exception. The hotel takes an attempt to improve service standards in order to increase its restaurant revenue because of the significant influence of service standards. As a part of the Hilton Group, the WA hotel has the mission to be a preeminent global hospitality company, the first choice of guests. In order to be involved, the WA hotel would like to bring more business by improving service standards. The staff will be involved because they play a significant role in delivering services. Besides, customer satisfaction will be involved due to the fact that improving the service standards can bring a great deal of business to the restaurants in terms of the empirical data. Thus, this thesis project aims at providing the client with advice on how to enhance customer satisfaction through the service standards of the staff.

First of all, the field research was conducted on the basis of the theoretical studies which demonstrated the key concepts of the present project. The field research was designed within the framework of qualitative research by using a case study approach. Among the global luxurious five-star hotel restaurant, three of them were selected. Qualitative interviews were conducted with the purposive sample of the selected restaurant managers. The data was mainly collected from the interviews, which were concluded by using a content analysis in terms of the open and axial coding. Moreover, the observation was conducted in the Grand Brasserie restaurant. In order to further understand the current situation of the client, the observation sheets were used to record the service standards of the staff, which were finished to conduct a content analysis.

The field research contributes to gain knowledge how the clients performs the service standards of the staff and the desk research discovered that there are three approaches to improve customer satisfaction, namely consistency of service delivery, customers’ values and the skills/knowledge of the staff. As a whole, the managers saw that the daily briefings and training sessions are very important to maintain the service quality because they have a positive influence on the level of customer satisfaction. It was found that the consistency of service delivery and customers’ values are possible to be stimulated on the service standards of the service timetable and wine service, through sharing customers’ comments, emphasizing their needs and reacting during the daily briefings. As for the skills/knowledge of the staff, the training sessions have appeared to be the most efficient approach. Additionally, the restaurant manager requires the staff to develop skills/knowledge after the sessions.

According to the results of the research part, it is possible to increase the restaurant revenue through improving the service standards of the staff on the basis of customer satisfaction. The researcher takes an attempt to recommend Grand Brasserie restaurant to improve the service standards of the staff through a high level of customer satisfaction. As a result, there are two approaches to improve the service standards of the staff, which are the empowerment of the staff and changing the structure of daily shifts. Considering the results of the research part, the empowerment of the staff was selected as the most efficient way because it can stimulate the staff members to create more values and keep consistent in service delivery, which can lead to a high level of customer satisfaction. On the basis of the empowerment of the staff, the researcher came up with concrete actions, which include share

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iv “service model”.

To sum up, this thesis report provides evidences to prove that the service standards of the staff have a positive effect on restaurant revenue through raising the level of customer satisfaction. Then, the research developed advice on how the client can effectively involve the staff in the service standards to increase restaurant revenue.

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1 1. Introduction

1.1 Background information about the Client

The present project has been given by the Waldorf Astoria hotel Shanghai on the Bund which was opened in 2010. It combines the history and culture of the celebrated Shanghai Bund with a taste for 21st century sophistication and it offers a heritage ambiance, legendary service and timeless amenities. At present, the WA hotel has been the leading brand within the competitive hotel industry in Shang Hai by winning many awards, such as “2014 Best City Hotels and Business Hotels organized by Conde” and “Nast Traveler and Asia’s Top 5 Heritage Hotel organized by Now Travel Asia”. Waldorf Astoria Shanghai on the Bund belongs to Hilton Worldwide and the aim of this company is: “to provide guests the exceptional environment and the personalized attention of true Waldorf service that creates a singular experience” (Hilton Worldwide group, 2014).

At present, there are many luxurious restaurants in Shang Hai, which include five-star hotel restaurants and independent restaurants. They provide customers with high quality of food; the restaurants are decorated grandly; and the service standards are excellent. In order to improve the restaurant revenue, the WA hotel has been providing customers with an exclusive atmosphere and high quality food and beverage to attract more customers. However, the service standard of the staff is an integral part to make improvements. It contributes to attract more customers and it is potential to make a difference with other restaurants in the Grand Brasserie. Last year in China, many people suffered from bird flu named H7N9 which aroused the people’s fear of eating outside. Although the disease was controlled by local

governments, it also had a negative impact on the WA’s restaurant revenue during the third season. After that, customers paid more attention to food hygiene and it is an integral part of the hotel to provide excellent restaurant service.

As a result, the Waldorf Astoria hotel has standardized the service standards in greetings, uniforms, food quality and the up-sell skills. The services and products are designed in terms of the customer’s preference, promotions and activities are often held during the festivals and on some other special days. In this project, the research will be focused on finding out how the hotel can improve the service standards in order to increase its revenue in the Grand Brasserie restaurant.

1.2 Reasons for the thesis project and the relevance of this project for the client

Shang Hai is a global financial center and a transport hub with one of the busiest container ports all over the world. These are the reason why many hotel groups entered this marketplace in order to benefit from the large population and economic potential. At present, there are more than forty-eight luxurious hotels which have been opened in Shang Hai. In order to survive in such a competitive market, the WA hotel must be outstanding comparing with the other ones and otherwise it would be submerged by the

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2 new entrants and their competitors. Additionally, the customers’ demands and needs are dynamic and diverse and it is quite difficult to attract more customers by keeping silence when they are choosing a place to dine. As Vlad Reyes, GM of the Conrad Dalian and Hilton Dalian said, “We are improving our presence in China’s second and third cities by providing diverse services in our new hotels (Reyes, 2012).” So what does this actually entail? According to Reyes (2012), it boils down to understanding the priorities of the local market (Jing Daily, 2012). According to the American Hotel & Lodging Association (AHLA), Washington, D.C., Tia T. Gordon, the manager of media relations for the AHLA says hotels can have influence on their bottom line through catering, restaurants and other food and beverage operations. Service is extremely important in a restaurant. People come to the restaurant for tasty food, but they will come back for excellent services. The reason why someone comes back to a restaurant is recognition (Colicchio, 2011). These findings show that the hotel industry is competitive in big cities. In order to achieve a good business in the WA hotel restaurant, it is necessary to be notable with the service. The service can make a restaurant more competitive and attract more customers because the customers come back for service. This project will focus on Grand Brasserie restaurant in Waldorf Astoria Hotel, which is the only all-day dining restaurant in the hotel to offer a chic yet casual experience within the grand ambience of Shanghai’s most prestigious hotel.

1.3 Project and research objectives

The thesis project was done to find solutions for the management problem of the client. The client would very much like to improve the service standards in the Grand Brasserie restaurant, which is a European– style restaurant, in order to increase the restaurant revenue. However, at this moment, the hotel has no clear idea what kinds of service standards should be improved. The researcher will help to give advice on how to improve the service standards which can positively influence customer satisfaction so that the revenue in the Grand Brasserie restaurant will be increased. Specifically, the thesis project will illustrate the motivated service standards of the staff based on field research which can lead to a better

performance of customer satisfaction by focusing on the target customers. The research methods consist of the desk research, which is a kind of literature research and field research, which gives in-depth description of procedures and knowledge related to the research questions. The performance of customer satisfaction is a very important indicator that may affect the number of customers. However, the number of customers has a decisive impact on the restaurant revenue. At present, the target customers of the WA hotel are businessman and leisure customers with a high income and consequently, the focus will be on these two target groups in order to do a research on the customer satisfaction regarding the service standards of the staff in the Grand Brasserie restaurant.

In terms of the objective from the client, the conceptual model explained below was established by the researcher in order to illustrate the objectives of the project as well as the objective of the research and advisory part within this project. The conceptual model is as following:

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3  Objective of this project is to improve the customer satisfaction in order to increase the hotel

restaurant revenue through attracting more customers in the Grand Brasserie restaurant

 Objective within this project is to provide the client with advice on how to enhance the customer satisfaction through the service standards of the staff

 Objective of the research part is to understand the relationship between the service standards of the staff and the customer satisfaction in the Grand Brasserie restaurant

1.4 Global work breakdown structure of the thesis project

The Global Work Breakdown Structure illustrated in Appendix I shows the sub-projects of this thesis project. It splits each part of the thesis project into detail. The first part of this WBS is a theoretical framework, which provides the literature support to start the research. The thesis project was started from 15th_{of February. To begin with, the literature review was performed by using various databases in} order to give define the core concepts of this project. The literature reviews provided a large amount of data on the basis of the previous research and empirical evidence and these data were analyzed in order to build up a relevant relationship among the core concepts; select the most reliable; and accurate literature by using the criteria AAOCC. The final step is referencing to the literature sources and setting up on the basis of the APA style guidelines. To sum up, the theoretical framework not only provided definitions of the core concepts, but also inducted the relationships between these core concepts in order to further understand the conceptual model.

With regards to the research part, it includes the preparation of conducting research and the implementation. To begin with, the objective, central questions and sub-questions were formulated based on the conceptual model. Then, the strategy and design of the research methods were done to collect data. All of these processes were finished in the first month. As for the next step, the observation sheet and interview guide were needed to be prepared in line with the operationalization. After prepared all of these, it was sufficient to conduct the research. The observation was planned to conduct by the first week of May. In order to keep the results efficient, the observers were required to record information in different times within a week. Besides, the interviews were performed at the same time. However, it was

Customer experiences: 1) The staff 2) Facilities 3) Food and Beverage

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4 expected to collect data within one month because of the researcher had to make appointments with many different restaurant managers. The interviews were planned to be finished by the third week of May. In order to use the data which collected from the restaurant managers, the open coding, axial coding, structuring coding, descriptive and exploratory analysis were conducted to obtain with a relevant results for the research objective. These processes were done in one week. Finally, the research data was translated into meaningful conclusions to answer the sub-questions, which helped further understand the central question. Therefore, the research part was finished before the last week of May. Meanwhile, the advisory part started.

Advisory part started in the last week of May. The first step was to define the objective of the advisory part and determined the key elements and aspects. Secondly, after the research results were prepared, the focus was on giving the advice alternatives which represented solutions to the management problem of the client. Then, the next step was to select the most suitable advice alternative for the client. In order to find out the best solution, the selection of criteria was developed in line with the mission and culture of the client. After that, the final choice of the advice alternatives was decided. Finally, the research was necessary to make an implementation plan of the selected advice. Therefore, the whole thesis report was finished before 15th_{of June.}

1.5 Reading guide to the thesis report

This thesis project is composed of three chapters. Chapter one presents the introductory information on the project and the client. Chapter two focuses on the process of the research part which includes the theoretical framework, research approaches and the research analysis. Chapter three is dedicated to the advisory part of the thesis project which offers the client solutions to the management problem.

2. Research of the thesis

2.1 Introduction

The objective of the research is to understand the relationship between the service standards of the staff and the customer satisfaction in the Grand Brasserie restaurant. The present project focuses on

answering the central question and some specific sub-questions in order to cope with the management problem of the client. The conceptual model shows the relationship between the core concepts. The central question of this research is formulated as following:

How do the service standards of the staff enhance the customer satisfaction in the Grand Brasserie restaurant?

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5 sub-questions aim to understand the key concepts of the central question. In addition, the

sub-questions serve to explore the relationship among the key concepts in order to answer the central question. As a result, sub-questions were formed as following:

 What are the current service standards of the staff in the Grand Brasserie?  What is the current customer satisfaction of the Grand Brasserie?

 How do the service standards of the staff correlate with customer satisfaction?

2.2 Theoretical framework

2.2.1 Introduction to the literature review

Before conducting the research, the service standard of the staff was supposed to be improved in order to increase the revenue in the Grand Brasserie. As mentioned in the introduction part, the objective of this project is to increase the restaurant revenue. Cheryl Parsons (2013) stated that the number of new customers; frequency of existing customers; speed when guests eating; rate of table turns all influence the restaurant revenue (Parsons, 2013). As the leading brand under the Hilton Worldwide group, Waldorf Astoria Shang Hai is dedicated to providing the guest with an excellent experience. Therefore, it is appropriate to choose the approach of increasing the number of new customers and frequency of existing customers in order to make more profits.

In order to attract more customers and maintain the existing customer, customer satisfaction is seen as a significant factor. Choi et al. (2010) found that the highly satisfied customers tend to go to restaurants more frequently; recommend restaurants more often; and spend more money compared to the customer with a dissatisfactory experience (Choi, Maclaurin, & CHo, 2010, p. 5). It is obvious that the high satisfaction level of customers can increase the number of customers. However, the customers’

experiences have a deep impact on ensuring the level of customer satisfaction. Some authors presented that customer experience is influenced by two factors, which are the physical appearance of the building and the length of time interacting with the staff (McHattie, Pike, Talbot, Jones, & Hickie, 2011). It can be concluded that, in hotel restaurants, the service standards of the staff, the quality of food and facilities are the most important aspects in order to provide a satisfactory customer experience. Waldorf Astoria hotel is a very luxurious five-star hotel in Shang Hai. It is well-appointed with a splendid inside

decoration. Additionally, the hotel kitchen has invited a professional group on account of the quality of food is crucial to ensure the high level of customer experience. As a whole, the researcher takes an attempt to understand the relationship between the service standards of the staff and restaurant revenue through the customer satisfaction by answering the central question:

 How do the service standards of the staff enhance the customer satisfaction in the Grand Brasserie restaurant?

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6 The central question had been split into five sub-questions in order to further understand how the service standards of the staff could enhance the customer satisfaction in the Grand Brasserie. Moreover, it is important to build up the theoretical framework in order to comprehensively understand the core concepts and the relationships between the key concepts in the course of literature review. In this thesis project, the search engines like Google Scholar and Saxion Library were applied very often. The search items were selected as service standards, customer satisfaction and restaurant revenue. To enable the literature resources to be valid and reliable, the criteria ‘AAOCC’ was applied to estimate the quality of data. Besides, the literature review presented the evidence for explaining the relationships between the core concepts, in order to clarify how the researcher establishes the main questions.

2.2.2 Customer experiences

Customer experience was defined as how customers perceive their interactions with a company (Menzies, 2014). And Menzies (2014) also divided customer experiences into three aspects. Firstly, the experience must meet customer's core needs. Secondly, it must be easy to accomplish the goals of a company. And finally, the experience must be enjoyable. Customer satisfaction mainly includes all touch-points which aim at distinguishing the customer service and marketing from customers’ experiences. Some authors presented that the physical appearance of the building and the moments of interaction with the staff are very important factors influencing customers’ experiences (McHattie, Pike, Talbot, Jones, & Hickie, 2011). The touch points between the staff and customers are a good opportunity to build up a positive

relationship, customer loyalty, differentiation and potential recommendation of restaurants’ business. Customer experiences are based on the process of delivering services. Wu & Liang (2009) stated that “service encounter” in restaurant settings is composed of three main elements: environmental elements (e.g. design, music and lighting), staff (e.g. professional skills, reliability) and customers (e.g. interaction with other customers) (Wu & Liang, 2009, p. 5). As for the staff, professional skills are essential to offer customers a high level of services. Furthermore, it is also important to make customers feel like a guest, not part of the process (McHattie, Pike, Talbot, Jones, & Hickie, 2011). However, the F&B manager of WA hotel, Linda Hemels said that “the wine knowledge and wine selling skills is insufficient in the Grand Brasserie”. Grand Brasserie restaurant is the largest restaurant in WA hotel. When comparing with the other five-star hotel restaurants, their food quality and facilities are all fabulous. Thus, the only way to distinguish them is to make differences in the service standards of the staff.

2.2.3 Service standards of the staff

Service standards are usually defined in terms of: timeliness, accuracy and appropriateness. In

restaurants, it is mainly related to offering customer services in a short time, with an appropriate way and with the accurate knowledge (Paternoster, 2010). The Service standards are an integral part of service improvement, thus, the standards are deserved to pay much attention. Besides, the service standards are an issue that has engaged academics and practitioners, leading to substantial debate over its

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7 conceptualization.

In order to improve the service standard of the staff, Fisher (2003) suggested that service standards should include service timetable, wine service, up-sell and serving special guests (Fisher, 2003). And he concluded that service timetable is a 10-step approach which provides customers with an unforgettable experience, while ensuring that the staff is providing the utmost attention to customers. The 10-step approach includes greetings to guests and escort them to appropriate tables; team members arrives at tables within one minute of the guest seating; drinks should be delivered promptly to guests; meal should be delivered to tables within 10 to 12 minutes; confirmation should be given in one minute after guests make orders; clean tables when guests are finished (normally 15 to 20 minutes); offer guest desserts after meal within 3 minutes; clean tables after the desserts are finished; pick up check and payment as soon as possible and always return the change; tables should be cleaned and reset within two minutes of the departure of guests. As for wine service, Douglas (2003) said selling and serving can be very rewarding to restaurant revenue. Wine service enhances a meal and sometimes can make a

restaurant relatively unique in the marketplace. For the five-star hotel restaurant, it is very important to prepare a wine list and train staff with some comprehensive wine knowledge. Besides, the process of preparation and delivery way are also important to wine service because some special wines are

necessary to be poured into a glass decanter in order to allow the wine to “open up” or “breathe”. Up-sell is an imperative skill for the restaurant staff to enable their customers’ demands to be satisfied and it also has a positive influence on restaurant revenue. Generally, up-sell includes incentives, which provide customers some food and beverage package or favorable price and suggestive selling. As for the last part of service standards in restaurant, it is the service for special guests like children and the elderly people, who need special care.

Time has become increasingly important for customers to receive service and efficient time management is the top most concern for many of the hospitality companies. With an increase in competition, there has been a significant expectation for restaurants to satisfy their customers by providing a better service in a cost-effective manner (Choi & Sheel, 2012, p.3). Therefore, the service standards could be innovated to follow the manner of cost-effective in order to be more competitive in local market.

To sum up, the service standards of the staff are improved on the basis of customers’ needs and demands. In the Grand Brasserie restaurant, the service standards are flexible. Because the customers have various understand and high expectation on the customer satisfaction, the service standards are necessary to be different in terms of the customers’ requirements. Considering that people go to restaurants often and the process of dining is more complex than before, the customer satisfaction is not only providing customers delicious food, but also offering them an excellent experience of dining. In order to further understand the restaurant service standards of the staff, customer satisfaction was taken into consideration.

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8 2.2.4 Customer satisfaction

Customer satisfaction has been defined as a feeling of customers’ experience when they are purchasing (Ro & CHON, 2006, p.6). A customer is deemed to be satisfied upon the experience which provides a feeling of enjoyment when compared with the expectation (Choi & Chu, 2001, p 3). Oliver (1997) presented that when focused on output aspect, the customer satisfaction is considered as an output of customer experiences (Oliver, 1997). This is a cognitive state that a customer feels about “value on money”. In terms of the customer cognition, they focus on cleanness, courtesy & manners, food & beverage quality and staff appearance. Opposite to the cognitive aspect, the customer satisfaction is regarded as an effective response to a product or service, which includes efficiency, technical execution, skills & knowledge and guests comfort (Yuan & Jang, 2008, p. 6). When focused on the process of purchasing or service, the evaluation of customer experience should be higher than expectation at least. This definition emphasizes that the evaluation of customer experience has an important influence on customer satisfaction. Comparing with output-oriented approach, process-oriented approach certifies the importance of customer satisfaction by measuring each factor that plays a role in each stage of experience (Oliver & Bearden, 1985, p.3). In the case of WA hotel, the process-oriented approach and output-oriented approach are both important to be considered because it is a five-star hotel restaurant, the customers’ expectations and requirements may be complex.

Scott Smith (2013) demonstrated that customer satisfaction can be measured through four fundamental elements. The first element is derived from the perceived quality. He said “it needs the company to have a strong read on the overall quality of service, especially as it pertains to fulfilling customers’ needs on a regular basis and creating the sense that your company is reliable” (Smith, 2013). As for customer loyalty, Beyond Philosophy (2013) defined it is the result of consistently positive emotional experience, physical attribute-based satisfaction and perceived value of an experience, which includes the product or services” (BEYOND PHILOSOPHY, 2013). The third element is attributional satisfaction which is a direct way to ask specific questions in order to have an overview on missing services. In hotel restaurants, the customer repurchase behavior is influential to their revenue. In order to increase the number of repurchase customers, the post-purchase process plays a significant role to stimulate customers’ willingness to recommend to others (Smith, 2013). Besides, highly satisfied customers go to restaurants more frequently, recommend restaurants more often and spend more money compared to customers who have low levels of satisfaction (Choi, Maclaurin, & CHo, 2010). Nowadays, increased competition with rising customer expectations for service quality has caused restaurants to try out innovative ways to satisfy customer needs (Baker & Cameron, 1996, p. 4).

As a whole, the level of customer satisfaction has a significant impact on the number of customers. Especially for current customers, it is decisive to their repurchase behavior and recommendations to others. To raise the level of customer satisfaction, the staff plays an important role because customer satisfaction is built up in the course of interactions between the staff and customers.

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9 2.2.5 Restaurant revenue

Restaurant revenue management can be categorized into three aspects such as issues related to managing capacity, managing demand and implementing those concepts. In general, restaurant revenue is evaluated by using the RevPASH, which means the Revenue per Available Seat Hour. There are two parts should be focused in order to increase restaurant revenue. At first, pricing strategy becomes complex because of customers’ demands and service quality. The high demands of customers can lead to a long waiting time and consequently, service quality may be decreased. However, restaurant managers can enhance their service quality by advancing sales of products/services or charging premiums to deal with its conflict with customers’ high demands. (Lee, Hwang, & Hyun, 2010). The second part is the number of customers which can lead to a good performance of restaurant revenue. As Parsons (2013) claimed that there are four ways to increase restaurant revenue.

The first way is to increase the number of new customers. There are a large number of tactics to attract new customers in the door. Some allow keeping the brand equity, some may cause a discount on it, but attracting more customers can provide growth potential.

Secondly, restaurant is possible to increase the frequency of existing customers. Keeping the customer back often can be accomplished by providing an excellent experience both inside the restaurant and after they leave. Exceptional service, food, value and atmosphere all contribute to the restaurant experience of customers. Individual communication with customers is of great importance to stay in customer’s mind and improve customer experience. Responding to all feedback, acknowledging

concerns and appreciating customers for compliments will let customers feel they are concerned. Besides, it is also crucial to provide incentives for the returned customers in order to reinforce the value of their return.

Thirdly, it is possible to increase expenses by asking the customer preference of dining and offering them recommendations would be possible to increase expenses as well. In order to do these, the staff is required to be attentive and read the right signs to urge additional items. And when pulling in the right customers, they are willing to spend more. For example, Rewards Network members actually spend 23% more than non-members at restaurants (Parsons, 2013)

Fourthly, restaurant can increase the rate of table turn/flow-through. When the restaurant is filled and everyone has ordered dessert, there is only one more way to increase restaurant sales that is do it all over again, as many times as possible in a day. This does not mean rushing customers through their

experience, but it does mean the restaurant should be staffed appropriately to deal with the table traffic. There are following things should be considered in a full service restaurant: Are checks being presented and collected in a timely manner? Are tables reset as soon as your guests leave? Do you have the right mix of tables for your average dinner party sizes? Can you add express ordering lines, or a separate

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10 station for call-ahead order pick-up?

This project is designed to increase the revenue in the Grand Brasserie restaurant. There are many approaches can be performed. However, the selected approach to enhance the restaurant revenue is increasing the frequency of existing customers and the number of new customers because the WA hotel focuses on providing guests for exceptional services. As mentioned in previous concepts, highly satisfied customers go to restaurant frequently and they are willing to recommend to others. To enable the customers to be satisfied, the staff must be efficient to meet their needs and demands. Therefore, the relationship between the service standards of the staff and the customer satisfaction will be explored in this project.

2.2.6 Service standards of the staff and customer satisfaction

Some empirical studies have certified that the performance of the staff has a positive effect on customer satisfaction, trust and behavioral intentions like the word of mouth, repeat repurchase and loyalty (Han & Ryu, 2012, p. 2). By reflecting on the definition of the service standards of the staff and customer satisfaction, the staff plays a very important role in the process of perceiving services. Therefore, restaurant is necessary to be well-managed by focusing on the service standards of the staff. As the Institute of Customer Service (2007) claimed, the service standards should be focused in terms of timeliness, accuracy and appropriateness (Paternoster, 2010). Thus, in order to win a high level of customer satisfaction, it is significant to offer guests services in a short time, with an appropriate way and with the accurate knowledge.

2.2.7 Customer satisfaction and restaurant revenue

Customer satisfaction and restaurant revenue are connected with each other, but it does not mean a positive customer satisfaction can lead to the higher revenue. Previous research illustrated that there are four rating customers on the basis of finance (Meyer & Schwager, 2007). These are listed as follows:

 Model customers: High customer satisfaction; Good revenue.

 Growth customers: High customer satisfaction; higher potential revenue. Candidates for cross selling and upselling.

 At-Risk customers: Low customer satisfaction; good revenue. Demanding decisive intervention.  Dangling customers: Low customer satisfaction; low revenue. To be rescued or abandoned.

As a whole, the growth segment had three times as many customers as any of the other models (Meyer & Schwager, 2007). This finding illustrated that the restaurant has potential to increase revenue through improving the level of customer satisfaction. A restaurant with a high level of customer satisfaction does not mean its revenue is soaring. However, it has a positive effect on attracting more customers to come.

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11 Therefore, in order to deal with the management problem of the client, customer satisfaction must be focused.

2.2.8 Conclusion

To sum up, the literature review demonstrated that customer satisfaction serves as a catalyst in order to increase restaurant revenue. It is not only a strong antecedent to increase the number of customers in restaurants, but also has a positive impact on restaurant revenue. The present research will not explore the relationship between the customer satisfaction and the restaurant revenue. However, the researcher will find solutions to improve the customer satisfaction in the Grand Brasserie restaurant, in order to increase the restaurant revenue. According to the literature review, many authors defined that customer satisfaction happened during the interaction between the customers and the team members and some of them presented that the service standard of the staff is outstanding to be improved because most of the customers perceive satisfaction from the staff. Therefore, the present research is supporting to explore how the service standards of the staff enhance customer satisfaction of the Grand Brasserie restaurant.

3. Approach to the research

3.1 Research strategy and design

In this thesis project, the objective of the field research is to find out the most appropriate service standards which are in line with the WA hotel’s culture and ambiance. As the literature review illustrated, the level of customer satisfaction is decisive to the increase of restaurant revenue. Therefore, customer satisfaction was involved in research questions. In order to research the customer satisfaction and the service standards of the staff, desk research and field research are involved.

Desk research was conducted in order to connect the service standards of the staff with the customer satisfaction. The desk research supported to analyze the internal data which the researcher has obtained from the client. As a result, the outcome of the desk research helped further understand the customer satisfaction of the client.

As for the field research, it was performed to come up with some advice of the current management problem through applying the methods of observation and interview. The present thesis project was performed within a framework of qualitative research due to several reasons. First of all, the thesis project aimed at giving helpful advice on improving the service standards of the staff in order to increase the restaurant revenue. The qualitative research is a useful method related to understand some aspects of the social life which generates words for analysis (Green, 2007,p.2). This method provided an in-depth description of the procedures and knowledge related to the research question. According to Fisher (2003), service timetable, wine service, up-sell and service to special guests are the main aspects

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12 to be developed in order to satisfy customers’ needs and demands. Hence, the qualitative research supported the researcher to understand the service standards of other restaurants. Secondly, the quantitative research was restrained to be carried out owing to the lack of guests’ information. Thus, the qualitative research method was implemented to answer the central question.

In terms of the research strategy, the descriptive case study approach was selected to describe an intervention or phenomenon and the real context in which it occurred (Baxter & Jack, 2008, p. 4). In this thesis project, the case study provided the researcher a detailed view on the objective. In addition, the client was featured with a five-star hotel restaurant and the purpose of the research was to compare the service standards of the staff, so the descriptive cases study method was selected to conduct. In order to better understand the current situation of the client, the observation research was also used as it can monitor and evaluate the service standards of the staff in practice (Evaluation Research Team, 2008).

3.2 Desk research

Desk research is any intelligence or data that already exists. In order to help the researcher understand the latest customer satisfaction in the Grand Brasserie restaurant, the client has provided some specific information which illustrated the customer satisfaction in January 2014. The result of the data was concluded by the Forbes Travel Guide. They did the qualitative research by collecting sixty

questionnaires from the Grand Brasserie restaurant. Sixty samples include 65% of leisure guests and 35% of business guests. Regarding to the nationality of the respondents, only 36.6% of them were Chinese guests and the rest mainly came from America, Australia and some European countries. In this project, the desk research helped the researcher understand the customer satisfaction of the Grand Brasserie restaurant. Besides, the desk research was connected to the service standards of the staff in order to find answers in the field research. As a whole, the desk research performed the descriptive analysis in order to answer the following sub-question:

 How do the customers satisfy the service standards in the Grand Brasserie restaurant?

Central question: To what extent the customers are satisfied with the service standards of the staff in the Grand Brasserie?

On the basis of the literature review, the researcher analyzed the customer satisfaction in cognitive and unconscious satisfaction aspects. Thus, the central question was split into two sub-questions:

To what extend the customers are satisfied with the cognitive services in the Grand Brasserie?  Cleanness

 Courtesy & Manners  Food & Beverage quality

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13  Staff appearance

To what extend the customer are satisfied with the unconscious services in the Grand Brasserie?  Guests comfort

 Skills and knowledge  Efficiency on service

The descriptive analysis demonstrated the data which provided by the client. The description was based on the categories which founded from the literature. The researcher describes the customer satisfaction on the service standards in the Grand Brasserie restaurant.

3.3 Field research

3.3.1 Method of data collection

In order to collect data for the field research, the observation and interview were used. The observation method is a way of watching behavior or events in the natural setting (Evaluation Research Team, 2008). In this project, a covert observation was selected because the staff is the most likely to present service standards naturally. To conduct the observation, an observation sheet was formulated. The researcher and another two mysterious visitors filled in the observation sheet. In most applied projects, the researcher does not have enough time to carry out a detailed observational study, but some observation, as part of their daily work, will help to observe it (Green, 2007). The researcher was selected on account of the half year working experience in WA hotel. The mysterious visitors were required to have 45 minutes or longer dinners in Grand Brasserie restaurant for one time. The first visitor went to the restaurant during the week and another one went there on weekends. They helped to record key information in the observation sheet which was formed on the basis of the sub-aspects of the service standards, but they were not allowed to show the observation form to the staff.

Secondly, the interview was used to collect data from the selected hotel managers. At first, the Grand Brasserie manager and F&B manager were interviewed in order to further understand the situation of the client. However, the interviews were performed by Skype or face-to-face due to the location of selected hotels. Besides, the interviews were performed in English or Chinese and the transcripts in Chinese were translated into English in this project.

3.3.2 Selection of research units

In order to guarantee the quality of case study, the sampling was made in two steps. The first step was the selection of the case companies while the second step was the selection of the data sources within the selected cases. As a result, three five-star hotels were selected as the samples: Shangri-La Hotel in Pu

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14 Dong district, Chang Sha Sheraton Hotel and Amstel hotel in Amsterdam. Shangri-La Hotel opened six restaurants inside the hotel which includes authentic French cuisine to delicate Japanese sushi,

award-winning Chinese fine dining to Michelin-star cuisine. Chang Sha Sheraton hotel is one of the most attractive five-star hotels opened in Chang Sha, which was selected as a case company because it has the same background with the Waldorf Astoria hotel. The last case company Amstel hotel came from Amsterdam which is also a business and tourist city like Shang Hai. Amstel hotel is a leading brand in Amsterdam and it has a good reputation because of its luxury and long- time history. Besides, the Michelin-starred restaurant in Amstel hotel is noteworthy because it shows high quality services in the restaurant.

The second step was the selection of data sources. In order to gain insight into the key concepts, the restaurant managers were selected to be interviewed because they are the planner of the service standards. Totally, there will be three to five interviews with restaurant managers.

The phenomenon of this project is to improve the service standards of the staff to enhance the customer satisfaction. In order to select some appropriate samples, a purposive sampling plan was formed.

 Similarities:

− International hotel background − Luxurious five-star hotel restaurants − Western-style restaurants in hotel

− The same target groups( Business and leisure customers)  Differences:

− Roles of respondents (F&B manager or restaurant manager) − Location(At least two local hotels)

3.3.3 Operationalization

In order to develop the observation sheet and interview guide, the core concepts of the research questions were operationalized on the basis of the conceptual model. Operationalization of the service standards of the staff were based on the introduction by Fisher (2003), which illustrated specific aspects and sub-aspects of the service standards in restaurants. In order to develop the observation sheet and interview guide, these aspects and sub-aspects were operationalized. Appendix II shows tree diagrams of the service standards of the staff.

In order to operationalize the desk research of customer satisfaction, Oliver (1997) introduced that the output and the process aspects are needed to formulate questions in the desk research in order to understand the current situation of the client. When focused on output, customer satisfaction is

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15 “value on money”. When focused on the process, the evaluation of customer experience should be higher than expectation at least. This definition emphasizes that the evaluation of customer experience has an important influence on customer satisfaction. Appendix II shows a tree diagram of the customer satisfaction. Besides, Scott Smith (2013) illustrated four elements to measure the customer satisfaction. It is clear that these elements should be evaluated in order to raise the level of customer satisfaction. As a result, customer satisfaction was operationalized as following:

 Perceived quality (Focus on the existing services)

 Customer Loyalty (Emotional experiences and Physical attribute based satisfaction)  Attributional satisfaction (Missing part services)

 Intention to repurchase (Post-service)

As a whole, the interview guide was developed on the basis of the operationalization of the core concepts. However, the question types were different to various respondents. In order to gain the most valuable and relevant information from the respondents, some probing techniques were used. As for the observation sheet, it was developed on the basis of the operationalization of the core concepts as well. The content of the observation sheets was the same to be presented to the observers in order to obtain valid and reliable information.

3.3.4 Methods of data analysis

The data analysis in this project was done by a content analysis and the method of coding and in line with the literature findings. A content analysis of the observation sheet was implemented to provide an overview on the implementation of service standards of the staff. The content analysis of the observation sheet provided for a comparison between the implementation and strategy of the service standards. The interviews were transcribed into a textual format. When finished the transcript, the next step was the process of coding. The open coding was performed separately for the various case companies. But, the same codes were given to the parallel labels of valuable data. Then, the next step was axial coding and it was conducted deductively. The axial coding in this project was clarified the conclusive sub-aspects into aspects and key concepts. The open codes were analyzed and distributed in different categories and each of them was classified into an umbrella code, which correlated with the aspects of key concepts developed in the operationalization. Furthermore, these categories provided more in-depth analysis. And the axial coding was carried out in order to further compare with the case companies. After axial coding, the next step is a descriptive analysis which provides for a comparison between the current situation of the client and collected data. The descriptive analysis provided for a comparison in order to make a conclusion of the research results. Finally, structuring coding and exploratory analysis were conducted to establish relationships between the key concepts, which aimed to provide evidence for the advisory part.

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16 4. Results of the research

This chapter introduces the results of the data which collected from the internal data of the client, the observation and interviews with all of the respondents. Firstly, the descriptive analysis introduces the current situation of the customer satisfaction. Then, the service standards of the selected cases and their engagement of the customer satisfaction are described on the basis of the literature review. Secondly, the exploratory analysis takes an attempt to examine the relationship between the service standards of the staff and customer satisfaction.

4.1 Results of the desk research

In this project, the desk research applied the descriptive analysis, which was based on the content analysis and the axial coding to support the results. The researcher describes how the staff performs their service standards; how the customer is satisfied with the service in the Grand Brasserie; how the restaurants deal with their customer satisfaction.

4.1.1 Customer Satisfaction in the Grand Brasserie restaurant

In order to analyze the customer satisfaction of the Grand Brasserie, the desk research results were used to further understand it. The table below presented the performance of the customer satisfaction in January 2014 and each classification gave an index to the customer satisfaction. The sample size is sixty, which include 65% of leisure guests and 35% of business guests.

Table 4.1 Customer satisfaction in the Grand Brasserie restaurant

The above table revealed that the cleanliness & condition and technical execution, skill & knowledge were not satisfied in the Grand Brasserie, which in accordance with the literature findings by Fisher (2003). The

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17 performances of those were 50% which is a very low score and it has a potential to make improvements. The respondents complained that the service station near the guest was not neat, which is influential to guests’ dining ambience. Besides, the guest was required to request ketchup for the hash brown patty.

As for the Efficiency and GT&SPS, the performances were arrived at 71.41% and 60% separately, which were also potential to be focused in order to offer excellent service. Especially, when the occupancy arrives at a high level, the service quality is too difficult to be consistent as the service standards ruled. The respondents stated that the staff escorted a guest to a table without chair assistance. And the guest ordered a cappuccino, while the staff delivered a cup of coffee instead. In addition, the staff was attentive at the beginning of the meal, while it became difficult to signal staff toward the end of the meal, as they were not attentive.

The Courtesy & Manners and the Elements of Luxury were going to be perfect in the Grand Brasserie. Both of their performances were greater than 80%. The Greetings and Assistance of the staff were proactive and timely. The staff gives warmly welcome and escorts guest to a table. As a whole, the respondents were very satisfied with those two aspects.

When it comes to Food & Beverage quality, Guests comfort & Convenience and Staff Appearance, all of them were highly spoken by the guest. Respondents described that when entered the Grand Brasserie for breakfast, the hot breakfast was served within 10 minutes. The omelet was properly cooked and includes vibrant broccoli and contrasting mushrooms. It was well-plated, fresh and flavorful. And the guests were informed the buffet would be closing within the next 10 minutes in case they would like to take anything. As for the Staff Appearance, the staff focuses on their grooming by wearing the same uniforms and dressing before working. As a result, the Food & Beverage quality, the Guests comfort & Convenience and the Staff Appearance in the Grand Brasserie are presented with a high level of customer satisfaction.

To sum up, the Grand Brasserie reached a high level of customer satisfaction with an index of 83.9% in cognitive aspects. And in unconscious aspects, the customer satisfaction performance was presented with 73.81%. Therefore, the unconscious aspects are more potential to raise the level of customer satisfaction in the Grand Brasserie restaurant by comparing the index of these aspects.

4.2 Results of the field research

4.2.1 Interview results of the service standards of the staff

The interview transcripts were translated into codes, which were contributed to the information of the service standards of the staff within the case hotels.

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18 provide guests with a comfortable service. Service timetable includes greetings, seating service, food and beverage order and delivery, cleanliness and payment/tips. In terms of the results of the interviews with the selected restaurant managers, they almost have the same service standards in service timetable.

With regards to greetings, all of these restaurants provide guests with a smile and eye contact for welcome. As for seating services, all of them escort guests to tables; give chair assistance; offer menus. Some of them offer water or drinks and support guests with their coat and bags. However, only the respondent D focuses on single guest by providing newspapers or magazines. If the table is not ready in ten minutes with a guest’s reservation, respondent D said they would like to offer a complimentary drink at the nearby bar. If there is no reservation, they would like to inform the guest with an estimated time or recommend alternative dining venue.

‘For single diners, the newspapers or magazines will be offered. If the guests make a reservation but the table is not ready within ten minutes, guests are offered a complimentary drink at the nearby bar. If there is no reservation, the guest will be informed with an estimated time or recommend alternative dining venue’. (Respondent D, interview by Skype, April 13, 2014)

When it comes to taking order and delivery, the restaurants are all required to offer guests very beautiful menu within three minutes and the staff members describe the menu items according to guests’ requirements. As for the delivery time, it is kept around ten minutes or less. During a meal, the guest’s name is used as a signal of recognition discreetly in the Grand Brasserie. At present, “lady first” has been a trend to deliver food and beverage. Almost all of these services are delivered in five-star hotel restaurants. Besides, respondent D mentioned that the team leaders are the only one to take order and respond guests’ requests.

‘For each shift, we assign different team leaders to take order and delivery of menu items. They are the only one to take order and respond guests’ requests’. (Respondent D, interview by Skype, April 13, 2014)

Cleanliness has been seen as a very significant factor in order to improve customer satisfaction in accordance with the above analysis. Restaurants focus on cleaning additional tableware; moving the soiled dishes; and refolding or replacing napkins when guests leave. However, the restaurant C pays much attention on personal hygiene and grooming. They maintain the presented area clean at all times. ‘We have a very strict standard of personal hygiene and grooming at all times. Besides, the staffs are required to maintain the presented area clean at all times’. (Respondent C, personal communication, May 11, 2014)

The five star hotel restaurants have the same service relating to payment and tip. The bill is prepared within a folder in two minutes. 15% extra fee is charged in advance in five star hotels. If the customers are happy with the restaurant service, they could pay an extra tip on bills.

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19 Wine service is very important to be performed because the quality of it can bring large number of revenue besides customers tend to have a very high expectation of wine service in five-star hotel restaurant. The respondents focus on training the staff with some professional wine skills in order to ensure that the staff can introduce and deliver wine appropriately and accurately.

‘Now, we focus on it. Actually, by selling wines, it can bring large number of revenue for our

restaurant…the guests order a wine in our restaurant because they expect more than drinking. That is very important for us to focus on wine service’. (Respondent A, personal communication, May 10, 2014)

Respondent A emphasized that they pour mouthful wine to the guest for tasting. Wine is poured less than 1/2 glass full of wine to breathe, for guest to appreciate the full aroma of the wine. Besides, the temperature of wine is quite important to be prepared before delivering. Respondent D mentioned that the staff must be elegant to carry the bottle to a table with a folded napkin sleeve around the neck. Glasses and bottles are served on the right side of guests. It is the same with delivering food that ladies are always served at first.

The up-sell is the most insufficient in the service standards of the staff. Some restaurants do not activate the up-sell program. Respondent A mentioned, they have no active selling used by the team but this training has been rolled out which includes an incentive scheme to stimulate upselling.

‘Currently no active selling used by the team; at the moment in the process of “REV MAX Training”; this training has been rolled out by Hilton China to train team members in different ways of upselling. Program will include an incentive scheme to stimulate upselling (incentive scheme currently not in place)’. (Respondent A, personal communication, May 10, 2014)

Respondent C mentioned that up sell program is not imbedded in their training. However, the restaurant supervisors and manager are always required to put in innovative ideas on the theme night and

promotional activities.

As for special guests, the restaurant managers focused on the convenience and the safety when serving these kinds of guests. Respondent A allows the blind guest bring guide dogs into the restaurant. The staff would like to assist them to tables and ensure the surroundings are free of obstacles. As for children, they offer high chairs, kid’s menu and the coloring set. Besides, if they only order half portion of the regular menu items, they could pay half price. In addition, all of the restaurants have prepared the kid’s tableware. As for the elderly guest, if necessary, the restaurant can assist them with a wheel chair. However, the number of these kinds of facilities are limited due to that the number of special guests is small. As a whole, restaurants pay much attention on these kinds of guests in order to offer them with a comfortable and safe experience.

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20 ‘Not very often. However, for the special guest, we have attentive services. For example, the blind guest is allowed to bring guide dogs into the restaurants. We will offer assistance in taking the guest to a table, avoiding physical contact but let the guest follows you. And ensure the surroundings are free of

obstacles, like wine cooler stands. As for children, the high chairs, the kid’s menu and the coloring set should be offered. If regular menu item is requested and only half portion required, honor the request at half of the menu item price’. (Respondent A, personal communication, May 10, 2014)

4.2.2 Observation results of the service standards of the staff

The content analysis of the observation sheet contributed to the service standards of the staff. It was supported to understand the execution of the staff when they performed the service standards.

The observer describes that the staff greeted the guest with a polite and warm welcome. They asked guests “if you have a reservation” and escorted the guest to a table proactively. As the seating services, the staff provided chair assistance, offered water, presented menus and unfolded a napkin. Observer A mentioned that the young staff was knowledgeable to introduce the menu and they offered water immediately. However, they were not passionate and unfolded a napkin in a casual way. As for the delivery of food, the observers recorded that they waited almost ten to fifteen minutes and the delivery of food was professional and graceful. Besides, they gave a small introduction when presenting food. Therefore, it can be saw that the staff is trained efficiently. With regards to cleanliness, observers praised that the staff removed the soiled dishes timely. However, the public area was not always neat such as the station, which closes to the table. Moreover, Observer B asked for ketchup, but the plastic on the bottleneck was not clean. As for the payment and tip, bill was presented in front of the observers within a folder and a pen was prepared to sign. In the bill, 15% extra fee was charged. Observer A also noticed that the staff was proactive to have a small talk with the guest at the end of dining.

According to the record from the observers, the Grand Brasserie prepared a very beautiful wine list for the guest to take an order and the content of this menu was sufficient. The staff was familiar with the wine knowledge. They could answer guests’ questions fluently. Besides, wine was delivered to a table within a container and it was poured to the guest with a mouthful only for tasting. With the guest’s acknowledgment and confirmation, the staff supported to pour 1/2 glass full. Wine was delivered in the right side of the guest and ladies were always served at first.

The up-sell training of the Grand Brasserie is not prepared in terms of the description by the F&B manager from the Waldorf Astoria Hotel in Shang Hai. And the observer also described that the staff just recommended daily special and gave a description to the ordered food.

Special guests in the Grand Brasserie are not that much. Observer C mentioned that the restaurant prepared special menu and tableware for children. And different from the regular guest, children could

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21 pay for half price if they order half portion of the menu items. As for the elderly and disabled guest, wheel chairs were supplied. As a whole, when the special guest is coming, they can enjoy the service first and the staff is attentive to serve for them.

4.2.3 The approach of improving customer satisfaction

Depending on the results of the interview, there are many approaches to improve the customer

satisfaction in the Grand Brasserie. The case companies focus on dealing with the guests’ comments and complaints in order to make improvements. The respondent A presented that they have a very high level of service and high ranking on Tripadvisor. In order to maintain these aspects, it is extremely important to be consistent in service delivery.

‘Waldorf Astoria Shanghai has a very high level of service. Number one in China and high ranking on Tripadvisor and is well known for its engaging team members with warm and friendly service. To maintain this reputation it is very important to be consistent in service delivery; if standards are not met during either very busy periods or very quiet periods, team members have less to do and are not focused. This reflects in overall service levels’. (Respondent A, personal communication, May 10, 2014)

As for respondent B, they conduct many steps in order to enhance customer satisfaction. At first, they would like to divide customer satisfaction into positive and negative. For the positive information, they keep up and share the good news with team members together in order to motivate them to move to another step. And for the negative information they would like to listen to the guest who they are not satisfied; emphasize their needs; apologize for the inconvenience caused; and react to guests’ needs.

‘When we receive the guest satisfaction, we will divide into two parts, one is positive, another is negative. For positive information, we will keep up and share the good news with our team members together in order to motivate them to move to another step. And for negative information we will listen to guest from which part that they are not satisfied; empathize their needs; apologize for the inconvenience caused; and react, according to guest needs, what we can do the best’. (Respondent B, personal communication, April 25, 2014)

As for respondent C, they improve customer satisfaction by communicating comments and complaints continually with team members in order to ensure mutual cognition, effective teamwork and high morale. Moreover, they carry out daily briefings to assign tasks and inspect the service standards of the staff. In addition, both of the respondent C and D would like to organize training sessions to develop the skills and knowledge of the staff.

‘We communicate the comments and complaints positively with team members to ensure mutual cognition, effective teamwork and high morale. We conduct daily briefings for staffs on subjects such as:

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22 Menu details and knowledge; daily menu and specials; functions or activities within the Hotel that need promotion; their service station assignments; check their personnel appearance. All of these are prepared for providing high quality service. We require every staff join in the training sessions and develop their job knowledge after these sessions’. (Respondent C, personal communication, May 11, 2014)

Different from the other restaurants, respondent E mentioned that they would like to capture guests’ values in order to improve the customer satisfaction.

4.3 Exploratory analysis

The theoretical background and empirical studies have indicated that customer satisfaction is quite relevant to the service standards of the staff. The results of interviews are in line with the theoretical findings by Han & Ryu (2012) that the performance of the face-to-face services is an influential factor on the customer satisfaction, trust and the behavioral intentions, such as the word of mouth, repeat repurchasing and loyalty. Restaurants deliver high quality service consistently in order to enhance the restaurants’ reputation. It is corresponded with the respondent A who claimed that the consistency of service delivery is extremely important to maintain its reputation.

‘To maintain this reputation it is very important to be consistent in service delivery; if standards are not met during either very busy periods or very quiet periods, team members have less to do and are not focused. This reflect in overall service levels’.(Respondent A, personal communication, May 10, 2014)

Secondly, it is very important to capture customers’ values. As the respondent B revealed, they have many steps to improve customer satisfaction. At first, they analyze the comments and complaints, which are collected in the process of serving or on the Internet. Then, they would like to stress customers’ needs. After that, the modified service standards will be delivered to customers.

‘When we receive the guest satisfaction, we will divide into two parts, one is positive, another is negative. For positive information, we will keep up and share the good news with our team members together in order to motivate them to move to another step. And for negative information we will listen to guest from which part that they are not satisfied; empathize their needs; apologize for the inconvenience caused; and react, according to guest needs, what we can do the best’. (Respondent B, personal communication, April 25, 2014)

The interview results have revealed that the customer satisfaction can be improved by focusing on the customers’ values. However, it is necessary to enhance the service standards of the staff in order to meet customers’ values.

Service standards and restaurant revenue

Thesis Project

Service standards and restaurant revenue

Through the concept of customer satisfaction

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