IMPACT OF PERCEIVED SERVICE QUALITY ON CUSTOMER LOYALTY: EVIDENCE FROM CASUAL DINING RESTAURANTS OF PESHAWAR

Abstract

A growing trend of dining out in recent years has giving birth to a multitude of Casual Dining
restaurants in Pakistan. The dining experience of every customer is unalike and evaluated differently.
Such a variability of experience renders the course of service purchase and delivery very difficult for
both the customer and seller. This research investigates the effect of perceived service quality on
customer loyalty in casual dining restaurants of Peshawar. Using a validated self-administered
questionnaire, quantitative data was collected from a sample of 400 casual restaurant diners with a
response rate of 79.50%. Customers were asked to evaluate the service quality on the basis of a
modified SERVQUAL scale. Tangibility, Reliability, Responsiveness and Assurance were taken into
account and their relationship with customer loyalty was measured. Results showed a strong positive
relationship between service quality dimensions and customer loyalty. Assurance was strongly
related to loyalty while tangibility had the weakest relationship with loyalty. Basing on the results, it is
therefore, recommended to the managers of casual dining restaurants to formulate strategies that
shall instill trust in their customers to gain their loyalty and retentiveness.