The role of Customer Service in building a loyal customer base for a fast-food franchisee : case Himu Oy

Abstract

The purpose of this thesis is to identify the most important factors available to a franchisee for nurturing a loyal customer base for their specific branch belonging to a particular fast-food brand.

Literature review, interview of one such franchise owner and empirical observations through practical experience point out the fact that a particular franchisee depends on the success of the brand as a whole to passively affect his/her revenue stream. A franchisee makes profits from the sales volume produced in his/her specific unit of the restaurant chain and therefore, boosting sales of their particular branch is the key to boost their profitability.

But a franchisee’s freedom of taking desirable actions to attain desired outcomes is very limited by agreements and contracts with the mother company. Hence, the only level of freedom they have is in the aspect of customer service and customer relationships.

This thesis is based on the theoretical foundation that customer service has a strong influence on customer retention and customer advocacy, and this in turn has a beneficial impact on profitability (Allen 2004). Previous quantitative studies that have taken place in regards to the fast-food industry in Indonesia, Pakistan, South Africa and USA which have demonstrated that there is a positive effect of customer service on customer satisfaction and customer retention- which in turn affects profitability in a positive manner (Sulu, Suryaputra & G 2020; Roberts-Lombard 2009; Qin & Prybutok 2009; Ryu, Lee and Gon Kim 2012).

This thesis tries to expand on these bases and examine the relationship between customer service, customer satisfaction, and retention pertaining to the fast-food consumers in Finland. This research is very small in scale and only examines data particular to the Pasila branch of fast-food brand Chitir Chicken in the capital city of Helsinki. Regardless, findings from this research work conforms to the previous studies in the literature review and customers’ willingness to repeat purchase and recommend to others indeed is influenced by level of customer service even in a fast-food restaurant.

Offering higher level of customer service and maintaining excellent customer relations can be an important factor for a franchisee to nurture a loyal customer base who will revisit and recommend their specific branch even though they are only a part of a bigger brand chain. This can help new franchisees to reach break-even point even faster than the normal scenarios.