Loyalty in Coffee Shop, Indonesia

The purpose of this study is to identify the drivers of loyalty model in the coffee shop industry in Indonesia based on service quality, store atmosphere and price fairness mediated by customer satisfaction. This is the first study integrating service quality, store atmosphere, price fairness and customer satisfaction to study the customer loyalty model in the coffee shop industry in Jakarta. The hypotheses are: Does service quality influence customer satisfaction? Does store atmosphere influence customer satisfaction? Does price fairness influence customer satisfaction? Does customer satisfaction influence customer loyalty? To collect the data, the instrument used in this study as the primary data was a survey divided into three sections: the introduction of research, respondent demographic (including gender, age, education, occupation and monthly expenditure) and the item statements to measure five constructs with 37 item statements. A 7-point Likert scale (1–strongly disagree to 7–strongly agree) was used to measure the constructs. Item statements for service quality were adjusted from Keshavarz et al. (2016) and Alhkami and Alarussi (2016), divided into 5 dimensions which are tangible with 5 item statements, reliability with 4 item statements, responsiveness with 3 item statements and both assurance and empathy with 3 item statements each. For store atmosphere, it was adjusted from Lee et al. (2018) and Hanaysha (2016), while price fairness, it was adjusted from Hanaysha (2016) and Jin et al. (2016) both consist of 4 item statements each. Furthermore, for satisfaction, item statements were adjusted from Lee et al. (2018) and Hanaysha (2016), and loyalty was adjusted from the questionnaire of Keshavarz et al. (2016) and Lee et al. (2018). The sample size used for this study was 384 customers from 16 most comfortable coffee shops in Jakarta based on Nibble’s survey in 2019. Confirmatory factor analysis was employed to confirm the attributes of each factor and to assess the validity and reliability, average variance extracted and composite reliability was applied. Further hypothesis testing was performed using structural equation modeling. The result shows that customer loyalty is affected by service quality – comprising 5 subdimensions: tangible, reliability, responsiveness, assurance and empathy – and price fairness mediated by customer satisfaction. It was found that service quality plays a significant role in the coffee shop industry in Indonesia. However, the store atmosphere was found rejected. This study was only conducted at 16 coffee shops out of 1,500 existing coffee shops in Jakarta area. Therefore, it is difficult to generalize the study in predicting customer loyalty to all types of coffee shop in Jakarta. Future study is suggested to compare with RSQS by Dabholkar et al. (1996) and DINESERV by Stevens et al. (1995). Cultural differences need to be added for further analysis