Operationalizing New Service Concept in Pre-Existing Fast Food Chain Essay

Operationalizing New Service Concept in Pre-Existing Fast Food Chain of Restaurants - Essay Example Introduction 4 2. Background 5 3. Literature Review 5 4. Designing New Service Concept and Service Innovation 6 5. Research 6 6. Service Recovery Design 7 7. Recommendations 8 8. Service Strategy 10 9. Conclusion 10 10. References 12 1. Introduction Customers are significant for every business , however, for fast food companies , which offer food which are perishable, it is very important to retain customer, create customer loyalty and regulate customers to survive in the increasingly competitive environment, which has been elevated through the globalization of fast food chains. Brink and Berndt (2004) found that many companies spent a lot of their efforts, money and time to recruit new customers but a few companies took appropriate steps to retain customer and customer loyally. In 2011, the total revenue generated by Italian fast food market was $2.1 billion, which represents a negative annual rate from 2007 to 2011. The demand for fast food was high till 2007 and the market perform ance also reduced during this time period. The market volume in fast food is classed as the number of visits the customer makes to the same fast food restaurant. Fast food restaurant market can be broken down into- Take Away Quick Service restaurant Mobile Food Street The fast food restaurant at the leisure locations The fast food chains meet new competitors in the market and customer relationship is the marketing purpose which can keep customers from going to the competitors (Ramakrishnan, 2006). Customer retention is the method which helps to keep customers actively involved with the firm through optimal allocation of resources (Kotelnikov, 2006). Six economic benefits of customer retention as outlined by Brink and Berndt (2004)- It reduces the cost of customer acquisition and customer replacement. It guarantees base profits as the customers may follow the minimum spend for a time period. It promotes increased customer revenue. It reduces the overall operating costs as the compani es spread the costs over many customers. It provides easy referral to new customers from the pre-existing customers and the customer can be charged premium price as they do not wait for discounts or price reductions. 2. Background The Italian restaurant operates a chain of 26 full-service restaurants close to shopping malls and high streets. The restaurant is known for excellent service and high quality Italian cuisine. The restaurant is looking for expansion opportunities and the management wants to launch new chain which will have following features 1. Low cost food 2. Limited menu The main issue is that the new outlets may lead to poor customer experience which can tarnish the image of the well established restaurant brand. Regardless of what the service industry perceive about their service and customers, the service should function for customers properly. It should be as per the perceived notion of service by the customer, even if in case, the customers have not experienced it previously (Johnston and Clark, 2001). Through word-of-mouth customer have a perceived imagination of the type of service, and during and after the service delivery the service should meet customers’ expectations related to the duration, notion and flexibility provided. Every organisation should focus on delivering the service concept. The paper explains how service concept is the key driver in service design decision at various