Understanding customer loyalty in the coffee shop industry (A survey in Jakarta, Indonesia)

Abstract

PurposeThe 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.Design/methodology/approachThe sample size used for this study was 384 customers from 16 most comfortable coffee shops in Jakarta based on Nibble's survey. 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.FindingsThe 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.Originality/valueThis 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.