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Research Article | Volume 4 Issue 1 (Jan-June, 2023) | Pages 1 - 7
Does Service Quality and Store Atmosphere Influence Customer Loyalty Insight?
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1
Faculty of Economics and Business, Universitas Tanjungpura, Pontianak, Indonesia
Under a Creative Commons license
Open Access
Received
Oct. 3, 2022
Revised
Nov. 9, 2022
Accepted
Dec. 19, 2022
Published
Jan. 10, 2023
Abstract

In Indonesia, the presence of a coffee shop as a place to sip coffee has been ingrained in the culture. Previously, people simply drank coffee in ordinary coffee shops. Currently, coffee drinking has become more luxurious. Fore Coffee is one of the coffee shops many people currently visit. Entrepreneurs are becoming more interested in opening a coffee shop as the number of coffee lovers rises from year to year; consequently, competition is intensifying in this industry. In facing business competition, efforts are needed to attract and retain customers. Fore Coffee presents a futuristic location concept and offers innovative services to consumers. This study aims to determine the magnitude of service quality and store atmosphere for customer loyalty mediated by customer satisfaction at Fore Coffee Indonesia. The hypotheses were tested with a causal design approach. The test tool to see the relationship of independent, dependent, and mediation variables using Structural Equation Modeling (SEM) with the AMOS 24 statistical tool. The data collection method used a questionnaire, with the number of samples used in this study were 200 respondents.

Keywords
INTRODUCTION

The food and beverage business industry in Indonesia is currently in great demand. The coffee shop industry is one of the culinary enterprises that is currently thriving in Indonesia. It is defined by the growth of coffee shops employing a variety of unique styles and concepts to catch consumers' attention [1]. In addition to the advantageous aspects of this coffee shop business, the lifestyle shift of people who have begun to enjoy coffee outside the home is another element that attracts entrepreneurs to this industry. Besides efficiency, It is also utilized as a technique of reviving relationships with family, relatives, and coworkers [2-3].

 

According to data from the International Coffee Organization (ICO) Indonesia (2017), Indonesia achieved the fourth position in coffee production. The International Coffee Organization (ICO) noted that Indonesia's coffee consumption (2016/2017) reached 4.67 million 60kg/lb (60kg) packaging, ranking sixth in the world in terms of coffee consumption, just behind Russia. Meanwhile, the world's largest coffee consumption is in European Union countries, with consumption of over 42.6 million lb (60kg). In addition, the results of TOFFIN's research with MIX MarComm Magazine revealed that the number of Coffee Shops in Indonesia in August 2019 reached more than 2,950 outlets. That figure has almost tripled or increased by about 1,950 outlets from 2016, which was only about 1000 outlets. It occurs due to an increase in daily coffee consumption among adolescents aged 18-24 (National Coffee Association United States, 2011). One of the famous coffee shops and already has branches in several cities in Indonesia is Fore Coffee.

 

Fore is a modern coffee shop that was founded in 2018. Fore Coffee has a concept that aims to change the lifestyle to be more eco-friendly for its consumers by making coffee packaging that can be reused without straws. The name Fore Coffee itself is inspired by the word Forest, meaning to grow quickly, strongly, tall, and support everything around. Fore coffee is recorded to have spread in 30 cities in Indonesia. This rise demonstrates that Fore coffee has distinct advantages in the eyes of consumers for generating consumer pleasure and loyalty. Furthermore, Fore Coffee has opened 42 new outlets in a number of metropolitan cities, such as Denpasar, Palembang, Yogyakarta, Malang, and Batam. As of February 2022, Fore Coffee is recorded to have 110 outlets. Fore Coffee's number of outlets has increased significantly. Initially, only existed in four cities in the beginning of 2021; there are now 18 cities.

 

Consumers are generally satisfied with a brand that provides the finest quality, performance, and innovation. Competitiveness in the food-and-beverage industry is mostly determined by the quality of service. Service quality is the main key in shaping consumer satisfaction and loyalty [4]. Consumers who feel comfortable using a company's products will tend to repurchase and share experiences with other consumers to buy the product [5]. The quality of provided services will cause individual perceptions of time and energy related to consumer loyalty. John and Shin [6] said that loyal consumers are intangible assets that are very valuable for a business. A loyal consumer will create a long-term and positive relationship between the product provider and the buyer that can increase sale.

 

Research conducted by Dhisasmito, P.P., and Kumar, S. [7] found that the store atmosphere is not the primary reason customers are satisfied. Hence, a nice environment does not guarantee customer satisfaction. The result of this study is different from the research [8]. They conducted a café study in Surabaya and found that customer satisfaction is significantly influenced by the store atmosphere because a pleasant atmosphere can encourage customer satisfaction. The results align with research conducted by Hallowell [9], Boohene and Agyapong [10] argue that satisfaction positively affects loyalty. Similarly, Darsono and Wellyan [11] asserted that satisfaction has a positive relationship with loyalty, observing that an increase in satisfaction does not always result in a proportional rise in loyalty. But there are differences of opinion on this point. The relationship between customer satisfaction with loyalty is not significant. Strauss and Neugaus suggest that several customers expressing satisfaction are still changing brands. Some dissatisfied customers, however, did not switch brands. With these differences of opinion, the quality of service, store atmosphere, and customer satisfaction need further investigation to determine their contribution to building customer loyalty.

 

Literature Review: Service Quality and Customer Satisfaction

[12] stated that improved service quality can increase customer satisfaction. Moreover, Mensah and Mensah [13] found that in the restaurant industry, customer satisfaction is obtained when the perceived quality of service exceeds expectations. This was suggested by [14-16] that there is sufficient empirical evidence demonstrating that service quality has a substantial beneficial effect on customer satisfaction, including in the restaurant industry. Therefore, based on empirical evidence, this study suggests that:

 

  • H1: There is a positive relationship between service quality and customer satisfaction

 

Store Atmosphere and Customer Satisfaction

Being a different coffee shop must create an adequate store atmosphere that will satisfy consumers. Lee et al. [17] found that store atmosphere positively affects customer satisfaction because higher customer satisfaction can be achieved with a better store atmosphere in coffee shops in the US. In the context of the restaurant industry, the atmosphere is considered a core attribute [18-19]. Furthermore, some literature supports that the restaurant's atmosphere positively influences customer satisfaction [20-22]. Therefore, based on empirical evidence, this study posits that:

 

  • H2: There is a positive relationship between store atmosphere and customer satisfaction

 

Customer Satisfaction and Customer Loyalty

In the fast-food restaurant industry in Spain, [23] revealed a significant positive influence of customer satisfaction in building loyalty. Bridson et al. [24] found customer satisfaction positively affects loyalty, including commitment which is an assurance or binding of the individual to their store choices. It was further revealed that it is impossible to gain customer loyalty without satisfied customers in the banking industry [25]. Therefore, based on empirical evidence, this study suggests that:

 

H3: There is a positive relationship between customer satisfaction and customer loyalty

 

Service Quality on Customer Loyalty

Service quality is considered one of the main determinants of customer loyalty [26]. Furthermore, Zangmo et al., [27] said that customer loyalty is the feeling and attitudes of customers given by a company or service provider that will build a perception of service quality. Furthermore, some literature also states that the quality of service positively affects customer loyalty [28-29] Therefore, based on empirical evidence, this study suggests that:

 

H4: There is a positive relationship between service quality and customer loyalty

 

Store Atmosphere on Customer Loyalty

Store Atmosphere reflects a combination of physical characteristics of the store, such as architecture, layout, signs, appearance, lighting, color, temperature, sound, and smell that are created and depicted in the minds of customers [30-31]. Based on previous research conducted by Shin, Hwang, Lee, and Cho [32] examined the impact of coffee shop quality and atmosphere on customer satisfaction and loyalty at 482 franchise coffee shops in Korea. The results of their research show that the store atmosphere is one of the variables that affect customer loyalty. Thus it can be concluded that the Store Atmosphere has several important elements that can make the atmosphere of the company different and unique. Therefore, based on empirical evidence, this study posits that:

 

H5: There is a positive relationship between store atmosphere and customer loyalty

 

Customer Satisfaction Mediates Service Quality on Customer Loyalty

Previous studies have suggested that customer satisfaction mediates service quality and customer loyalty relationships. In their study, Akbar and Parvez [33] found that customer satisfaction becomes an important mediator between perceived service quality and customer loyalty. Kheng et al. [34] in their research on banks in Malaysia found that satisfaction has a mediating effect on service quality and loyalty relationships in the banking industry. Other studies reinforce this belief. For example, Santouridis and Trivellas [35] found a positive correlation between service quality and customer satisfaction that positively affects customer loyalty. Hadi et al. [36] posit that customer satisfaction fully mediates the quality of service and the relationship of customer loyalty. Similarly, Turel and Serenko [37] feel the quality of service is the determinant of customer satisfaction; ultimately, customer satisfaction leads to customer loyalty. Therefore, we hypothesize:

 

  • H6: Customer Satisfaction positively mediates between Service Quality and Customer Loyalty

 

Customer Satisfaction Mediates the Relationship between Store Atmosphere and Customer Loyalty

Based on research conducted by Dhurup et al. [38] on the relationship between restaurant image attributes with customer satisfaction and loyalty, an impressive atmosphere can increase the chances of word of mouth and turn new consumers into loyal consumers. In addition, Customers who feel comfortable with the atmosphere of the store created make them feel satisfied. The customer's satisfaction will affect loyalty. In the research conducted by Alfin and Nurdin [39] proved that the atmosphere of the store has a positive effect on customer loyalty through customer satisfaction. In line with Listiono and Sugiarto [8] research, store atmosphere variable positively affects customer loyalty through customer satisfaction. Therefore, we hypothesize:

 

  • H7: Customer Satisfaction positively mediates between store atmosphere and customer loyalty

MATERIALS AND METHODS

Measurements

This study utilized questionnaires that were deemed to fit the predetermined criteria. The questionnaire used a 5-point Likert scale (1 = strongly disagree, 5 = strongly agree). A four-item scale was adapted from [40-41] to measure the quality of service. Store Atmosphere was measured using a four-item scale adapted from Lee et al. [17] and Hanaysha [42]. Customer satisfaction was measured using a four-item scale adapted from Han and Ryu [43]. Loyalty was measured using a five-item scale adopted from Keshavarz et al. [44] and Lee et al. [17].

 

Sampling and Data Collection

The number of samples collected and studied in this study was 200 respondents. The sample involved is Fore Coffee Indonesia Consumers. Sampling locations were distributed in various cities in Indonesia such as Jakarta, Bandung, Medan, Surabaya, Semarang, Samarinda, Banjarmasin, Makassar, Pontianak, and various other parts of Indonesia through online questionnaires.

 

Data Analysis

This research used Structural Equation Modeling (SEM) with AMOS 24 statistical tools to analyze and evaluate measurement and structural models from the research constructs. The fit test model will be assessed based on goodness of fit index parameters such as chi-square (χ2), CMIN/DF, Root Mean Square Error of Approximation (RMSEA), root mean squared residual (RMR), goodness of fit index (GFI), Tucker Lewis Index (TLI), Incremental Fit Index (IFI), Comparative Fit Index (CFI), Normed Fit Index (NFI). The validity evaluation relied on the value of the standardized loading factor (SLF), which value must be≥0.50, and the reliability constructs relied on the results of tabulation of construct reliability (CR) and average variance extracted (AVE) values. Furthermore, the SEM analysis carried out was the analysis of structural models to assess the research hypotheses that have been built whether they are accepted or rejected. The SEM analysis displayed the t-count value on each coefficient. The hypothesis can be said to have a causal relationship if the t-count value≥t table (1.96) with a significant degree of α is 0.05.

RESULTS

Respondent Characteristics

This section describes the profile of Fore Coffee Indonesia consumers who are respondents to the study. The profile includes gender, age, domicile, occupation, intensity, and visiting expenses.

 

Measurement and Structural Models

The results of goodness of fit, validity, and reliability tests can be described as follow.

 

Based on Table 2, the Standardized Loading Factor (SLF) of all indicators in the full model had a value above 0.50. It indicated that all indicators on the five variables were declared valid and capable of measuring the full model construct. Furthermore, the reliability test also showed the corresponding results. The full model construct was declared reliable and capable of carrying out measurements consistently. It can be seen from the Average Variance Extracted (AVE), which obtained a value above 0.50 and the Construct Reliability (CR), which gained a value above 0.70.

 

Based on the Goodness of Fit (GOF) measurement results in Table 3, it can be stated that the suitability requirements of the model were acceptable. The data illustrate that there were six measurements categorized as a good fit. The values of CMIN/DF = 2.269 (≤3.00) and RMSEA = 0.080 (≤0.08) were declared fit. Likewise, the values of IFI = 0.918, TLI = 0.901, and CFI = 0.918 were all above 0.90, so it can be concluded that the model was fit and accepted.

 

Hypotheses Testing

The test results of the causal relationship between variables in the present research construct are as follows.


Table 1: Characteristics of Respondents

CategoryItemF%
Gender

Man

Woman

Total

66

134

200

33

67

100

Age

17-21

22-26

27-30

30 Years and above

Total

88

64

28

20

200

44

32

14

10

100

Domicile

Jakarta

Pontianak

Bandung

Surabaya

Medan

Semarang

Makassar

Denpasar

Manado

Palembang

Total

20

80

4

8

22

16

8

20

8

14

200

10

40

2

4

11

8

4

10

4

7

100

Work

Students

PNS

Private

Entrepreneurial

Total

98

28

20

54

200

49

14

10

27

100

How many times have you visited Fore Coffee

1 time

2 times

3 times

4 times

5 times

Total

30

82

64

10

14

200

15

41

32

5

7

100

The average cost incurred when visiting Fore Coffee

<IDR 100,000

IDR 100,000 - IDR 200,000

IDR 200,000 - IDR 300,000

>IDR 300,000

Total

122

30

32

16

200

61

15

16

8

100

 

Table 2: Measurement Model Results

ItemsSLFCRAND
Service QualityThe waiter served the order exactly the same as I had ordered0,6740,9090,502
The waiter provides fast and precise service0,718
The waiter is always willing to help me0,712
The waitress made me feel comfortable dealing with them0,720
Store AtmosphereThis coffee shop has a cozy atmosphere0,7110,8980,502
The atmosphere in this coffee shop is familiar to me0,623
Convenient to spend my time in this coffee shop0,752
This coffee shop relaxes me0,741
Customer SatisfactionI love visiting this coffee shop0,8300,7650,659
In this coffee shop, I really enjoy myself0,862
The overall feeling that I get from this coffee shop makes me in a good mood0,784
Overall, I am satisfied with this coffee shop0,768
Customer LoyaltyI will say positive things about the coffee shop to others0,6950,9240,533
I would recommend this coffee shop to anyone who asks me for advice0,753
I would encourage my friends or relatives to do business with this coffee shop0,753
 I am more likely to subscribe to this coffee shop in the future0,733  
 I will still buy from this coffee shop even if they increase the price of the service0,713  

 

Table 3: Goodness of Fit Index

Goodness of Fit IndexCut off ValueResults
CMIN/DF≤3.002.269
RMSEA≤0.080.080
IFI≥0.900.918
TLI≥0.900.901
CFI≥0.900.918

 

Table 4: Hypothesis Testing

Parameters  EstimateS.E.C.R.pLabel
CS<---SQ0.3810.1352.830.005par_14
CS<---HIS0.4750.1114.301***par_15
CL<---HIS0.6070.115.526***par_16
CL<---SQ0.2520.1122.2560.024par_17
CL<---CS0.2610.0763.448***par_18


 

Table 5: Sobel Test - Significance of Mediation

ParametersSobel test statisticTwo- tailed probability
Service Quality --> Customer Satisfaction --> Customer Loyalty2.1800.029
Store Atmosphere --> Customer Satisfaction --> Customer Loyalty2.6780.007


 

 

Figure 1: Full Model Structural Test

 

Based on Table 4, the t-score value of the effect of Service Quality on Customer Satisfaction is 2,830, higher than the t-table value (1.96). Likewise, the p-value of 0.005; is smaller than 0.05 (α = 0.05). This result relates to the first hypothesis, where Service Quality positively and significantly affects Customer Satisfaction. For the second hypothesis, the t-score value of Store Atmosphere influence on Customer Satisfaction is 4,301, and the p-value is less than 0.001 marked with a three-star emblem. It proves that Store Atmosphere has a positive and significant effect on Customer Satisfaction. For the third hypothesis, the t-score value of the effect of Customer Satisfaction on Customer Loyalty is 3,448, and the p-value is less than 0.001 marked with a three-star emblem. It proves that Customer Satisfaction has a positive and significant effect on Customer Loyalty. For the fourth hypothesis, the t-score value of the effect of Service Quality on Customer Loyalty is 2,256. Likewise, the p-value is 0.024; smaller than 0.05 (α = 0.05). This result is in accordance with the hypothesis that Service Quality has a positive and significant effect on Customer Loyalty. For the fifth hypothesis, the t-score value of Store Atmosphere effect on Customer Loyalty is 5,526, and the p-value is less than 0.001 marked with a three-star symbol, indicating that Store Atmosphere has a positive and significant effect on Customer Loyalty.

 

The consumer satisfaction can influence consumers' decisions to make repeated purchases in the future. The results of this study are in line with previous studies which stated that service quality has a positive relationship with customer satisfaction [45-48]. Store atmosphere has a positive and significant influence on customer satisfaction. This study's results align with previous studies [26], which states that the quality of service is considered one of the main determinants of customer loyalty. In addition, the study's results support the opinion of Delgado et al. [49], interpreting the concept of customer loyalty that when customers receive a good quality of service, it will increase their loyalty to the company. It is in line with research conducted by [50] which states that the store atmosphere has a positive and significant effect on customer loyalty.

 

Customer satisfaction is found to have a positive and significant influence on customer loyalty. In line with previous research [23], customer loyalty can be improved by increasing their satisfaction. Satisfaction is a key indicator in winning customer loyalty to a particular brand in the long run [51]. In the business industry, we as marketers must first satisfy customers to gain loyalty from these customers [25].

 

Service quality has a positive and significant influence on customer loyalty. It is also in line with Kotler [52], who explained that good service would create a good relationship with customers and become the basis for consumers to decide to make repurchases in the future. Store Atmosphere has a positive and significant influence on customer loyalty. Kotler [53] stated that satisfaction is a person's feeling of pleasure or disappointment that comes from a comparison between the impression of a product's performance (result) and expectations.

 

Furthermore, the indirect impacts of the mediating variables are presented in Table 5, which contains the Sobel test results.

 

Based on the results of the Sobel test in table 5, the Sobel test value was obtained at 2.180, and the p-value was 0.029. These results show that the statistical value of the Sobel test is higher than the t-table (1.96). Likewise, the obtained p-value is less than 0.05 (α = 0.05). It shows that there is a significant indirect influence of service quality on customer loyalty through customer satisfaction. Corresponding results were also obtained in store atmosphere, where the statistical value of the Sobel test was 2.678 higher than 1.96, and the p-value was 0.0 07, smaller than 0.05 (α = 0.05). Thus, there is a significant indirect influence of the store atmosphere on customer loyalty through customer satisfaction.

CONCLUSION

This study discovered that service quality had a favorable and substantial effect on customer satisfaction at Fore Coffee. Quality service is evidenced by the congruence between what consumers receive and what they expect [54]. Fore coffee shows that the quality of service provided is good through fast and precise service, communication convenience, and the suitability of presenting the ordered product. This study's results align with previous research that showed that store atmosphere is one of the predictors of customer satisfaction and repurchase intention [55]. It can be concluded that a good café atmosphere will encourage customers to make repeat purchases.

 

This study demonstrates that store atmosphere is crucial to customers. A pleasant environment will make clients feel at ease and encourage them to make repeat purchases, fostering customer loyalty. Customer satisfaction has a positive and significant influence in mediating the relationship between service quality and customer loyalty. The results of the study support similar findings of other researchers [36]. which posits that customer satisfaction fully mediates the quality of service and the relationship of customer loyalty. Ultimately, customer satisfaction creates loyalty to companies that provide satisfactory quality. It provides a direction where companies can target their marketing attention which can help in their efforts to serve, satisfy, retain and attract more loyal customers. Customer satisfaction has a positive and significant influence in mediating the relationship between store atmosphere and customer loyalty in line with previous research [38] Alfin and Nurdin, [39,8] who stated that the store atmosphere variable has a positive effect on customer loyalty mediated by customer satisfaction. Those clients who are comfortable with the store's atmosphere will be satisfied. This contentment will result in increased loyalty.

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Does Service Quality and Store Atmosphere Influence Customer Loyalty Insight? © 2026 by Rizki Tito Sanjaya, Anwar Azazi, Bintoro Bagus Purmono, Titik Rosnani, Erna Listiana licensed under CC BY-NC-ND 4.0
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