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CHAPTER I INTRODUCTION 1.1 Background Dunkin' Donuts Started CHAPTER I INTRODUCTION 1.1 Background Dunkin' Donuts started its business in Indonesia with its first store built in 1985 at Jalan Hayam Wuruk, Jakarta. Followed by the arrival of new competitors of other national and multinational donut companies that enter Indonesian market, there are Country Style Donuts from Canada, Donuts Xpress from Australia, Krispy Kreme from United States, Mister Donut from Japan, J.Co Donuts and many more. Dunkin' Donuts successfully expand its market network in Indonesia and open more than 200 stores which spread in various major cities of Indonesia, such as Jakarta, Tangerang, Bogor, Bekasi, Depok, Surabaya, Bandung, Bali, Medan, Yogyakarta, Makassar, etc (Dunkin’ Donuts Indonesia, 2014). Meeting the challenges from multinational and local competitor who dominate donut market in Indonesia such as J.Co Donuts and evolving coffee shop business sector is not easy. According to coffee consultant, Adi Taroepratjeka, the increasing standard of coffee drinking in the community is one of the causes of the increasing number of coffee shops in Indonesia. Starting from just hanging out and looking for a free internet network in the coffee shop, but now the coffee itself is also favored by teenagers to adulthood (Kharina Trianand, 2014). Data from the International Coffee Organization (ICO) two years ago noted that the average growth of coffee consumption in Indonesia was two percent 1 higher than the growth in the world. If the world grows four percent in 2012, it turns out that growth in Indonesia reaches six percent (Kharina Trianand, 2014). Table 1.1 Table of Growth of Coffee Consumption in Indonesia and All Exporting Countries Survey of Growth in Growth in Growth in 2012 2013 2014-2018 Domestic consumption by 6.35 % 6.84 % 8.47 % Indonesia Domestic consumption by all 3.11 % 1.47 % 6.85 % exporting countries Source: International Coffee Organization, 2011. No wonder now there are many coffee shops, especially in big cities in Indonesia. This trend can threaten the existence of Dunkin' Donuts store and attract Dunkin' Donuts' customers because coffee shops also offers good store ambience and facilities to attract its customers. This can be seen from the comparison of the number of Dunkin’ Donuts outlets with the number of competing outlets. Table 1.2 Table of Donuts Outlets Opened in Indonesia Store Name Year Openend in Number of Outlets in Indonesia Indonesia Dunkin’ Donuts 1985 200 J.CO Donuts 2005 190 Krispy Kreme 2006 22 Source: Nuran Wibisono, 2016. 2 From the survey that was previously done by Nuran Wibisono regarding the quality of food and service between J.CO Donuts and Dunkin’ Donuts, the survey results show that many people are more satisfied with the quality of food and services served by J.CO Donuts rather than Dunkin’ Donuts. Survey results are listed in the table below. Table 1.3 Table of Results of J.CO Vs Dunkin’ Donuts Service Quality Surveys Survey of J.CO Dunkin’ Donuts Quality of Donuts 63 % 37 % Quality of Beverages 63 % 37 % Quality of Service 60 % 40 % Visiting with friends 55 % 45 % Visiting with family 61 % 39 % Source: Nuran Wibisono, 2016. To survive in this competitive business, Dunkin' Donuts consistently forced to modify and innovate to meet the changing needs and preferences of various consumer targets segments. Effort that can be done is to improve the weakness and the quality of service. Not only that, atmosphere of the store that makes customers feel comfortable should be considered because it can affect consumer satisfaction. It is crucial to apprehend service quality and satisfaction towards coffee shops along with customers’ wants. The level of customer satisfaction is important indicator in determining the success or failure of a product or service market in the community where in determining the level of 3 satisfaction there are some indicators such as desire, expectations, and needs where the needs must exceed consumer expectations for consumers feel happy so they are loyal to the products and services. Therefore, information about consumer behavior becomes important to learn and needed to determine the right decisions in the development and marketing of products or services. The main purpose of this study is to analyze service quality factors based on a research. Analyzed service quality factors and store atmosphere are added as service quality factors. This report will discover how service quality and store atmosphere of Dunkin' Donuts Indondesia especially in Jakarta and Tangerang region, influence customer satisfaction and loyalty. Based on the results above, it would be able to deduce implication of right service quality strategies. 1.2 Problem Statement and Research Question The problems formulation in this research are competition among donut stores industry in Indonesia is getting tougher because national and multinational companies engaged in the donut industry open its stores in Indonesia. The increasing number of coffee shops in Indonesia which also provide facilities such as stores atmosphere and good service quality can be a threat to the existence of the Dunkin' Donuts stores and attract Dunkin' Donuts' customers. Dunkin' Donuts has to be able to compete with good service quality and good stores atmosphere, therefore the research questions are: 1. Does café service quality have positive influences on customer satisfaction of Dunkin' Donuts Gading Serpong? 2. Does café store atmosphere have positive influences on customer satisfaction of Dunkin' Donuts Gading Serpong? 4 3. Does customer satisfaction have positive influences on customer loyalty of Dunkin' Donuts Gading Serpong? 1.3 Objective Study Purpose of this research are: 1. Shows whether café service quality has positive influences on customer satisfaction of Dunkin' Donuts Gading Serpong. 2. Shows whether café store atmosphere has positive influences on customer satisfaction of Dunkin' Donuts Gading Serpong. 3. Shows whether customer satisfaction has positive influences on customer loyalty of Dunkin' Donuts Gading Serpong. 1.4 Scope of the Study Due to the large scope of research, cost, and time spent, the researcher decided to set up a research boundary whereas this research was conducted only on Dunkin' Donuts' customers throughout Dunkin' Donuts stores in Gading Serpong, Tangerang. 1.5 Benefits of Research The results of this study can be utilized by the company to plan strategies to fix and improve the ability to provide the right service quality in order to compete with other donut companies and coffee shops. Another benefit of this study is as a benchmark and reference for advanced study on the topic of this discussion. 5 1.6 Research Method In this study, the research uses quantitative method along with giving questionnaires to the customers of Dunkin' Donuts throughout Dunkin' Donuts stores in Gading Serpong, Tangerang. Moreover, this research is use individual as the unit analysis. Finally, the data that obtain from the respondent should be analyzed using Smart PLS. 1.7 Research Design To provide a more detailed description, the researcher will write this research based on 5 chapters: 1. CHAPTER I Introductions In this chapter will be explained on the background of topic selection, problem formulation, objectives to be achieved, problem limits used, benefits from this research, as well as systematic writing is described. 2. CHAPTER II Literature Review This chapter describes the theories that can be a reference in the development of a useful model for the purpose to be achieved. In addition, the research hypothesis is also included. 3. CHAPTER III Research Methodology This chapter explains about the data and research methods that will be used in this research. 6 4. CHAPTER IV Analysis of Results This chapter explains about the results obtained from data processing using the methods described in chapter three. After that, each result is analyzed further and compared with previous research. 5. CHAPTER V Conclusions and Recommendations In this chapter will be written conclusions obtained from this research and suggestions for further development of this topic. 7 .
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