Effect of restaurant reward programs on customers’ loyalty: evidence from Iran

Abstract

Purpose The purpose of this paper is to examine how the moderating effect of restaurant type (fast food versus casual dining) affects the Generation Y’s customers’ reaction to reward time redemption (immediate versus delayed) and reward type (economic versus social). Design/methodology/approach A 2 × 2 × 2 full-factorial, randomized, between-subject experimental design is conducted to test the research framework. The treatment groups are different from each other by manipulating reward type, reward timing and restaurant type through eight different scenario exposures. Findings The findings of the study reveal that the loyalty is significantly higher for immediate than delayed rewards in the both examined restaurant segments. In the casual dining restaurant segment, the effect of rewards increases for social rewards more than economic ones. On the other hand, for fast food restaurant context, there is no difference in the effect of reward type, whether they are economic or social. Research limitations/implications Due to the limitations of fine dining restaurants in Iran, the present study consists of only two types of restaurants (fast food vs casual dining). Originality/value This study aims to contribute towards the understanding how restaurant type (fast food versus casual dining) affects the impact of restaurant reward programs on the loyalty of Generation Y’s customers.