The Effect of Product Quality and Service Quality on Loyalty with Customer Satisfaction as A Mediation Variable (A Study at Wizzmie Jimbaran Restaurant)

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FORMOSA NEWS - Badung - Quality Food and Excellent Service Drive Restaurant Customer Loyalty, New Study Finds. Customer satisfaction plays a critical bridging role in turning good food and attentive service into long-term customer loyalty in the competitive restaurant industry. This key insight comes from a study conducted by Nelson Pally, a researcher at Universitas Triatma Mulya in Bali, Indonesia. Published in 2026 in the Asian Journal of Management Analytics, the study reveals that while high product quality and superior service quality both directly encourage customers to return, their impact is significantly amplified when customers feel genuinely satisfied with their overall dining experience. The findings offer actionable strategies for restaurant managers trying to survive in a crowded post-pandemic culinary market.

The culinary sector in Indonesia and across Southeast Asia has experienced rapid expansion, leading to fierce market competition among food service businesses. In such a crowded environment, retaining existing customers is far more cost-effective than acquiring new ones, as loyal patrons generate recurring revenue and promote brands through positive word-of-mouth recommendations. However, fast-growing restaurant chains frequently struggle with operational bottlenecks, such as inconsistent food taste during peak hours or slow customer service. Understanding how product quality and service quality interact to build long-term brand loyalty is therefore essential for business sustainability.

To investigate these customer dynamics, Nelson Pally designed an associative quantitative study focusing on Wizzmie Jimbaran, a popular noodle restaurant located in Badung Regency, Bali. The researcher gathered primary data through structured questionnaires distributed to 95 restaurant customers selected via purposive sampling. The collected data were evaluated using Structural Equation Modeling with Partial Least Squares (SEM-PLS). This analytical method allowed the researcher to test both direct relationships among variables and the indirect mediating effects of customer satisfaction on customer loyalty.

The study produced several notable findings regarding consumer behavior in the restaurant industry:

• Direct Impact of Product Quality: Product quality—measured through taste, food consistency, and presentation exerts a statistically significant positive effect on both customer satisfaction ($\beta = 0.359$) and customer loyalty ($\beta = 0.302$).
  
• Strong Influence of Service Quality: Service quality, which encompasses staff responsiveness, friendliness, and speed, demonstrated an even stronger positive influence on customer satisfaction ($\beta = 0.542$) and direct loyalty ($\beta = 0.368$).
  
• Crucial Mediating Role: Customer satisfaction directly boosts loyalty ($\beta = 0.338$) and functions as a vital mediating bridge. High product and service quality only translate into maximum customer retention when they successfully create a satisfying overall experience.
  
• High Predictive Accuracy: Together, product quality and service quality explain 83.6 percent of the variance in customer loyalty ($R^2 = 0.836$), indicating an exceptionally strong predictive framework.
  

The real-world implications of this research extend across restaurant operations, hospitality management, and small business strategy. Restaurant operators often overemphasize menu development while neglecting front-of-house service efficiency. Nelson Pally emphasizes that great food alone cannot overcome poor service. "Increasing customer loyalty depends not only on product quality but equally on the quality of service provided to customers, with customer satisfaction acting as the essential engine that drives repeat visits," noted Nelson Pally from Universitas Triatma Mulya. For business owners, policymakers, and marketing professionals, these findings emphasize the need for balanced operational investment. Restaurant management must implement strict kitchen standardization to ensure dish consistency, while simultaneously training service personnel in speed, empathy, and complaint resolution. By treating customer satisfaction as a central strategic objective rather than an afterthought, food service enterprises can build resilient, loyal customer bases.

Author Profile
Nelson Pally, S.E., M.M., is a lecturer and academic researcher at Universitas Triatma Mulya, located in Bali, Indonesia. His primary areas of research interest include marketing management, consumer behavior analysis, and service operations strategy within the hospitality and culinary sectors.

Source

Pally, N. (2026). The Effect of Product Quality and Service Quality on Loyalty with Customer Satisfaction as A Mediation Variable (A Study at Wizzmie Jimbaran Restaurant). Asian Journal of Management Analytics (AJMA), Vol. 5 No. (3), Hal. 659-676.
DOI: https://doi.org/10.55927/ajma.v5i3.16739
URL:  https://journal.formosapublisher.org/index.php/ajma