Evaluating Restaurant Innovativeness - The Generation Z Perspective Across Dining Format

Restaurant innovativeness (RI) can be prolonged into two folds; the first is a supply-side view and the second is a demand-side view. Yet, many works of literature [11-16] found it to be in the first fold instead of the second fold that pointed out the term “innovation capability” or “firm innovation” or “firm innovativeness” or “innovation orientation”. However, the term itself is used interchangeably [17].

On the other hand, less literature stresses the second fold, especially for the past three decades. Only 4.61% of the literature was found investigating innovation in the context of tourism and hospitality from 1992 to 2014 from a demand-side perspective such as of customer or guest or client [18]. To be said, 59.21% of the literature was found from the supply- side such as company owners, entrepreneurs, employees, managers, and experts. For instance, recent studies have been carried out for this fold specifically in the restaurant context [1, 10, 19-22].

Moreover, it is worth mentioning the research which stream restaurant context research should more greatly investigate from the customer perspective as the demand side instead of the management perspective as the supply side [18, 23]. Nevertheless, as pointed out by Savino et al. [24], future research regards to restaurant contexts from diverse age groups is also essential. As a result, and to overcome the research gap, the current study integrates RI literature using an approach from the customer perspective in the context of the restaurant business for a specific generation cohort by integrating various RI construct which stresses technology and environment sustainability while extending to possible implementation for diverse type of restaurant premises.

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Figure 1. Newly proposed restaurant innovativeness measurement based on literature reviews

Following the categorizations of restaurant innovativeness (RI) from the various works of literature in the previous section, seven restaurant innovativeness dimensions are identified, which have interlinked one another with different terms used interchangeably. Those seven dimensions are product, technology, experiential, promotion, environmental, process, and management. However, two out of seven dimensions are excluded in this study, which is process innovativeness and management innovativeness, due to both dimensions' characteristics that accordingly should be investigated from the firms’ point of view, and not from a customer point of view as this research focus [11, 12]. This left five dimensions to remain to be further used in this study (see Figure 1).

2.1 Menu innovativeness

The first dimension of restaurant innovativeness is menu innovativeness (MI) derived from product innovativeness specifically for the food service industry in which food remains the main offering of restaurants [1]. According to Gomezelj [18] product innovativeness means “a new product or service or one that is significantly improved regarding its characteristics or intended uses”. Gagić [15] suggested that restaurant should widen their menu offerings to include dishes created with ingredients that customers consider to be healthy, for example, organic food, whole grain cereals, low-fat, low-energy, and gluten-free foods. Accordingly, in order to be able to compete in the harsh food and beverage industry, a restaurant must constantly introduce specialized and new menus as well as service [25].

2.2 Technology-based service innovativeness

The second dimension of restaurant innovativeness is technology-based service innovativeness (TI). Service innovativeness itself means “innovation taking place in the various contexts of services, including the introduction of new services or incremental improvements of existing services” [26]. Their study found that most of the service innovation in the service industry does not integrate the service process with the advancement of technology although the rising technology and social media platforms have altered the way the hospitality industries deliver services, including the restaurant [2, 3, 27], and also in related tourism hospitality industry as such in hotel [28], souvenir handicraft [29], and tourism destinations [30].

To overcome this gap, the contribution of study considered the most prominent and significant yet latest literature in the restaurant context [1], has focused on the technology into service innovativeness, thus the term “technology-based service innovativeness” emerged and was used further. Similarly, Mavale and Rautela [31] strongly suggested that technology-based innovation should be prioritized by the restaurant premises to maintain its business sustainability.

According to Kim et al. [1], technology-based service innovativeness means “methods for a restaurant’s integrating technology into service and thereby creates an advantage for customers through the most contemporary service delivery processes” that can be measured using a four-item- scale. The first scale is “This restaurant offers new apps or online ordering tools”. In a prior study, technology-based service innovativeness measurement includes the term “delivery service” apart from online ordering tools [12]. Additionally, Brewer and Sebby [32] suggested that integrating both online food ordering and delivery service during the COVID-19 pandemic led to customer purchase intention. Aligned with Ma et al. [33] and Kim et al. [34] highlight the importance of restaurants having delivery service, especially since COVID-19 hit in 2020 as it will boost the transactions and sales.

In contrast, the majority of RI research was conducted before the COVID-19 pandemic although it was published during the period 2020 to 2021. Consequently, the measurement items have not considered the RI approach to the COVID-19 pandemic situation. The logic underlying this is due to dine-in restrictions during the COVID-19 pandemic, instead, only takeaway and delivery are allowed. The finding advises that restaurants are likely to see primary growth after the delivery service introduction. Hence, the first-item scale will be added one new term which is “delivery service”. Next, the second to fourth-item scale [1] will remain the same with no further amendment.

However, since the focus of this study will be on Generation Z in Indonesia, the RI construct should fulfill the generation characteristic. For example, a recent study in Indonesia's fast food chain restaurants stresses the usage of technology such as ease of payment using GoPay as a part of firm technology adoption [35]. This is in the same vein as the characteristic of the younger generation in Indonesia prefer to opt for digital wallet or e-wallet payment rather than conventional payment using cash or card [36], in which 45% of digital wallet goes for food and beverage while the remaining 39% for transportation and 9% for parking and online shopping. Four top-of-the-mind digital wallet brands for Indonesian Gen Z are 52% GoPay, 35% OVO, 11% Dana, and 2% LinkAja [36]. On the other hand, Suarez et al. [37] studied the tablet-based menu in the three types of restaurant premises and highlighted that customers in fast food and midscale restaurants are more likely to adopt tablet-based menus compared to upscale restaurants.

Another concern is also due to the COVID-19 pandemic in accelerating contactless dining experience on the premises thus leading to digital menus instead of printed menu to prevent shared touch points [38, 39]. Yet, the four-item scale [1] does not emphasize these generation characteristics in terms of technology-based service innovations. Therefore, to fill the literature gaps, two additional measurements of digital wallet and digital menu should be complemented to comprehensively determine this dimension.

2.3 Experiential innovativeness

The third dimension of restaurant innovativeness is experiential innovativeness (EI) meaning “a firm’s practice for creating a personalized and lifestyle-based experience for individual customers with a novel approach” [40]. Similarly, a definition from [1] is “employees’ interactions with customers, problem-solving, design of physical facilities, intangible atmosphere, activities, and events”. In the hospitality sector, the accent of EI is the establishment of an environment where customers can engage with staff or other customers in innovative ways, resulting in long-term relationships.

A study by Chou et al. [41] found sustainable service innovation; in this sense, the term “service innovation” is equal to “experiential innovation”; depicted as the basis of restaurant business sustainable development. They elaborate that this act may lead the restaurant to become an innovative leader in the related domain. This includes the act of fewer environmental causes or eco-friendly or green practices such as reducing food waste, material waste, and less single-use plastic. It is also consistent with a recent study by Rodríguez-López et al. [42] of bibliometric analysis from over 700 journals in the restaurant context from the period span 2008 to 2018 identified the emerging trend and the research gap. The findings rigor list of topics that should be addressed more from the standpoint of innovation, with a new approach to healthy eating and sustainability. Further, Filimonau and Sulyok [43] also emphasizes the need for a restaurant to contribute to environmental impact by reducing single-use plastic such as packaging, straws, cutleries, and mini-size condiments. Yet, the four-item scale [1] does not emphasize these sustainable characteristics in terms of service or experiential innovativeness. Therefore, to fill the literature gap, one additional measurement of green practice should be complemented to comprehensively determine this dimension.

2.4 Promotional innovativeness

The fourth dimension of restaurant innovativeness is promotional innovativeness (PI), meaning “new methods and changes in design, packaging, placement, promotion, or price, i.e., changes in any of the marketing mix dimensions” [18]. Similarly, a definition from [1] is “customers’ perceptions of a restaurant’s innovative marketing strategies”. This innovativeness comprises the restaurant marketing activities, including promotions, deals, as well as the membership program.

2.5 Brand innovativeness

The fifth dimension of restaurant innovativeness is brand innovativeness (BI), meaning “consumers’ perceptions of innovativeness of a restaurant brand as the extent to which a brand is perceived to be innovative, differentiating, dynamic, generative, and primary in the industry” [44]. Aligned with Kunz et al. [8], the definition is “consumers’ perception of a brand’s capability of providing new and useful offerings to fulfill their needs”. The key point to brand innovativeness is the viewpoints of amazement such as the wow factor and surprise [45] that can benefit the company in recent fierce competition due to its effect on overall brand value [9, 46]. For instance, when McDonald’s collaborated with the famous South Korean boy band BTS in 2021 and launched BTS meals globally, it indicated that McDonald’s had set itself apart from other fast-food restaurants, hence becoming a brand that wow the customer, while also bringing more profit to the company. Another example is when Starbucks opened its store called “Signing Store” throughout the world, with the purpose of not only selling coffee but also supporting and embracing equality for the deaf and people with hearing impairments, it surprised the community with how the company committed to accessibility and opportunity.

A recent study in 2020 of bibliometric analysis from over 700 journals in the restaurant context from the period span 2008 to 2018 identified the emerging trend and the research gap [42]. The findings rigor list of topics that should be focused more, for example, the measurement of brand value from the innovation perspective. An extensive body of previous studies for this stream can be widened to see as the extension from either study of Eisingerich and Rubera [47] or Kunz et al. [8] measurement of brand innovativeness. For instance, Shams et al. [45] for mobile phones in Australia, Hetet et al. [48] for electricity meters in France, Huaman-Ramirez et al. [49] for fast-food restaurants in France, and the most recent Lin and Zhou [50] for a green restaurant in China.

At this point, the key measurement is effective solutions, different product offerings, and new solutions. On the other side, some studies employed the measurement [8] in which key measurements are creativity, new solutions, new ideas, and market changes. For example, a study in the hotel context in Norway integrated the stream with brand experience and customer satisfaction [51]. However, in the notion of restaurant context, the recent study was particularly relevant due to its characteristics that are specified for the restaurant business with casual concept and considers brand innovativeness as a part of restaurant innovativeness from the customer perspective [44].

At the beginning of the questionnaire, respondents were asked to choose one of their most visited restaurant types among three given options: casual dining, fast food, and coffee shop, as a basis for their remaining answers in the questionnaire. The respondent's demographics of this study are 34.87% male (181 respondents) and 65.13% female (338 respondents), with their choices of the most visited restaurant type being 31.79% casual dining (165 respondents), 33.41% fast food (172 respondents), and 35.07% coffee shop (182 respondents).

Restaurant innovativeness measurement

The step-by-step process in SPSS uses the menu of =>Analyze =>Dimension Reduction =>Factor =>Descriptive (KMO and Bartlett’s test of sphericity, Extraction (Principal Component, Correlation matrix, Based on Eigenvalue greater than 1), Options (suppress small coefficient with an absolute value below 0.50) [54-56]. In total, there are three steps of factor analysis in this study as seen in Table 1.

The first analysis employs 25 items from its original literature review. As a result, three items (MI5, TI3, TI4) have low loading (below the aside value of 0.50) while two items (EI1, TI6) show high cross loading to more than factor. Therefore, these five items were deleted. The second analysis employs only 20 items after the five-item deletion from the first analysis. The finding shows no item has a loading below 0.50, but there is one item (BI5) that has high cross loading, and therefore eliminated. The third analysis leaves only 19 items, after six items deletion from the previous two steps. As a result, none have low loading or high cross-loading. All three steps result in forming four factors with the statistical results such as KMO, Bartlett’s sig, communalities, and cumulative total variance presented in Table 1.

Table 1. Factor analysis

It can be posited that Step 3 resulted in the highest cumulative total variance percentage (80.31%), compared to Step 2 (80.19%) and Step 1 (77.52%). Despite the increase for each step being less than 1%, still, it enhances progressively, indicating that the 19 items better explain the restaurant innovativeness than its 25 original items. Accordingly, the final factor analysis refers to the result in Step 3, as seen in Table 2 displays the statistical result for communalities, correlation, and loading factor for all items. In addition, Cronbach’s Alpha value for all items is more than 0.9 showing high reliability.

Table 2. Measurement items statistical result

Note: SD (Standard Deviation), C.A (Cronbach Alpha), COR (Correlation), COM (Communalities), C.M (Component Matrix), *deleted

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Figure 2. Newly proposed restaurant innovativeness measurement specific for Gen Z

Table 1 and Figure 2 show the first factor account for 68.51% of the total variance and consists of 8 items as a combination of experiential innovativeness and promotional innovativeness. The second factor accounts for 4.40% of the total variance and consists of 4 items, formed only from brand innovativeness. The third factor accounts for 4.32% of the total variance and consists of 3 items, formed only from technology-based service innovativeness. The fourth factor accounts for 3.07% of the total variance and consists of 4 items, formed only from menu innovativeness. The next section presents the Gen Z restaurant innovativeness based on three settings; casual dining, fast food, and coffee shops with the basis of using only 19 items of 25 origin items.

Restaurant innovativeness for casual dining

31.79% or equal to 165 respondents chose the casual dining concept as their most visited restaurant type. The casual dining intended in this study refers to the food service business that offers table service with a casual atmosphere and a quite cozy dining space, including family restaurants and ethnic restaurants. In the context of Indonesia, several brands mentioned by respondents are Solaria, Pan & Co, Ramen Ya, Mang Engking, Pizza Hut, Sushi Tei, Bakmie GM, Es Teler 77, Shaburi, Bebek Kaleyo, Ta Wan, Sushi Hiro, Imperial Kitchen, Pancious, Gerobak Betawi, and many other.

Based on the factor analysis, the KMO is .952, df 105, and Sig. 000. Of 19 items, another 4 items were deleted due to low loading (MI1, EI4) and high cross-loading (BI1, PI3), and there are 15 items. According to Table 3 and Figure 3, factor analysis for fast food Gen Z is formed into two factors of 15 items (component with eigenvalue below 1 is not presented) with 72.17% cumulative. The first factor accounts for 65.17% (10 items) of the restaurant innovativeness variance, followed by the second factor accounts for 7% (5 items).

Table 3. The new factor for casual dining

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Figure 3. Newly proposed casual dining innovativeness measurement

Restaurant innovativeness for fast food

33.41% or equal to 172 respondents chose fast food or quick service concept as their most visited restaurant types. The fast food intended in this study refers to the food service business that does not offer table service, in which customers order by themselves at the counter, where the dining atmosphere is more past face and not as comfortable as casual dining. In the context of Indonesia, the fast food restaurant brand mentioned by respondents is McDonald’s, KFC, Burger King, CFC, Hokben, A&W, and Yoshinoya.

Based on the factor analysis, the KMO is .956, df 120, and Sig .000. Of 19 items, another 3 items were deleted due to high cross-loading (EI2, EI4) and low loading (MI1), with 16 items remaining. According to Table 4 and Figure 4, factor analysis for fast food Gen Z is formed into two factors of 16 items (using two-factor numbers to extract) with 76.98% cumulative. The first factor accounts for 71.30% (12 items) of the restaurant innovativeness variance, followed by the second factor accounts for 5.67% (4 items).

Table 4. The new factor for fast food

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Figure 4. Newly proposed fast food innovativeness measurement

Restaurant innovativeness for coffeeshop

35.07% or equal to 182 respondents chose the coffee shop concept as their most visited restaurant type. The coffee shop intended in this study refers to the food service business that offers beverage-based (instead of food) main products. The booming of these business types in Indonesia consists of those from the international chain and also from national brands as well. To name a few, such as Janji Jiwa, Starbucks, Kopi Kenangan, Mixue, and Chatime.

Based on the factor analysis, the KMO is .954, df 171, and Sig .000. Of 19 items, none show cross-loading and low loading value, therefore the items remain the same. According to Table 5 and Figure 5, factor analysis for fast food Gen Z is formed into two factors of 17 items (using two factor number to extract)) with 75.06% cumulative. The first factor accounts for 70.24% (12 items) of the restaurant innovativeness variance, followed by the second factor accounts for 4.82% (7 items).

Table 5. The new factor for coffee shop

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Figure 5. Newly proposed coffeeshop innovativeness measurement

Perceived restaurant innovativeness

In addition, this study also extends the degree of perceived restaurant innovativeness based on industry types and gender according to the descriptive statistic result. As seen in Figure 6, all customer, who often visit casual dining restaurant, fast food, and coffee shop agree that the existence of e-wallet payment and online apps are two restaurant innovativeness they perceived the most during their dining experience. Moreover, casual dining restaurant customers tend to perceive innovative food presentation compared to fast food and coffee shop customers. This makes sense since casual dining restaurants indeed offer more food or menu variety, which sometimes can vary from appetizer to dessert, with mostly higher prices, and therefore food presentation should come as a company strategy for product innovativeness. Coffee shops, on the other hand, offer fewer food options, in which customers are more on the beverage selection. Meanwhile, for fast food restaurants, the menu usually comes very simple, without much variety to choose from due to its business characteristics.

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Figure 6. Major perceived restaurant innovativeness by types

As seen in Figure 7, show slight differences in how males and females perceived innovativeness during their dining experience in the restaurant premises. Both do agree that the existence of e-wallet payment and online apps are two restaurant innovativeness they perceived the most. However, female Gen Z tend to perceive innovative design, innovative technology in service, and innovative staff interaction. Meanwhile, male Gen Z shows very different results as they tend to perceive how restaurants are more dynamic than their competitors, innovative problem solutions, and innovative communication platforms. It is interesting to see the result as females place value on employee interaction while males on communication platforms. This shows that in-store dining in terms of service experience is more important for female than male. While engagement outside in-store dining is more prevalent for male than their female counterpart.

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Figure 7. Major perceived restaurant innovativeness by gender

Discussion

Past studies have explored and confirmed the literature on diverse restaurant innovativeness. This study attempted to investigate the measurement scale of restaurant innovativeness from the customer-perceived point of view, meaning the consumer’s perception of an enduring firm capability that results in novel, creative, and impactful ideas and solutions for the market” [8-10]. Five dimensions were initially proposed, consist of 25 items (see Figure 1), namely (1) menu innovativeness, (2) technology-based service innovativeness, (3) experiential innovativeness, (4) promotional innovativeness, and (5) brand innovativeness. The first RI dimension (5 items) uses the term “menu innovativeness” whereas other pieces of literature use the term product innovativeness. The second RI dimension (6 items) uses the term “technology-based service innovativeness” where literature uses various terms interchangeably such as technology innovativeness or technology-related service innovativeness. The third RI dimension (5 items) uses the term “experiential innovativeness” where kinds of literature use various terms interchangeably such as experience-related service innovativeness, service innovativeness, and service quality innovativeness. The fourth RI dimension (4 items) uses the term “promotional innovativeness” where literature uses various terms interchangeably such as promotion innovativeness, marketing innovativeness, and market innovativeness. The fifth RI dimension (5 items) uses the term “brand innovativeness” which acts as the new literature contribution to the restaurant innovativeness concept.

Since the focus of this study is on Generation Z, the restaurant innovativeness construct should fulfill those characteristics with three main adjustments. The first focus refers to Generation Z or Gen Z's shifting perspective on consumption. A study found that 89% of Gen Z prefer to purchase from a company that supports environmental and social issues over one that does not [57]. In the same vein, Gen Z's eating attitude indicate not buying food product from the company in which ecologically irresponsible as they believe their lifestyle tend to be more sustainable consumption [58]. The second focus refers to the research location, where the younger generation in Indonesia tend to use digital payment for their food and beverage transaction The third focus refers to the latest worldwide (including Indonesia) condition due to the COVID-19 pandemic in accelerating contactless dining experience on the premises thus leading to the digital menu instead of a printed menu [36] to prevent shared touchpoints [38, 39]. Mendoza-Silva [17] also insisted that more innovation studies should be conducted in developing countries due to the previous research majority founded in Taiwan, Spain, China, and Australia. In this sense, exploring the RI concept in Indonesia (classified as a developing country) will be an interesting phenomenon.

As a result, in the context of the particular market of the generation cohort, in this sense, Generation Z, a new restaurant innovativeness measurement was proposed, consist of 4 factors or dimensions of 19 items (see Figure 2). The first factor formed from the combination of experiential innovativeness and promotional innovativeness, can be considered a “core” innovativeness as it contributes the most. It confirms 8 items, which are; employees interact with customers in innovative ways, are well-known for innovative events, employees provide innovative problem solutions, apply green practices that contribute to sustainability, implement an innovative marketing program, offer innovative deals, provide innovative communication platform, and have innovative membership/ reward program. Instructively, Gen Z considers these factors as what determines them the most in terms of perceived firm innovativeness, while the remaining three factors account for a small contribution. This implies that customers nowadays, especially Gen Z, are starting to perceive not only the food while they dine but also other factors intensively. In fact, customers start to understand what the restaurant has to offer apart from only its food and beverage. For instance, the way restaurants implement an innovative marketing program and what are the innovative deals available. Although these might not be the main determinant for customer dining satisfaction [59], this comes as the most perceived by customers, meaning that when restaurants create or launch related to this program, customers will definitely be aware and show their involvement in that program.

The second factor is named brand innovativeness since all items come from only one factor. It confirms 4 items, which are; set itself apart from other similar restaurants, dynamic- compared to competitor, consider as an innovative brand, and prospective becoming the market leader. Interestingly, since brand innovativeness is considered a new factor or dimension in the existing literature, this factor itself is placed as the second substantial factor of restaurant innovativeness. This implies that an innovative restaurant brand stands out among young customers. For instance, McDonald’s which collaborates with various K-Pop Idols, is considered an innovative fast food brand among Gen Z. This is not only because of the new menu that they launched, but also other innovative products that suit the value of young customers. This also set them apart from their fast food competitor.

The third factor is named technology-based service innovativeness since all items come from only one factor. It confirms 3 items, which are; offer new apps or online ordering delivery, integrate innovative technologies into the services, and provide e-wallet payment. The fourth factor is named menu innovativeness since all items come from only one factor. It confirms 4 items, which are; offer new combinations of food, offer an innovative customized menu, consistently introduce new menu items, and offer a new flavor. Surprisingly, this menu innovativeness became the least substantial among other factor. This result contradicts most past literature that found the menu as the most important innovation from the customer's point of view.