Between International Coffee Chain and Indonesia Local Coffee Chain: the Differences on Driving Factors for Customer Satisfaction and Loyalty

The aim of this research is to identify factors that influence customer loyalty, including service quality, product quality, software quality, price fairness, atmosphere, and brand image with the mediation of customer satisfaction between customers of international coffee chains in Indonesia and Indonesian local coffee chains. The research was conducted on Starbucks Indonesia and Kopi Kenangan customers with a total of 448 respondents. Multigroup Analysis and Partial Least Square Structural Equation Modeling (PLS-SEM) are used to test validity, reliability and variable testing. The test results show that each coffee shop has several differences in the factors that influence customer satisfaction and loyalty, but store atmosphere is found to be the main driving factor that can influence customer satisfaction and loyalty in international coffee chains or Indonesian local coffee chains. This research is the first study to integrate service quality, product quality, software quality, price fairness, atmosphere, brand image, customer satisfaction and customer loyalty by comparing international coffee chains and Indonesian local coffee chains.


Introduction
Currently, in almost all parts of the world, coffee has become a basic need for society, no longer just a lifestyle (Burhan Ismael et al., 2021).Indonesia is one of the countries experiencing this trend of growth.The shift in consumption activities in Indonesia can be seen from the level of people's coffee consumption.According to data from (International Coffee Organization., 2023), Indonesia will be the country with the fifth largest coffee consumption in the world in 2020/2021.The total is 5 million bags measuring 60 kilograms.The shift in the status of coffee from initially being just a lifestyle to now becoming a basic necessity, especially for those who drink it, has led to a growing trend in consuming coffee every day, which has resulted in more and more coffee shops popping up all the time (P.Rian, 2022).
The growing level of coffee consumption in Indonesia has influenced the increase in the number of new coffee shops appearing in Indonesia (Dhisasmito & Kumar, 2020).This can be seen from the number of coffee shops in Indonesia increasing threefold from 1,083 outlets in 2016, to more than 2,937 outlets in 2019, and this number will continue to increase.Coffee shops themselves have several types which are distinguished by several specific criteria.In Indonesia, in general, it is very easy to find this type of coffee shop, especially local and international franchise coffee shops whose outlets are spread across various locations.
Indonesia is the largest modern coffee market in Southeast Asia, with growth largely driven by the expansion of local coffee chains (Momentum Works, 2023).One of the largest local coffee chains in Indonesia is Kopi Kenangan which is the 2nd largest local coffee chain in Indonesia based on the number of outlets and is the only one that has penetrated the international market (Singapore & Malaysia) carrying a lowprice strategy with a mass market target.Meanwhile, the largest international coffee chain in Indonesia is Starbucks.This coffee chain first entered Indonesia in 2002, until now there are more than 500 outlets spread throughout Indonesia, making Indonesia the 9th country with the most total Starbucks outlets (Starbucks., 2023).

Method Data collection, research instruments
The questionnaire used to conduct this research was adapted and adapted from several previous studies.For data collection, the instrument used in this research as primary data was a survey with 28 indicator questions.To measure the construct, a 5-point Likert scale was used (1 for completely disagree -5 for completely agree).The question items to measure service quality were adapted from (Gopi & Samat, 2020;Parasuraman et al., 1985) which consist of 6 question indicators.For product quality, it was adapted from research conducted by (Hanaysha, 2016) which consisted of 3 questions and added 1 additional question from the author.The questions to measure software quality were adapted from (Hsiao et al., 2019)  Before being distributed, the questionnaire was assessed by 4 academic experts in the research field.Adjustments were made based on recommendations from these experts, then the questionnaire was translated into Indonesian with the help of Indonesian language experts.Finally, the online questionnaire was distributed openly via online broadcast on social media.A random sampling method was chosen in this study with the target respondents being people who had downloaded the Starbucks Indonesia and Kopi Kenangan mobile applications and made purchases and visits at least once.The time for distributing the questionnaires was from 30 September 2023 to 22 November 2023 and succeeded in collecting 496 respondents, however 48 questionnaires (9.7%) were discarded because they did not meet the requirements or were incomplete.

Result Description of the research sample
Information regarding demographic groups is differentiated based on gender, age, total monthly income, employment, and frequency of visits as shown in table 1.Most of the sample was male (57.6%) aged between 12-25 years (56.9%) with monthly income is in the range of IDR 2.000.000 to IDR 5.000.000(36.2%) and the majority of respondents work as employees / civil servants with a dominant total of 3-5 monthly visits (45.3%).

Test of the measurment model
This research uses confirmatory factor analysis to test the measurement model.Regarding reliability analysis, factor loading and composite reliability (CR) are used to evaluate the internal consistency of the model.The results are shown in Table 1.The factor loadings for all dimensions are greater than 0.5 (Fornell and Larcker, 1981) and the combined reliability value is > 0.7 as suggested by (Fornell and Larcker, 1981) which indicates good reliability and stability of each dimension item.
In the aspect of convergent validity, there are three standard model measurements proposed by Bagozzi and Yi (1988): 1.All factor loading must be > 0.5 (Hair et al., 2009); 2. Composite reliablitiy must be > 0.7 (Fornell dan Larcker, 1981); And 3. Average bariance extraction (AVE) for each dimension must be > 0.5 (Hair et al., 2009) As shown in Table I, the factor loadings of all items exceed 0.7; the composite reliability for each dimension is in the range of 0.784-0.908,and the average variation for each dimension is in the range of 0.640-0.725.Therefore, it is proven that the measurement model of this research has demonstrated the required convergent validity.Regarding discriminant validity, (Fornell and Larcker, 1981) suggest that the square root of AVE for the dimension itself must be greater than the correlation coefficient between other dimensions.As can be seen in Table 2, the AVE of each dimension is greater than the square root of the correlation coefficient between dimensions.As a result, the various dimensions in the measurement model differ from each other, which follows:

Hypothesis testing
Hypothesis testing was carried out by comparing the T-statistic value > T value (1.96) and P-value < 0.05 using a significance level of 5%.The results of hypothesis testing are shown in table 4 for direct effects and table 5 for indirect effects.For the overall category of the software quality test group, it was found that it did not have a significant influence on customer satisfaction, while other factors were found to have a T-statistic > 1.96 and a P value < 0.05.In the Starbucks Indonesia category, service quality and software quality were found to have no significant influence on customer satisfaction, while other factors were found to have T-statistics > 1.96 and P value < 0.05.Meanwhile, in the Kopi Kenangan category, it was found that brand image did not have a significant influence on customer satisfaction, while other factors were found to have a T-statistic > 1.96 and a P value < 0.05.Most of the data processing results between direct effect which measures the influence of independent variables on customer satisfaction and indirect effect data processing results which measure the influence of independent variables on customer loyalty with moderation through customer satisfaction get results that are in harmony, except for the Kopi Kenangan group, where apart from brand image and product quality are also factors that have an insignificant influence on customer loyalty.

Discussion
This research reveals that service quality has a significant positive effect on overall satisfaction of coffee shop customers, and Kopi Kenangan customers, which is in line with previous research (Abdullah et al., 2018;Dhisasmito & Kumar, 2020;Gopi & Samat, 2020;Hapsari et al., 2017;Hidayat et al., 2019;Huang et al., 2014;Kartikasari & Albari, 2019) but not for Indonesian Starbucks customers, service quality was proven to have no effect on satisfaction.This implies that Starbucks Indonesia customers from the respondents of this study do not consider the quality of service provided by Starbucks Indonesia as a factor that determines their perceived satisfaction and this is in line with research conducted by (Taufik et al., 2022).
The importance of product quality on customer satisfaction has been explained by previous research (Atsnawiyah & Rizan, 2022;Ogba & Tan, 2009), in contrast to previous findings (Hanaysha, 2016) which conducted research in the restaurant industry and confirmed that product quality is the main driver for customer satisfaction, in the coffee shop industry product quality only occupies the umpteenth position that contributes to satisfaction, this also implies that in the coffee shop industry customers do not necessarily choose to visit a coffee shop just because the products sold have a good taste, but because of consideration of factors others too.
Unexpectedly, software quality/mobile application quality was found to be positively significant to customer satisfaction from the main findings (Aldholay et al., 2018;Chung et al., 2012;DAugherty et al., 2015) proved to be insignificant for the overall respondents and the Starbucks Indonesia respondent group, this implies that Starbucks Indonesia customers do not consider software quality to be the main cause of their perceived satisfaction, where this result is inversely proportional to the results obtained in the group Kopi Kenangan customer respondents.Software quality has a significant positive effect on customer satisfaction.It is believed that these differences in implications are because there are significant differences between the mobile applications owned by Starbucks Indonesia and Kopi Kenangan in terms of usability.The Starbucks Indonesia mobile application only functions as a medium for its customers to get information regarding balances and rewards they have received, while the Kopi Kenangan mobile application, apart from providing information regarding ongoing promotions, can also place orders online, so customers don't have to queue in person.direct.
Price fairness was found to have a significant positive effect on overall customer satisfaction, both for Starbucks Indonesia and Kopi Kenangan respondents, which is in line with research conducted by (Abdullah et al., 2018;Dhisasmito & Kumar, 2020;Huang et al., 2014;Kartikasari & Albari, 2019).This indicates that setting prices commensurate with the quality provided has an impact on increasing customer satisfaction and loyalty.
Store atmosphere is the main driving factor for increasing customer satisfaction in this research, this is in line with research conducted by (Hanaysha, 2016).This indicates that customers who have a good perception of the physical environment of the coffee shop have a greater possibility of developing a higher level of satisfaction.
Creating a brand image that can stick in people's minds is one of the most critical and challenging issues in the coffee industry because of competitiveness (Kim & Lee, 2020), especially for new players like Kopi Kenangan.In line with research conducted by (Simanjuntak & Djumarno, 2023) on Kopi Kenangan consumers, where the brand image of Kopi Kenangan itself has no effect on customer satisfaction.
Meanwhile, among Starbucks Indonesia respondents, it was found that brand image had an influence on customer satisfaction and loyalty and this was in line with research conducted by (Hapsari et al., 2017;Ogba & Tan, 2009).A good brand image of a company cannot be formed by itself, but rather through factors such as service quality, product quality and other factors.
The mediator variable, namely customer satisfaction, was found to significantly influence customer loyalty.This finding is in line with previous research which states that customer loyalty is directly proportional to customer satisfaction (Dhisasmito & Kumar, 2020).

Conclusion
This research has found several factors that influence customer satisfaction and customer loyalty in coffee chains in Indonesia.Several factors that have been studied, such as service quality, product quality, software quality, atmosphere, price fairness, and brand image, do not fully influence customer satisfaction and loyalty.Overall, it is proven that software quality has not contributed or influenced customer satisfaction, while store atmosphere was found to have the most significant influence on customer satisfaction and customer loyalty.In the Starbucks Indonesia group category, it was found that software quality and service quality did not significantly influence customer satisfaction and loyalty.Meanwhile, in the Kopi Kenangan group category, it was found that brand image had no influence on customer satisfaction, and product quality had no influence on customer loyalty through the mediation of customer satisfaction.This happens because Kopi Kenangan has an image as a low-price coffee shop so customers will not expect to get product quality that is equivalent to a high-class coffee shop.Lastly, store atmosphere was found to be the factor that has the most significant influence on coffee shop customer satisfaction and loyalty, this can be a focus for coffee shop stakeholders to always pay attention to this.

Daftar Pustaka
with a total of 3 question indicators.The question items for measuring atmosphere were adapted from (Lee, 2001) with a total of 3 question indicators.The question items to measure price equity were adapted from (Kartikasari & Albari, 2019) with a total of 3 question indicators.The question items to measure brand image were adapted from (Kim & Lee, 2020) with a total of 3 question indicators.Kumar, 2020) with a total of 3 question indicators.The question items to measure customer loyalty were adapted from (Hapsari et al., 2017) with a total of 3 question indicators.

Figure
Figure 1.Research model