Physical Environment as a Key Success Factor for Building Strong Brand Equity: A Study on Restaurant Industry

Abstract

Physical environment is one of the important factors that influence customers’ choice towards selecting a restaurant over another. This paper is designed to examine the effect of physical environment on brand equity of restaurant industry in Malaysian market. The data was gathered from 293 customers of international fast food restaurant brands in East Coast Malaysia. The collected data was coded into SPSS and analysed using structural equation modelling approach (SEM) on AMOS. The findings indicated that the physical environment of a restaurant has significant positive effect on its brand equity. Moreover, this paper found that physical environment has significant positive effect on the dimensions of brand equity, namely: brand image, brand loyalty, brand preference, and brand leadership. The findings build upon the literature with regard to the role of physical environment in building strong brands. This study suggests that in order to succeed in a competitive market environment, it is vital to please or satisfy customers through providing products or services with added values. Such offering will ultimately lead to favourable brand image and stronger brand equity as customers tend to select or buy from brands that provide them with greater benefits.

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