Retention of Employees in The Fast-Food Industry in Pakistan
Retention of Employees in The Fast-Food Industry in Pakistan
5,2021
https://cibg.org.au/
P-ISSN: 2204-1990; E-ISSN: 1323-6903
DOI: 10.47750/cibg.2021.27.05.039
Abstract
This study identifies critical factors which have influence employee retention in the fast-
foodpolicies in these organizations to retain staff at the floor level.Overall, the results give a
fresh insight into the topic of retention industry. It adds to research studies on similar topics by
exploring critical factors which have not been a regular part of the research, such as supervisor
support and job security. Instead of taking employee turnover intention, this study takes a more
direct approach by using the retention of employees as a dependent variable. The study confirms
through quantitative analysis that three independent variables – Job Satisfaction, Brand Image,
and Job Security have a significant impact on employee retention. In an unusual result, two other
independent variables – Career Development and Supervisor Support have been found to have an
insignificant impact on the employee retention in the fast-food industry. These results have been
validated through online interviews with an Industry Specialist and a Food Researcher.Based on
this study, it is recommended that Operations staff should have their jobs enriched with regular
transfers to other areas like Finance, Marketing, and Purchasing. There is also an urgent need to
reenergize the motivational levelof employees in the fast-food industry in Pakistan.
Key Words: Fast Food industry, Job Satisfaction, Brand Image, Job Security, Employee
Turnover, Retention of Employees
INTRODUCTION
Background of the study
Fast Food Restaurants are an important part of the retail business in Pakistan.(Economic Survey
of Pakistan, 2016-17).The National Restaurant Association in India (NRA) defines the restaurant
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industry as locations where meals, snacks, and beverages can be purchased and consumed. This
also includes all the takeout meals. A quick service restaurant serves what is called fast-food. A
consumer pays at the counter and consumes the product quickly.(Borgave, 2016). Fast Food
Restaurants started in Pakistan with KFC (1997) and McDonald’s (1998). Pizza Hut was
established in 1993 but is technically not fast food but sometimes mistakenly identified as
such(Borgave, 2016). The last two decades have seen a rise in new Fast Food Restaurants with a
different type of retail designs and displays in all the large cities of Pakistan.(Ghani, 2014)
Changes that are now taking place in Pakistan in the Fast Food industry are similar to those that
occurred in the twentieth century in North America and Europe(Ghani, 2014).
Pakistan has a population of above 220 million, with a flourishing middle-class.
Approximately one quarter of the total population represents the potential market for fast
food, and interestingly it is also rising due to increased affordability. The success of
international fast-food chains such as McDonald’s, KFC, Pizza Hut, Pizza Express, Subway
and others clearly validates the increased desirability of fast food in Pakistan.(Ehsan, 2010).
Retail Planet estimates the entire Pakistani Retail landscape at $ 152 billion in end 2016.
The research also outlines the figures for QSRs, but the data is inaccessible. What is clear is that
there is growth in this segment, all around Pakistan, and this can be gauged by the fact that new
restaurants have all come up in the last 20 years. Pakistan holds the world’s eighth largest market
when it comes to fast food and food related business.(Memon, 2016). For Karachi specifically,
you have new chains in Pantry, Moos, and Cluck, Hiesens, OMG, etc.The opening of malls also
had an impact on the growth of the QSR industry. Major malls have come up in all the main
urban centers of Pakistan. Prominent amongst these are Lucky One (3.4 million square feet),
Packages Mall (3.1 million square feet), and Nishat Emporium (2.6 million square feet). The
latter is based in Lahore but the first one is in Karachi – it is Pakistan’s largest mall. Every mall
has a food court, and every court has at least 3-4 fast food brands.
Employee Turnover in Pakistan’s Retail Industry is highest in the World in 2016. It’s
55% compared to 25% in the US and 20% in the EU.In the food industry in Pakistan, employees
will switch jobs very quickly due to low pay scales, work environment, and other
factors.(StaticA, 2016). Some studies on US fast food chainshave shown voluntary employee
turnover as high as 50% and an estimated cost of 30 -50% of the cost of labour for entry-level
positions(Cross, 2017). Retention of employees globally involves several factors which include
training and development, job satisfaction, reward systems, and many other variables that differ
industry to industry(Brown , Murphy , & Wade, Human resource development implications for
large and small organizations, 2006). But its importance to the entire fast food industry remains
undisputed and involves active HR engagement as well as a complete program for employee
retention. It also requires a complete understanding of the critical factors which influence
employee retention(Dienhart, 1993)
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Journal of Contemporary Issues in Business and Government Vol. 27, No. 5,2021
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DOI: 10.47750/cibg.2021.27.05.039
Research Gap
Previous studies point out the impact of key variables on employee retention in the fast food
industry. But these studies have been carried out indeveloped countries. There is a need to do this
study on the rapidly growing fast food industry of Pakistan. As previous studies have already
established key retention factors such as training, work environment, and compensation, etc., in
this paper, the aim is to explore other critical factors that impact employee retention.
Research Questions
What are the critical factors for the retention of employees in the fast food industry?
What is the relationship of these factors to employee retention in the Fast Food
Industry?
This paper has four further sections. Section 2 is the literature review and describes the
theoretical framework and the conceptual model. Section 3 explains the research methodology.
Section 4 is the analysis and discussion and includes the quantitative analysis and application of
SEM. Finally, Section 5 enumerates the recommendations, limitations and concludes the
findings.
LITERATURE REVIEW
Review of literature
A quick service restaurant serves what is called fast-food. A consumer pays at the counter, often
serves himself, and consumes the product quickly. Unlike traditional eateries, payment is made
before the consumption of food (Borgave, 2016).
The product mainly comprises of Burgers, Sandwiches, Donuts, Coffee, French Fries,
and other snack items. Beverages are part of the product range. Pizza is defined as fast food but
is a fine dining item in some countries. Some QSRs will also serve specialty items (Borgave,
2016). The defining characteristics of fast-food industry is to, it is moving fast, available quickly
at outlets situated nearby, so that such food is available within minutes. Fast food is
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homogeneous. This is its second characteristic, like Big Mac is not just available quickly and
easily but is designed to be eaten quickly and easily. Bap, Pizza edge or taco shell is made to be
held in the fingers so that knives, forks and even tables are not required. Fast food can be eaten
anywhere, even in transit. (Grumett, Bretherton, & Holmes, 2015). The foodservice industry is
shown below.
Should Pizza be defined as fast food? In some countries, Pizza is classified as fast food as
it has all the above mentioned characteristics. In Pakistan, however, you do not pay at the
counter and the food is served by a restaurant employee at the table. Furthermore, it is social
activity to eat out in Pizza restaurants and you spend a lot of time in them. However, even in the
case of Pakistan, articles and research include Pizza as fast food.(Farooqui & Alwi, 2019)
The global Fast food industry has grown by 3.5% since last five years and generates
revenue of approximately 668 billion dollars.(IBIS WORLD, 2018) It is forecasted that in 2022
the fast food industry will grow from 533,244 M dollars to 743,859M dollars at a compound
annual growth rate of 4.8%.(Farooqui & Alwi, 2019). Compared to global market of fast-food
industry business, Pakistan rank 8th among all countries around the world.(Farooqui & Alwi,
2019). The consumption of fast food in Pakistan has increased drastically. Contributing factors
which impact on customers food preferences are as follows; Urbanization, socializing, taste
preferences by the students of college and universities, Pakistani family’s dual income
expediency and other aspects(Farooqui & Alwi, 2019) On average Pakistan fast food industry
observed 21% annual increase in business because of the people more spending on fast food
eating preference, which make fast food industry in Pakistan is one of the fast growing
businesses around globe(Farooqui & Alwi, 2019).
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employer branding and productivity and brand advocacy can also be seen which shows that
employer branding directly impacts productivity and brand advocacy without the mediating
effect of job satisfaction and the psychological contract.
Job Security
Job security can impact the retention of employees(Sokhanvar, Kakemam, & Chegini,
2018). A study of 100 companies confirmed that retention of employees is increased by
promoting from within. This practice increases job security and international fast food chains
practice this. This has also been validated through research.(Dienhart, 1993).In another study on
the factors influencing employee retention, Job security as a retention strategy had the maximum
factor score. It was listed asone of the factors that influence employees to stay in the company.
(Rakhra, 2018)Employees tend to stay longer in an organization when they feel that their job is
secure and are not worried about their future career. Further, if no conditions or factors
arethreatening their job positions, and if they feel that careerprogression is possible through self-
development, retention will be higher. A culture of sympathy and kindness in an organization
also helps in retention of employees(Sokhanvar, Kakemam, & Chegini, 2018)
A tabular literature review table of the important articles is given below.
Author and Time Frame Objective Results / Conclusion
Michelle Kaiser & Albulena How employer branding The five values of employee
Regjepaj impacts employee branding directly influence
(2019) commitment and satisfaction commitment and satisfaction
Darren D. Cross (2017) Understand the tools and Good communication and
techniques of retention of training, along with a
employees in a fast food supportive environment can
environment help improve employee
retention and improve profits
Gaunette Marie Sinclair- To determine whether talent Talent management practices
Maragh, Noriel Jacobs-Gray, Managementpractices play a motivating role and are
Norene Roomes, (2017) motivate employees in a fast mutually beneficial for both
food entity the company and the
employees.
Shuana Zafar Nasir & What is the effectiveness of No single factor alone results
Nasir Mahmood (2016) retention strategies in an in retention. Hence, one has
organization? to work on all correlated
factors.
Harpreet Kaur Rakhra (2018) What are the factors that This paper gives potential
influence employee retention reasons why employees leave
in companies? and compare 6 important
factors concerning age,
gender, and organizational
level. The importance of each
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Job Satisfaction
Career Development
Employee
Supervisor Support
Retention
Brand Image
Job Security
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RESEARCH METHODOLOGY
Data
Primary Data
Primary data has been obtained from an Online Questionnaire created in Google documents.
Data has been collected from the two leading fast food brands, McDonald’s, and KFC. These are
the two oldest fast food brands and the trendsetters in Pakistan.
Secondary Data
The articles selected for this study are based on the content and relevance of the research
topic. Two searches were conducted. The first used “retention” to identify keywords / potential
variables. These were new articles – 2015 onwards. The second search was fast food specific
using keywords/ variables indicated by the first search with no restriction of time on articles.
Variables
Independent Variables:
Job Satisfaction
Career Development
Supervisor Support
Brand Image
Job Security
Dependent Variable:
Employee Retention
Inclusion Criteria (for Secondary Data)
No relevant unpublished articles, like conference proceedings, on the subject matter are
considered for inclusion in the systematic literature review. Articles published in journals with a
high impact factor are considered for inclusion for the study. However, articles with strong
content representing the regional and local norms and cultures have been considered for
inclusion as well. Thesis studies have also been included in this research. There was no
limitation inthe country in the search. Articles are marked as either accepted or rejected. Rejected
articles are excluded based on inadequate information about research design and methodology.
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To confirm the reliability of the model, we have performed Cronbach’s Alpha test. Results
show that all Cronbach’s Alpha is more than 0.70 for all variables. Hence, the results of
Cronbach’s alpha showed that the data collection instrument has considerable reliability.
Multiple regression analysis was used for hypothesis testing using SPSS. The following table
showed the results of hypothesis-testing.
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The results of regression analysis showed that job satisfaction (0.096, p < 0.10) has a positive
significant relationship with retention of employees in the fast-food industry while brand image
(0.2470.096, p < 0.05) and job security (0.4550.096, p < 0.05) have also found a positive
significant effect on retention of fast-food employees. However, career development
(0.0760.096, p > 0.10) and supervisor support (0.0180.096, p > 0.10) were found statistically
insignificant in relation to the retention of employees in the fast-food industry of Pakistan.
The analysis revealed R-Square value of 0.678 and that means that the independent variables
explain 67.8% of the variability of the dependent variable,the R-Square value was 0.665.
The F-ratio tests whether the overall regression model is a good fit for the data. The analysis
shows that the independent variables statistically significantly predict the dependent variable as
F = 50.576, p < .0005 (i.e., the regression model is a good fit for the data).
Qualitative Input
Three variables – Job Satisfaction, Brand Image, and Job Security have shown a significant
impact on employee retention. But Career Development and Supervisor support are not
impacting the retention of employees significantly. To validate this, we conducted an online
interview with a senior resource in the industry. The sample size of both the brands consists
ofmainly Operations staff and 75% of the sample size is manager level or above. As pointed
outby the industryexpert, Operations staff at a certain level do not need supervisor support. It can
turn out to be a hindrance at times as employees like empowerment. The nature of operations is
such that there is decision making at all times and empowerment becomes necessary to keep the
restaurants serving the customers. In the case of career development, there are not many
employment opportunities in Pakistancurrently and people join fast food chains to earn a
livelihood, not because they want to work in a restaurant. Some employees might also feel that
their talents are under-utilized in a fastfood environment and that career
advancementopportunities within the operations set up might be limited. These fast food chains
do have a policy of 50% promotions from within and generally, avoid hiring at a senior level
from outside but more job enrichment is needed to retain Operations staff.
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These factors were later validated by a commercialresearcherwho has done fast food
research as well. His opinions confirmed the views of the industry specialist.
Limitations
This research has certain limitations. It is confined to two fast food restaurants, even if these are
an accurate representation of the fast food industry. The respondents working in other restaurants
have also been ex KFC and McDonald’s employees. Both the above restaurants are mainly
concentrated in the big urban cities of Pakistan – Karachi, Lahore and Islamabad. It is only in the
last few years that they have expanded into smaller cities, like Sahiwal, Hyderabad etc. So, the
results represent the top tier cities of the country, not the whole country. The respondents are
mainly from the Operations side. So, the results have been influenced by their experiences on the
floor. 75% of the respondents are of manager grade or above, so the results are representative of
the middle and senior management grades. Operations are the lifeline of any restaurant, but the
demands of the job tend to be different from HR or head office jobs.
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Recommendation
It is recommended to carry this research forward and to include other fast food chains like
Subway and Burger King in the sample size. Generally, local brands in this market have been
followers but it would be prudent to include at least one strong local brand to gauge their
retention practices as well. The research should be expanded to brands which are present in
smaller cities as well, so the views of the whole of the country can be represented. The research
should include non-operations staff as well. The views of people in the head office would be
different from that of the Operations team. Head office staff have access to a lot more
information and take part in setting corporate policies. This might impact the factor “career
development” as succession planning is a normal part of the HR cycle. However, there is also an
urgent need for fast food chains to review their career development plans for Operations staff.
People often join fast food chains due to the struggling economic conditions in Pakistan. They
might not be looking for a long term career unless motivated enough. This can be seen by the
high rate of employee turnover in the fast food industry in Pakistan. Based on this study, the staff
also feel that their full talents might not be utilized in an Operations environment. Hence, fast
food chains need to urgently review their motivational policies for Operations staff. It is
recommended that further job enrichment be done for Operations staff, with transfers not just
from restaurant to restaurant but also from function to function. Operations staff should be
giventransfers and regular exposure to head office level, in areas of Finance, HR, and
Purchasing. This will add to job enrichment and ultimately, lead to greater retention. A further
recommendation is that this research should be extendedacross all levels. Response at junior
levels was only 25% as it became difficult to control the type of respondent but given more time
and resources this can be attempted as well. Overall, the unusual results will enable other
research to use this as a benchmark for further studies.
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