National Customer Satisfaction Index-UK

NCSI-UK Commentary Second Quarter 2011

National Customer Satisfaction Index Results for Carmakers, Full Service Restaurants, and Limited Service Restaurants

Customer Satisfaction Dips as Carmakers Stall and Restaurants Tumble

June 7, 2011

After a flat first quarter, the National Customer Satisfaction Index (NCSI-UK) falls for the first time in two years. The index dips 0.2% to 74.5 on the 0-100 scale. Customer satisfaction with full-service restaurants drops, while customer satisfaction with limited-service restaurants rises slightly and owner satisfaction with car manufacturers is unchanged.

The UK economy had modest growth of 1.3% in 2010 after contracting by nearly 5% in 2009. Similarly, the NCSI rebounded from a 1% drop in 2009 with a 2.5% improvement in 2010. Now, with the NCSI stalling in the first quarter and slipping in the second quarter of 2011, it is not surprising that economic growth is slowing as well. After a 0.5% increase in GDP for the first quarter, growth was barely positive for the second quarter, with GDP rising at a mere 0.2% pace.

The fifteen industries included in the NCSI represent nearly half of total UK consumer spending. All industries reported in the second quarter of 2011 perform better than the national average, with Limited Service Restaurants slightly above average at an NCSI score of 75, while Full Service Restaurants and car manufacturers still score well above average at 78 and 79, respectively.

Amid a downturn in sales, customer satisfaction with carmakers stalls a year after reaching an all-time high. The industry is unchanged with an NCSI score of 79. The market has seen 12 straight months of declining sales and contracted by 4.4%. The economy continues to put a damper on spending, especially on big-ticket purchases like cars. Still, for those with the means to spend, customer satisfaction with carmakers is tied with that of department stores; only the e-commerce industry has higher customer satisfaction.

Among individual carmakers, Volkswagen’s luxury brand Audi leads, debuting this year in the NCSI with a score of 83. Audi beats both BMW and the VW brand itself, even though BMW is up 4% and Volkswagen 3%, tying at a score of 81. Despite the weakening industry sales, both BMW and VW sales increased. According to customers, the quality of BMW cars and services is improving, but Audi cars are a better value. With the addition of Audi in the NCSI, Toyota relinquishes the top spot, even though it has a gain of 3% to 82. Toyota appears to have rebounded from its difficulties with recalls in the UK as well as in America, according to NCSI’s counterpart in the United States - the American Customer Satisfaction Index (ACSI).

Vauxhall improves by 2% to tie with Peugeot at an NCSI score of 77. Market share leader Ford is unchanged at 76. Renault returns to last place with a score of 74. After a record increase in customer satisfaction last year, Renault’s efforts to improve quality and focus on customer satisfaction appear to have been difficult to sustain. The automaker publically acknowledged that quality was hampered by electrical issues with some models, and the brand has implemented a goodwill program to address concerns.

Customer satisfaction results for restaurants are mixed—Limited Service Restaurants make a small gain for second straight year, up 1% to an NCSI score of 75, while Full Service Restaurants plummet 6% to 78. Fast food chains continue to have a competitive advantage in a weak economy. Not so for full-service restaurants. The largest chains show some improvements, but the majority of the full-service restaurant industry (which includes smaller restaurants, local establishments and food-serving pubs) declines. Many have been forced to trim staff, and purchasing budgets have been reduced, resulting in decreasing quality of service and food for customers. By contrast, customer satisfaction with the aggregate of smaller fast food restaurants, including ‘takeaways’, improves by 3%.

Despite the drop in customer satisfaction, smaller restaurants still have higher customer satisfaction than the major chains do. The average of all smaller restaurants, including local establishments, still tops the full-service industry with an NCSI score of 79. At 78, smaller limited-service restaurants also beat the larger fast food chains.

Greggs maintains its lead among the largest limited-service chains, improving 1% to 76. Starbucks follows, gaining 3% to 74. Starbucks has strengthened its breakfast menu and reduced prices at the same time. A year ago Starbucks tied with Whitbread subsidiary Costa Coffee, but Costa dips slightly this year to 71. Yum! Brands (Including Pizza Hut and KFC) improve 3% to 71. Burgers round out the category well below the rest, with McDonald’s up 3% to 68 and Burger King slipping 1% to 66.

Nando’s makes the greatest improvement among all restaurants, rising to the top of the industry with a 6% gain to an NCSI score of 76. For Nando’s patrons, superior quality more than compensates for a somewhat higher price. Gondola Holdings (including ASK, Zizzi, and PizzaExpress) loses the top spot among the full-service chains, falling 3% to 73. Tragus Holdings (including Café Rouge, Strada and Bella Italia) improves to 73. Close behind are the Whitbread Group (Beefeater and Brewers Fayre), and the Restaurant Group (Frankie & Benny’s and Chiquito), both at 72.