Weighing WiFi in Restaurants

Does WiFi, or high speed Internet access (HSIA), play a significant role in hotel guest satisfaction, and does it have a hand in hotel booking preferences? As per the 2009 Hotel Guest Technology Study, commissioned by the American Hotel & Lodging Association's technology and e-business committee and conducted by the University of Delaware, the answer to that question is a resounding yes. Yet if this question were to be applied to restaurants, would the results be the same? Is WiFi service, whether it is free or with a fee, a determinant in customer retention? University of Delaware researcher Anil Bilgihan and myself conducted a follow-up study to understand the impact of WiFi service in the restaurant environment.

Industry snap-shot
WiFi is increasingly becoming a must-have for public places and consumers are demanding it. Over the past few years, IEEE 802.11 wireless networks have become increasingly deployed over a wide range of environments, with wireless LANs popping up in coffee shops, airports, hospitals and restaurants. Most restaurants offer WiFi service via the 802.11g standard (at 54 megabits per second) or the 802.11b standard (at 11 megabits per second). A small number of restaurants offer the newest WiFi standard, 802.11n (at 100 megabits per second).

Restaurants that offer WiFi services typically follow one of these three business models:

• For a Fee model: the hot spot is offered by a location owner in partnership with a wireless Internet service provider to generate revenue through paid subscribers;
• Free of Charge Model: the hot spot is offered free to the customer with the cost being borne by the location provider;
• Hybrid Model: the hot spot is free to customers who purchase the service in the restaurant (i.e. 30 minutes of free Internet for $10 spent in the restaurant). Even though more and more restaurants are offering WiFi to their guests following one of the three business models, there is little research as to its impact on customer retention.

Study results
A survey was sent to roughly 1,000 American consumers, of which 257 people responded. The results showed that: 1) WiFi access has become an important amenity in restaurants and cafes in the U.S.; 2) tech-savvy customers prefer restaurants or cafes with WiFi access.; 3) customers prefer the free-of-charge WiFi model over the paid models in restaurants; and 4) a stepwise regression model (a statistical technique used to identify the impact of a variable on other variables) showed that the following are predictors of the likelihood of a customer's return to a restaurant: WiFi service availability, WiFi service quality, the price of WiFi service, the perceived risk of using WiFi service, and the perceived value of WiFi.

This study suggests that there is a positive correlation between WiFi service and customer return visits. This finding makes more sense considering that 70 percent of respondents indicate utilizing a WiFi-enabled device such as a laptop or PDA. Additionally, increasing numbers of consumers own dual-mode telephones that allow phone conversations to be conducted over a WiFi network for lower or no cost. Given these trends, it is likely that the demand for WiFi access in public places such as restaurants will only increase.

This study also suggests that there is a negative correlation between the cost of WiFi access in restaurants and customers' intentions to return. As the cost of restaurant WiFi access increases, customers are less likely to return to that establishment. To offset this, WiFi service should be offered to customers either free of charge or through a business model where customers are required to make a food or beverage purchase to access the free WiFi service. This way, the cost of the service will be satisfied. The data also shows a positive correlation between perceived value of WiFi and intention to return to a restaurant.

There also is a negative correlation between the perceived risk of using WiFi at a restaurant and a guest's intention to return. There is little that restaurants can offer to address the perceived risk of using WiFi in public networks. Users should be prepared to use their own tools to enable WiFi security, such as secure socket layers and virtual private networks. However, restaurants can offer secure WiFi access to their loyal customers through WiFi protected access which is an advanced encryption method for WiFi access.

The study results indicate that restaurants could gain a positive return on their WiFi investment. Restaurant owners and operators may do well to review the complete results and evaluate their high speed Internet offering strategy.