International Journal of Hospitality Management 30 (2011) 599–611

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International Journal of Hospitality Management

journal homepage: www.elsevier.com/locate/ijhosman

New or repeat customers: How does physical environment influence their

restaurant experience?
Kisang Ryu a,1 , Heesup Han b,∗
a
Department of Food Service Management, College of Hospitality and Tourism Management, Sejong University, 98 Gunja-Dong, Gwanjin-Gu, Seoul, Korea
b
Department of Tourism Management, College of Business Administration, Dong-A University, Bumin-dong 2-ga, Seo-gu, Busan, South Korea

a r t i c l e i n f o a b s t r a c t

Keywords: This study proposed a conceptual model to examine how customers’ perceptions of the physical environ-
Physical environment ment influenced disconfirmation, customer satisfaction, and customer loyalty for first-time and repeat
Disconfirmation customers in upscale restaurants. Using a structural equation modeling analysis, this study showed that
Customer satisfaction
facility aesthetics, lighting, layout, and service staff had significant effects on disconfirmation. Moreover,
Customer loyalty
disconfirmation exerted a direct influence on customer satisfaction and customer loyalty. Customer sat-
First-time and repeat customers
Upscale restaurant isfaction also positively influenced customer loyalty. Finally, the impacts of facility aesthetics, lighting,
table settings, and service staff on disconfirmation significantly differed between first-time customers
and repeat customers. More specifically, facility aesthetics, lighting, and service staff were significant
predictors of both first timers’ and repeaters’ perceived disconfirmation, while layout and table settings
were significant determinants of only repeat visitors’ perceived disconfirmation. The implications for
academic researchers and marketing practitioners are discussed.
© 2010 Elsevier Ltd. All rights reserved.

1. Introduction ian consumption is mainly task-related or functional in nature. This

The importance of creating and maintaining a distinctive atmo-
sphere has garnered growing attention among hospitality scholars
and managers as it is considered a key factor in attracting and
satisfying customers and in increasing financial performance by
maximizing income and market share in the hospitality indus-
try (Dube and Renaghan, 2000; Han and Ryu, 2009; Heide and
Gronhaug, 2009; Hertenstein et al., 2001; Jang and Namkung, 2009;
Kim and Moon, 2009; Liu and Jang, 2009; Magnini and Parker, 2009;
Ryu and Jang, 2007; Zemke and Pullman, 2008). A number of stud-
ies have found that customer reactions to the physical environment
(also known as ‘atmospherics’) can be more important, particularly
when hedonic consumption is highly involved (Bitner, 1992; Ryu
and Jang, 2007; Wakefield and Blodgett, 1994). While consump-
tion of many types of services (e.g., consumption of a ready-to-eat
food) is driven primarily by utilitarian, or functional, purposes, con-
sumption of leisure services (e.g., fine-dining experiences) is largely
driven by hedonic, or emotional, motives (Lin, 2004; Ryu and Jang,
2007; Tang et al., 2001). Hedonic aspects of consumption behav-
ior focus on the consumption experience (Arnold and Reynolds,
2003; Babin et al., 1994; Wakefield and Baker, 1998), reflecting the
need for entertainment and emotional value. In contrast, utilitar-
∗ Corresponding author. Tel.: +82 51 200 7427.
E-mail addresses: kryu@uno.edu (K. Ryu), heesup.han@gmail.com (H. Han).
1
Tel.: +82 2 3408 3313.
study examines the determinants of customer satisfaction and loy-
alty within the realm of hedonic services, particularly in the upscale
restaurant context.
The physical environment is an important determinant of
consumer psychology (e.g., disconfirmation and satisfaction) and
behavior (e.g., patronage and word-of-mouth) when a service is
consumed primarily for hedonic purposes and when customers
spend moderate to long periods of time immersed in a particular
atmosphere (Ryu and Jang, 2007; Wakefield and Blodgett, 1994).
For instance, in the case of upscale restaurants, customers may
remain within an eatery’s confines for 2 h or more, and they take in
their physical surroundings consciously and unconsciously before,
during, and after the meal. In addition to food and service, a pleasant
physical setting (e.g., innovative interior design and décor, pleasing
music, subdued lighting, a unique color scheme, agreeable ambient
odors, a spacious layout, appealing table settings, and an attractive
service staff) should determine to a large extent the degree of over-
all customer satisfaction and loyalty resulting from the restaurant
visit (Han and Ryu, 2009; Kim and Moon, 2009; Sulek and Hensley,
2004; Turley and Milliman, 2000).
Researchers have acknowledged the importance of understand-
ing the differences between first-time visitors and repeat visitors
in the hospitality and tourism industry (Anwar and Sohail, 2004;
Morais and Lin, 2010; Opperman, 1997; Petrick, 2004). More specif-
ically, various marketing researchers suggested that understanding
the differentiation between first-time and repeat visitors can pro-
vide a good basis for market segmentation. The two segments differ

0278-4319/$ – see front matter © 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.ijhm.2010.11.004
600 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611
with regards to their motivations and activities towards the prod-
ucts or services. In addition, prior experience is perceived as a
vital determinant to consumers’ tripographic characteristics (e.g.,
number of previous visits, length of stay, party size, and accommo-
dation type), as well as other variables such as planning behavior
and post-experience evaluations (Li et al., 2008; McKercher and
Chan, 2005). Regardless of their characteristics, repeat visitors
are commonly perceived as a preferable market segment that
should receive high priority in tourism and hospitality sectors, as
is evident in the abundance of loyalty programs and incentives
offered to encourage and reward repeat patronage (Mattila, 2006).
Therefore, various hospitality and tourism sectors need to first
understand the differences between these two different segments
(e.g., first-time versus repeat visitors) to develop persuasive mar-
keting strategies to more effectively target these two segments,
more importantly for repeat visitors/customers. Nevertheless, the
following question still remained unanswered in the literature:
are there differences between first-time visitors and repeat visi-
tors in regards to their perceptions of physical environments in
the hospitality industry? In this regard, from a marketing perspec-
tive, it was advisable to examine the differences between first-time
visitors and repeat visitors in terms of their perceptions of the phys-
ical environments on behalf of the restaurant management in this
study.
Despite the fact that there have been many studies made on the
influence of the physical environment, a majority of this empiri-
cal research has focused on only one or a few particular physical
environmental elements (e.g., music). Hence, there still seem to be
areas calling for more study to understand the combined effect of
physical environments. While a substantial amount of research has
revealed that physical environments and disconfirmation (defined
as a function of product or service performance, as perceived by
consumers following their actual experience, as well as their expec-
tation of the product or service) can be important predictors of
customer satisfaction, particularly in a hedonic consumption situ-
ation, to the best of our knowledge no previous studies have jointly
tested the proposed relationships between physical environments,
disconfirmation, and customer satisfaction in an integrated model.
In particular, surprisingly, no research has examined the rela-
tionships between the perceived quality of physical environments
and disconfirmation. Since physical environments are particularly
influential factors towards customer reactions in hedonic services,
there is a need to understand how customer satisfaction and
behavior change depending upon customers’ perception of physi-
cal environmental elements. Additionally, despite the importance
of understanding the differences between first-time customers and
repeat customers in the hospitality and tourism industry, no study
to date has yet empirically compared the differences between
these segments (first-time and repeat customers) in regards to
their perceptions of physical environments in the hospitality and
tourism industry, particularly in the restaurant industry. Thus, we
attempt to incorporate the moderator ‘the frequency of past visits’
to evaluate how customers’ the frequency of past visits (first-
time versus repeat visitation) strengthen or lessen the effect of
their perceived physical environment quality on satisfaction in this
study.
This present research aims to fill these research gaps. It proposes
and tests an integrative model which focuses on the relationship
between customer perceptions of physical environments on their
disconfirmation, satisfaction and intended behaviors while identi-
fying the differences between first-time and repeat visitors in the
upscale restaurant industry. More specifically, the objectives of cur-
rent study were (1) to explore the effects of customers’ perceptions
of dining environments on perceived disconfirmation in the upscale
restaurant context; (2) to examine the influence of perceived dis-
confirmation on customer satisfaction; (3) to test the impact of
customer satisfaction on customer loyalty; and (4) to investigate
the moderating effect of the past experience (differentiating first-
time customers and repeat customers) on the link between physical
environments and disconfirmation.
This study is important both theoretically and practically. Prac-
tically, this study can provide restaurateurs with various insights
into the important role of physical environmental elements on cus-
tomer satisfaction and customer loyalty. It is expected that the
conceptual model, survey instrument, methodology, and findings
of this study can be used to help restaurant managers establish
what they are doing right or wrong to retain customers, which could
lead to increased revenue and market share (Molinari et al., 2008).
This study can also offer meaningful information to restaurant man-
agers who plan to undertake renovation projects. In addition, this
study theoretically contributes to the service marketing literature
beyond previous research. This study is the first to propose a con-
ceptual model that investigates the combined relationships among
physical environments, disconfirmation, customer satisfaction, and
loyalty for both first-time customers and repeat customers in the
service industry, particularly in the restaurant industry.
2. Literature review
2.1. Physical environment
Dining is more than eating out for a majority of customers.
Customers may not want to feel at home. They may seek a mem-
orable experience away from home, and atmosphere can play a
critical role in creating that memorable experience. To capture how
customers perceived the physical environment in the dining area,
the DINESCAPE scale was used in this study (Ryu and Jang, 2007,
2008a). The DINESCAPE is defined as the man-made physical and
human surroundings in the dining area of upscale restaurants. The
DINESCAPE includes six dimensions: facility aesthetics, lighting,
ambience, layout, table settings, and service staff. These component
aspects will be detailed in the paragraphs that follow.
2.1.1. Facility aesthetics
Facility aesthetics means architectural design, interior design
and décor that contribute to the attractiveness of the dining envi-
ronment (Wakefield and Blodgett, 1994). Facility aesthetics can
be critical in attracting and retaining restaurant customers (Cobe,
2007). Not only can it influence consumer traffic to a restaurant, but
it can also affect the revenue of the restaurant. A lot of dining estab-
lishments recognize and utilize facility aesthetics to create specific
restaurant themes (Barbas, 2002). For instance, P.F. Chang’s China
Bistro made their mark through innovative interior design and
décor. Additionally, it can play a role as an important marketing tool
by affecting customer responses such as attitudes, emotions, price
perceptions, value perceptions, satisfaction, and behavior (Berry
and Wall, 2007; Han and Ryu, 2009; Kim and Moon, 2009; Liu
and Jang, 2009; Pullman and Gross, 2004; Pullman and Robson,
2007; Ryu and Jang, 2007). For instance, once inside the dining area,
customers often spend hours observing (consciously and uncon-
sciously) the interior of the dining area. These evaluations are likely
to affect their attitudes towards the restaurant. In addition to the
appeal of the dining area’s architectural design, customers may be
influenced by the color schemes of the dining area, such as those
adorning its walls and floor coverings. Other aspects of interior
design, including furniture, pictures/paintings, plants/flowers, or
wall decorations may serve to enhance the perceived quality of
dining environments, eliciting emotions in a customer and influ-
encing behavior. Ryu and Jang (2008b) found that facility aesthetics
was a significant antecedent of customers’ pleasure, arousal and
behavioral intention in an upscale restaurant context.
 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611
2.1.2. Ambience
Ambient elements are intangible background characteristics
(e.g., music, scent, temperature) that tend to affect the non-visual
senses and may have a subconscious effect on customers (Baker,
1987). Previous studies have found that atmospheric music can
(1) affect customer perceptions of business places (Mattila and
Wirtz, 2001; North and Hargreaves, 1998); (2) elicit emotions
(Ryu and Jang, 2007); (3) influence customer satisfaction and
relaxation (Magnini and Parker, 2009; Oakes, 2003); (4) increase
shopping time and waiting time (Yalch and Spangenberg, 2000);
(5) decrease perceived shopping time and waiting time (Hui et al.,
1997; Yalch and Spangenberg, 2000); (6) influence dining speed
(Milliman, 1986); (7) influence purchase intentions (Baker et al.,
1992; North and Hargreaves, 1998); (8) amend consumer per-
ceptions of brand personality (Magnini and Parker, 2009); (9)
influence buyer/seller interaction (Magnini and Parker, 2009); (10)
enhance employee productivity (Magnini and Parker, 2009); and
(11) increase sales (Magnini and Parker, 2009; Mattila and Wirtz,
2001; North and Hargreaves, 1998). Moreover, the influence of
pleasant scents as a powerful tool to increase sales has gained
much attention in retail businesses (Bone and Ellen, 1999; Chebat
and Michon, 2003; Mattila and Wirtz, 2001). Retailers now know
that aroma can have an impact on a consumer’s desire to make
a purchase. It is also suggested that ambient scent might also
influence a consumer’s mood, emotion, or subjective feeling state
(Bone and Ellen, 1999; Chebat et al., 2009). Additionally, Zemke
and Shoemaker (2008) conducted an empirical study to investigate
how introducing an ambient scent affects interactions between
people within a meeting room. The study revealed that introduc-
ing an ambient scent into a meeting room significantly increased
the number of social interactions between subjects. Ryu and Jang
(2007) revealed that ambience had significant effects on the level
of customer pleasure. Kim and Moon (2009) further found that
ambient conditions have the highest association with perceived
service quality and the second highest correlation with pleasure-
feeling.
2.1.3. Lighting
. Research indicates that there is a relationship between
lighting levels and individuals’ emotional responses and approach-
avoidance behaviors. Baron (1990) showed that subjects had a more
positive affect in conditions of low levels of lighting compared to
high levels of lighting. The level of comfort was increased at rel-
atively low levels of light, while comfort decreased as levels of
light rose. In addition, higher levels of illumination are associated
with increased physiological arousal. Moreover, the type of light-
ing could affect an individual’s perception of the quality of space,
changing his/her awareness of physical, emotional, and psycho-
logical aspects of the area and accordingly influencing behavioral
intentions (Kurtich and Eakin, 1993). Areni and Kim (1994) identi-
fied the impact of in-store lighting on various aspects of shopping
behavior (e.g., consumer behavior, amount of time spent, and total
sales) in a retail store setting. The results revealed that brighter
lighting influenced shoppers to examine and handle more prod-
ucts but did not have an impact on sales or time spent in the store.
Knez and Kers (2000) examined the influence of indoor lighting,
gender, and age on mood and cognitive performance. It was found
that indoor lighting was an affective source that may convey emo-
tional meanings differentiated by gender, age, or both. Lighting
can be one of the most powerful physical stimuli in restaurants,
particularly in upscale restaurants. While bright lighting at fast-
food restaurants (e.g., McDonald’s) may symbolize quick service
and relatively low prices, subdued and warm lighting in more gen-
teel establishments may symbolically convey full service and high
prices.
601
2.1.4. Layout
Spatial layout refers to the way in which objects (e.g., machinery,
equipment, and furnishings) are arranged within the environment.
Just as the layout in discount stores facilitates the fulfillment of
functional or utilitarian needs, an interesting and effective lay-
out can also facilitate fulfillment of pleasure or hedonic needs
(Wakefield and Blodgett, 1994; Ryu and Jang, 2008b). Spatial lay-
out that makes people feel constricted may have a direct effect on
customer quality perceptions, excitement levels, and, indirectly, on
their desire to return. This implies that service or retail facilities that
are specifically designed to add some level of excitement or arousal
to the service experience, such as those in an upscale restaurant,
should provide ample space to facilitate exploration and stimu-
lation within the physical environment (Wakefield and Blodgett,
1994). The locations of tables in restaurants have a tremendous
impact on the overall experience of a customer. Table placement
has the ability to transmit a sense of privacy, portray the func-
tionality desired, and operate as a boundary for the customer (Lin,
2004). Ryu and Jang (2008b) revealed that layout was a signifi-
cant determinant of the level of pleasure in an upscale restaurant
context.
2.1.5. Table settings
Table settings should be an important element of atmosphere in
upscale restaurant setting. Upscale restaurants should be designed
to deliver a prestigious image to attract upper-class customers. For
instance, high quality flatware, china, glassware, and linen can be
effective tools to influence customers’ perceptions of overall restau-
rant service quality. The way in which the table is decorated (e.g.,
an attractive candle and flowers on the table) can also make cus-
tomers feel that they are in a prestigious environment. Even though
this dimension has been largely ignored in the hospitality literature,
probably because it is unique and valid only to upscale restaurants,
table setting is assumed to affect diners’ cognitive (e.g., disconfir-
mation) and affective (emotions) responses, which in turn influence
customer behavior.
2.1.6. Service staff
Service staff refers to the service employees in the service set-
ting (Ryu and Jang, 2008a). It includes employee appearance, the
number of employees, and the gender of employees. It is impor-
tant to note that actual service staff interactions differ from the
physical presence of service staff. More specifically, the interactions
between service staff and customers are not considered as the ele-
ments of the physical environments in this study since they are
not the attributes of the tangible quality. A professional employee
uniform may effectively convey an organization’s image and core
values in a very up-close and personal way. Baker et al. (1992) found
that social cues (e.g., number/appearance of employees) positively
influenced customer emotions such as arousal. Tombs and McColl-
Kennedy (2003) further claimed that service staffs are related to the
desired social density, which affects customers’ affective and cog-
nitive responses as well as their repurchase intentions. Similarly,
Ryu and Jang (2007) supported the strong influence of employees
on customers’ pleasure and arousal states.
2.2. Disconfirmation and customer satisfaction
A considerable amount of work towards understanding con-
sumer satisfaction or dissatisfaction has taken place among
consumer researchers since understanding what makes consumers
satisfied or dissatisfied is a key to successful marketing manage-
ment in service industries (Han and Ryu, 2009; Oliver, 1980). From
the satisfaction stream of research, the concept of ‘disconfirmation’
evolved. In the literature, disconfirmation refers to a psychological
or mental comparison of the expectation-performance gap (Oliver,
602 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611
1997). This proposes that consumers have expectations about prod-
ucts or services prior to consumption. As the product or service
is consumed or delivered, consumers compare their perceptions
of consuming the product or service to their expectations. Three
general types of outcomes can be expected from disconfirmation:
positive disconfirmation, negative disconfirmation, and zero dis-
confirmation. Positive disconfirmation takes place when perceived
performance exceeds expectations and is likely to lead to enhanced
satisfaction. In contrast, negative disconfirmation happens when
performance falls short of expectations and is likely to result in less
favorable evaluations, consequently dissatisfaction. Zero disconfir-
mation or simple confirmation occurs when performance just meet
expectations (Menon and Dube, 2000; Oliver and Bearden, 1985;
Oliver et al., 1997; Wirtz and Bateson, 1999).
On the other hand, based on the performance-based approach,
other scholars have argued that customer satisfaction needs to
integrate affective responses in addition to cognitive evaluations
during consumption (Mano and Oliver, 1993; Oliver, 1993; Rojas
and Camarero, 2008; Westbrook and Oliver, 1991). Traditionally,
satisfaction was considered to be a cognitive state (disconfirma-
tion theory) (Oliver, 1980; Oliver and DeSarbo, 1988). Recently,
however, there has been a growing recognition among researchers
that a purely cognitive approach may be inadequate in explain-
ing satisfaction evaluations. The need to understand satisfaction
from a more emotional aspect has been emphasized in connec-
tion with cognitive influence (Oliver et al., 1997; Phillips and
Baumgartner, 2002; Premkumar and Bhattacherjee, 2008; Rojas
and Camarero, 2008; Wirtz and Bateson, 1999). Specifically, in the
case of upscale restaurants, understanding customer satisfaction
from a more emotional perspective can be more relevant given
that customer reactions to the physical environment is more emo-
tional and hedonic consumption is highly involved. In this study,
customer satisfaction represents the consumer’s emotive state or
fulfillment responses, the degree to which the level of fulfillment
is pleasant or unpleasant (Oliver, 1997).
2.3. Impact of physical environments on disconfirmation
We are aware of no studies that examine the relationship
between the perceptions of physical environment quality and per-
ceived disconfirmation. However, there are a number of reasons
why we assume the relationships between two variables.
Researchers established the simultaneous effect of key customer
satisfaction or dissatisfaction (CS/D) constructs (expectations, per-
formance, and disconfirmation) in various contexts (Bigne et al.,
2008; Bowen, 2001; Kanning and Bergmann, 2009; Lee and Beeler,
2007; Molinari et al., 2008; Oliver and DeSarbo, 1988; Patterson,
2007; Premkumar and Bhattacherjee, 2008; Rojas and Camarero,
2008; Szymanski and Henard, 2001; Wirtz and Bateson, 1999; Yi
and La, 1993; Yoon and Kim, 2000). The literature assumed that
expectations and performance have indirect effects on satisfaction
through a “disconfirmation” process in a causal path framework. In
this process, an individual’s expectations are used as a standard for
comparison in the judgment of consumers’ perceived performance
through actual experience (Szymanski and Henard, 2001). While
much of the prior disconfirmation research has examined simulta-
neous effect of expectation and performance as key determinants of
disconfirmation (Bigne et al., 2008; Kanning and Bergmann, 2009;
Lee and Beeler, 2007; Molinari et al., 2008; Oliver and DeSarbo,
1988; Patterson, 2007; Premkumar and Bhattacherjee, 2008; Rojas
and Camarero, 2008; Spreng and Mackoy, 1996; Szymanski and
Henard, 2001), the present study only used performance as an
important predictor of disconfirmation. Although past empirical
research has shown a significant effect of expectations on disconfir-
mation (Patterson, 1993; Spreng et al., 1996; Tse and Wilton, 1988),
recent studies empirically demonstrated that “performance” was a
much more powerful predictor of satisfaction than “expectation”
and that it is therefore not necessary, in practice, to conduct a dif-
ferentiated survey of expectation measure (Kanning and Bergmann,
2009; Lee and Beeler, 2007; Premkumar and Bhattacherjee, 2008).
Therefore, this study only included the performance measure (e.g.,
physical environment quality) as the primary determinant of per-
ceived disconfirmation.
Although no study to date has yet empirically examined the
relationships between the physical environment quality and per-
ceived disconfirmation, some scholars demonstrated the causal
relationship from perceived performance regarding perceived ser-
vice quality to perceived disconfirmation (Rojas and Camarero,
2008). The perception of service quality refers to the global judg-
ment made by the consumer by evaluating the excellence of a
service (Oliver, 1997). Some scholars stated that the perceived ser-
vice quality is determined by three dimensions: outcome quality,
interaction quality, and physical environment quality (Brady and
Cronin, 2001; Rojas and Camarero, 2008). Here, physical environ-
ment quality means the ambient conditions where the service is
delivered or the product is sold. In addition, some other scholars
suggested that the physical environment quality is one of three
primary dimensions of perceived service quality (i.e., food qual-
ity, service quality, physical environment quality) in the context
of restaurant industries (Jang and Namkung, 2009; Ryu and Han,
2010). Since the physical environments are considered as one of
major components of perceived service quality (Brady and Cronin,
2001; Jang and Namkung, 2009; Ryu and Han, 2010), it is logical to
expect the direct effect of the physical environment quality on the
level of disconfirmation.
Not only may the physical environment elicit affective
responses (e.g., emotions, customer satisfaction) (Han and Ryu,
2009; Mehrabian and Russell, 1974; Ryu and Jang, 2007), it may also
induce cognitive or perceptual responses (e.g., quality, disconfirma-
tion, value) (Bitner, 1992; Kim and Moon, 2009; Reimer and Kuehn,
2005), influencing people’s evaluations and judgments on the qual-
ity of a place, product, or service (e.g., the dining experience). Some
previous studies have further revealed that the physical environ-
ment may influence a customer’s evaluation of service quality, as
well as their behavioral responses (Baker et al., 2002; Berry and
Wall, 2007; Jang and Namkung, 2009). For example, if customers
perceive the background music of a restaurant to be pleasing, this
environmental cue may positively affect cognitive responses such
as perceived disconfirmation.
Several sources of information (e.g., advertising and commer-
cial communication, word of mouth referrals, or prior experiences)
can create expectations of service quality for individuals, which are
then challenged by the real experience (d’Hauteville et al., 2007).
The results of a service experience such as a dining experience can
be worse or better than what the consumer expected when the
purchase or consumption is made (Oliver, 1980). One can therefore
reasonably assume that the intensity of disconfirmation can vary
in relation to the intrinsic qualities of a product or service such as
the physical environment in the dining area. For example, in the
case of upscale restaurants, an unknown atmospherics can gener-
ate a pleasant surprise upon dining experience and thereby leads
to positive disconfirmation and, consequently, customer satisfac-
tion. Oppositely, an unpleasant experience with high expectations
towards upscale restaurants can create a feeling of disappoint-
ment which reinforces the negative disconfirmation. Hence, it is
logical to postulate that customers’ perceptions of physical envi-
ronments may influence the perceived disconfirmation. Based on
the aforementioned discussion, the following hypotheses were
proposed:
Hypothesis 1a. Facility aesthetics positively influences perceived
disconfirmation.
 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611
Hypothesis 1b. Lighting positively influences perceived discon-
firmation.
Hypothesis 1c. Ambience positively influences perceived discon-
firmation.
Hypothesis 1d. Layout positively influences perceived disconfir-
mation.
Hypothesis 1e. Table settings positively influence perceived dis-
confirmation.
Hypothesis 1f. Service staff positively influences perceived dis-
confirmation.
2.4. Impact of disconfirmation on customer satisfaction and
customer loyalty
An array of previous research has empirically confirmed a direct
causal relationship between disconfirmation and consumers’ sat-
isfaction/dissatisfaction (Bigne et al., 2008; Bowen, 2001; Kanning
and Bergmann, 2009; Lee and Beeler, 2007; Loureiro, 2010;
Molinari et al., 2008; Patterson, 2007; Pizam and Milman, 1993;
Rosen et al., 2003; Spreng and Mackoy, 1996; Szymanski and
Henard, 2001; Wirtz and Bateson, 1999; Yen and Lu, 2008; Yoon
and Kim, 2000). Wirtz and Bateson (1999) proposed a conceptual
model that integrated the research on the environmental perspec-
tive of service experiences with the standard satisfaction model.
The study found that confirmation/disconfirmation had a direct and
positive effect and positive effect on pleasure, and both, in turn,
had direct and positive effects on satisfaction. Pizam and Milman
(1993) tested Oliver’s (1980) expectancy disconfirmation theory
and found that disconfirmations were relatively good predictors of
overall satisfaction with a destination. Patterson (2007) examined
the determinants of customer satisfaction or dissatisfaction (CS/D)
in the context of business professional services. The results indi-
cated that performance was found to affect CS/D directly but not as
powerfully as disconfirmation. Bigne et al. (2008) conducted a study
to examine cognitive and affective antecedents and consequences
of consumer satisfaction in the context of two hedonic services:
a theme park experience and a visit to an interactive museum.
The results showed that disconfirmation had a direct influence on
consumer satisfaction in both samples. Additionally, the findings
indicated that disconfirmation had an indirectly positive effect on
loyalty through pleasure and satisfaction. Molinari et al. (2008) also
conducted an empirical study to examine how satisfaction, quality,
and value affect repurchase and positive word-of-mouth behav-
ioral intentions in a service’s business-to-business setting. The
results of the study showed a strong positive effect from positive
disconfirmation of expectations to satisfaction. The findings also
indicated direct links from positive disconfirmation to repurchase
intention and word-of-mouth intention. Yen and Lu (2008) con-
ducted a study to draw on expectancy disconfirmation theory (EDT)
to explore e-service quality and the factors influencing an individ-
ual’s loyalty intention towards online auctions. The results found
that that e-service quality dimensions (i.e., efficiency, privacy pro-
tection, contact, fulfillment, and responsiveness) had statistically
significant influences on buyer’s disconfirmation. The findings fur-
ther indicated that that buyers’ disconfirmation of online auctions
was positively associated with their satisfaction, and their satis-
faction was positively associated with loyalty intentions. Loureiro
(2010) suggested that satisfaction was a more significant determi-
nant of loyalty than delight and disconfirmation was an important
predictor of both satisfaction and delight. Although there is con-
siderable support for the impact of disconfirmation on satisfaction,
research on the effect of disconfirmation on customer loyalty is rel-
atively limited (Bigne et al., 2008; Molinari et al., 2008; Oliver et al.,
1997).
603
Consequently, this study postulates that positive disconfir-
mation derived by customers who positively evaluate physical
environments will positively influence their satisfaction and loy-
alty (Bigne et al., 2008; Wakefield and Blodgett, 1999), resulting in
the following hypotheses:
Hypothesis 2. Perceived disconfirmation positively influences
customer satisfaction.
Hypothesis 3. Perceived disconfirmation positively influences
customer loyalty.
2.5. Impact of customer satisfaction on customer loyalty
A great deal of previous research has shown empirical evi-
dence of a positive relationship between customer satisfaction
and loyalty (Alegre and Cladera, 2009; Chi and Qu, 2008; Cronin
et al., 2000; Cronin and Taylor, 1992; Fornell et al., 1996; Han
and Ryu, 2009; Oh, 1999). Fornell et al. (1996) indicated that
enhancing satisfaction levels contributed to building customer loy-
alty in regards to repurchase likelihood and price tolerance given
repurchase. Cronin and Taylor (1992) revealed that satisfaction
is a critical determinant of positive behavioral intentions in vari-
ous service sectors (e.g., fast food, banking, and dry cleaning). In
addition, Han and Ryu (2009) conducted a study to provide empir-
ical evidence of customer-loyalty enhancement through physical
environments, price perception, and customer satisfaction in the
restaurant industry. The findings showed that the direct effect of
customer satisfaction on customer loyalty was statistically sig-
nificant. Satisfied customers are likely to remain loyal to the
provider by repatronizing the service/product, by spreading pos-
itive word-of-mouth (WOM), and by spending more. Therefore,
it was hypothesized that customer satisfaction was a significant
predictor of customer loyalty in the upscale restaurant industry.
Hypothesis 4. Customer satisfaction positively influences cus-
tomer loyalty.
2.6. Physical environment and disconfirmation between
first-time and repeat customers
Lim and Razzaque (1997) argued that the impact of the situation
in which purchase or consumption occurs has been largely ignored
in understanding customer behaviors. However, situational influ-
ence can be either the largest or second-largest determinant
of or contributor to consumers’ preferences for different types
of products or services (Belk, 1975). Bitner (1990) found that
physical environments and employee responses significantly influ-
enced important consumer responses and underlined the need to
consider these and other situational variables in predicting and
explaining consumer behaviors. Similarly, Bitner (1992) proposed
that situational factors such as monetary mood and plans/purposes
for being in the physical environment can have a moderating effect
on customers’ responses. Meiselman (1996) also argued that the
most important and neglected area in need of understanding in
restaurant consumer behavior is the dining situation itself. Given
this rationale, we can carefully assume that past experience, which
can be one of the most powerful situation factors, can possibly affect
customers’ perceptions about the quality of physical environments
(Bitner, 1992).
Expectations are known to play a critical role in the formation
of disconfirmation by serving as a comparison standard. However,
the nature of expectations might differ across customers depending
on many factors, such as past experience, word-of-mouth reports,
advertising, policies, and price. In particular, the past experience is
perceived as an important predictor to consumers’ post-experience
evaluations (Li et al., 2008; Ryu and Jang, 2006). That is, the expec-
604 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611
tations and interpretations of physical environment quality might
vary across first-time visitors and repeat visitors (Parasuraman
et al., 1985; Zeithaml et al., 1993). Accordingly, first-time visitors’
perceptions of physical environment quality might be different
from those of repeat visitors under the assumption that the past
experiences of repeat visitors influence their judgment of physical
environment quality. Similarly, the disconfirmation measure might
be also influenced by the past experience among two groups.
Past experience is highly associated with the cues that cus-
tomers use to evaluate the quality of products or services. First-time
visitors with less familiarity with products or services should have
fewer core cues to assess quality than repeat visitors since they
lack prior experiences in a restaurant setting. First-time visitors
are more likely to have more complex and differentiated images of
products and services than repeat visitors (Fakeye and Crompton,
1991; Petrick, 2004) because of incomplete evaluative information
about the restaurant. However, repeat visitors are likely to evaluate
the gap between expectations and performance more exactingly.
Accordingly, this study assumed that situation-specific measures,
particularly the frequency of past visits (first-time visitors versus
repeat visitors) could enhance or lessen the effect of customers’ per-
ceptions about the quality of physical environments on perceived
disconfirmation.
The perceived quality of the physical environment might vary
depending upon different prior experience (e.g., new visitors
versus repeat visitors). Customers in various frequency stages
may influence their preferences and, consequently, evaluations of
the physical environment quality in foodservice differently. For
instance, in comparison to repeat visitors, first-timers tend to be
more explorative and adventurous in nature. Thus, first-time visi-
tors might prefer to get a table where he or she is able to facilitate
exploration and stimulation within the luxurious physical environ-
ment considering it is his/her first experience in the environment.
In contrast, repeat customers might be more preferred with the
table with more privacy. Therefore, it is reasonable to assume that
under the upscale restaurant context frequency of past visits (first-
time versus repeat visitation) can be a key factor to differentiate
customers’ perceptions of physical environments and, in turn, per-
ceived disconfirmation. In sum, given the different expectations
towards the atmospherics of the restaurant between first-time
visitors and repeat visitors, it also seemed advisable to consider
moderating role of the frequency of past visits (first-time versus
repeat visitation) in this study to better explain the impact of phys-
ical environments on customer satisfaction and loyalty behavior.
Consequently, the following hypotheses are proposed:
Hypotheses 5a–5f. Past experience (of first-time customers
versus repeat customers) has a significant moderating role in the
relationship between each dimension of physical environment and
perceived disconfirmation.
Based on aforementioned discussion, the following conceptual
framework regarding the relationships among latent variables was
proposed, as shown in Fig. 1.
3. Methodology
3.1. Measurement
The operationalizations of the questionnaire were developed
based on the extant literature to examine the relationships between
the perceived quality of physical environments, disconfirmation,
customer satisfaction, and customer loyalty in the upscale restau-
rant setting. The questionnaire was first developed in English and
then translated into Korean by the researcher from the respective
country and a bilingual professor to ensure that all expressions and
words were included and properly stated in both versions. The com-
Facility
H1a
Aesthetics
Ambience H1b
Customer
Lighting H1c H2 Satisfaction
Disconfir
H1d mation H4
Table
Settings
H3
Customer
H1e Loyalty
Layout
H5a-5f
H1f
Service
Staff
First-timers
vs. Repeaters
Fig. 1. Proposed model.
plete Korean version of the questionnaire was then back-translated
into English by another bilingual professor who was familiar with
the subject content. Differences in expression were dealt with by
consultation with an English professor in Korea. Then, a pilot test
of the research instrument was conducted as a preliminary test of
the final version. Thirty actual customers at an upscale restaurant
participated to assess the adequacy of the content. Based on the
results of a content adequacy assessment, modifications of items
were made.
First, respondents were asked to rate each DINESCAPE item
using a 7-point Likert scale (1 = strongly disagree, 7 = strongly
agree) to assess customers’ physical environmental perceptions
in the dining area. The DINESCAPE scale also included an option
for ‘not applicable’, which was useful in analyzing non-response.
The questionnaire included a pool of 21 measurement items for
six dimensions (facility aesthetics, lighting, ambience, layout, table
settings, and service staff) derived from the DINESCAPE scale (Ryu
and Jang, 2007; Ryu and Jang, 2008a,b). More specifically, this
list of 21 items consisted of five items for aesthetic design (e.g.,
“Paintings/pictures are visually attractive”), four items for ambi-
ence (e.g., “Background music relaxes me”), three items for lighting
(e.g., “Lighting creates a warm atmosphere”), three items for layout
(e.g., “Seating arrangement gives me enough space”), three items
for table settings (e.g., “Tableware (e.g., glass, china, silverware) is
of high quality”), and three items for service staff (e.g., “Employees
are neat and well dressed”).
Second, perceived disconfirmation is a psychological inter-
pretation of a expectation-performance discrepancy, and can be
perceived as worse than expected (negative disconfirmation), or
better than expected (positive disconfirmation), or as expected
(zero disconfirmation) (Oliver, 1980; Spreng and Page, 2003). Per-
ceived disconfirmation was measured with two items using a
7-point semantic differential scale suggested by previous studies
(Bigne et al., 2008; Oliver, 1980; Wirtz and Bateson, 1999). Subjects
were asked to respond to two statements, ranging from “worse
than expected” to “better than expected” (e.g., “Overall dining
experience is worse than–better than expected”). Third, customer
satisfaction was assessed using a 7-point Likert scale (1 = strongly
disagree, 7 = strongly agree) with three items (e.g., “Overall, I am
satisfied with this restaurant”) (Oliver, 1997). Fourth, customer
loyalty was measured using a 7-point Likert scale (1 = strongly dis-
agree, 7 = strongly agree) with five items (e.g., “I would like to come
back to this restaurant in the future”) (Han and Ryu, 2009). Fifth, to
 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611 605

identify if the participants were first time or repeat visitors to the
restaurant, one question was asked (“Is this your first time to visit
this restaurant?”) using a dichotomous scale. Finally, demographic
variables (e.g., gender, age, education, income) were measured.
3.2. Data collection
To limit extraneous variability, we examined the perceptions of
the physical environments only in the context of classic Korean
restaurant. The data were collected from customers at Korean
upscale restaurants in which average guest check per person were
more than $25 and which provided professional service, a luxu-
rious Korean atmosphere, and exceptional Korean cuisine. Using
a convenience sampling approach, 310 responses were collected
via a self-administered questionnaire at three upscale restaurants
in Seoul, Korea. The host explained the purpose of the survey and
asked if customers were willing to participate in the survey when
they sat down at their tables. Those who agreed were given a survey
questionnaire as they were finishing their main entrée. To control
or minimize common-method bias, we guaranteed anonymity and
confidentiality to the respondents in order to reduce evaluation
apprehension (Podsakoff et al., 2003). Under the permission of the
management, the questionnaire was distributed to 450 customers
in three upscale restaurants. 310 responses were gathered with a
68.9 percent response rate. After deleting surveys with incomplete
responses, 300 questionnaires remained for data analysis. Among
these 300 usable responses, two extreme multivariate outliers were
excluded (Mahalanobis’ D (21) > 46.797, p < .001). Finally, 298 cases
were deemed appropriate for further analyses.
ric invariances. In particular, a non-restricted model without any
parameter constraints was compared to the full metric invariance
model where all underlying factors were constrained to be equiv-
alent in order to test the measurement invariance. Once the full
metric invariance was supported, which indicates the patterns of
factor loadings across the two groups were invariant, the structural
invariance was tested by comparing a baseline model (full metric
invariance of the structural model) to the constrained model (full
path invariance model) to identify the equivalence of the structural
paths. Finally, invariance tests for hypothesized paths were con-
ducted to test path differences between the first-time and repeat
visitor groups.
4. Results
4.1. Profile of the respondents
In the present study, about 54.0% of the participants were male
(n = 161), and 46.0% were female (n = 137). Their mean age was
37.82 years old. The survey participants were relatively highly
educated. In particular, the largest category was college graduate
(51.3%) followed by the 2-year/some college (15.1%) and gradu-
ate degree (7.7%) groups. In terms of household income, 24.1% of
the participants reported an income less than $20,000; the major-
ity reported an income between $20,000 and $50,000 (50.7%); and
25.2% reported an income above $50,000. Among the participants,
36.9% reported that it was their first time to visit the restaurant
(n = 110), and 63.1% reported that they had visited the restaurant
two or more times (n = 188).

3.3. Data analysis 4.2. Measurement model

The present study employed Anderson and Gerbing’s (1988)
two-step approach to evaluate the convergent validity for mod-
eled constructs and to test hypotheses. After testing the sufficiency
of the measurement model using the Confirmatory Factor Analysis
(CFA), a structural analysis was conducted to assess the proposed
model through Structural Equation Modeling (SEM), using AMOS
5. In addition, the moderating effect of past experience (first-time
versus repeat visitor groups) was evaluating by using tests for met-
The measurement model provided a good fit to the data
(2 = 1050.463, d.f. = 428, p < .001; RMSEA = 0.070; CFI = 0.904;
NFI = 0.849). However, a standardized factor loading value for the
last item of ambience (i.e., air aroma) was lower than the sug-
gested cutoff of .40 (Nunnally and Bernstein, 1994). Thus, this item
was excluded for further analyses. The CFA excluding this variable
was re-estimated (2 = 893.011, d.f. = 398, p < .001; RMSEA = 0.065;
CFI = 0.921; NFI = 0.867). The chi-square test showed that the model

Table 1
Results of the confirmatory factor analysis and correlation matrices.

Measure FA AM LI TS LA SS DI CS CL AVE Composite

reliability

FA 1.000 .513 .817

AM .663 1.000 .603 .812
(.440)
LI .725 .658 1.000 .641 .840
(.526) (.433)
TS .596 .496 .488 1.000 .632 .837
(.355) (.246) (.238)
LA .495 .473 .483 .517 1.000 .519 .764
(.245) (.224) (.233) (.267)
SS .568 .534 .554 .585 .518 1.000 .637 .840
(.323) (.285) (.307) (.342) (.268)
DI .497 .386 .406 .512 .443 .478 1.000 .684 .866
(.247) (.149) (.165) (.262) (.196) (.228)
CS .538 .416 .455 .484 .480 .570 .732 1.000 .735 .893
(.289) (.173) (.207) (.234) (.230) (.325) (.536)
CL .533 .417 .427 .491 .440 .581 .718 .744 1.000 .728 .930
(.284) (.174) (.182) (.241) (.194) (.338) (.516) (.554)
Mean 5.230 5.361 5.315 5.122 5.132 5.264 4.688 5.083 4.979
SD .813 .893 .917 .937 .905 .927 1.110 .961 1.064
Coefficient alpha .818 .778 .820 .831 .750 .833 .854 .891 .930

Goodness-of-fit statistics: 2 = 893.011, d.f. = 398, p < .001; RMSEA = 0.065; CFI = 0.921; NFI = 0.867

Note. FA = facility aesthetics; AM: ambience; LI: lighting; TS: table settings; LA: layout; SS: service staff; DI: disconfirmation; CS: customer satisfaction; CL: customer loyalty.
Squared correlations are in the parentheses.
606 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611

Table 2 Table 3
Results of the structural equation modeling. Standardized indirect effects.

Hypotheses Coefficients t-Values Results Effects of Customer Customer loyalty

satisfaction (CS) (CL)
H1a: FA → DI .652** 3.051 Supported
H1b: AM → DI .134 1.465 Not supported Facility aesthetic (FA) .563** .538**
H1c: LI → DI .294* 2.069 Supported Ambience (AM) .116 .111
H1d: TS → DI .100 .950 Not supported Lighting (LI) .254* .243*
H1e: LA → DI .165* 1.985 Supported Table settings (TS) .086 .082
H1f: SS → DI .262** 2.793 Supported Layout (LA) .143* .136*
H2: DI → CS .862** 16.441 Supported Service staff (SS) .226* .216*
H3: DI → CL .509** 5.080 Supported Disconfirmation (DI) .316**
H4: CS → CL .367** 3.720 Supported *
p < .05.
**
R2 (DI) = .554 p < .01.
R2 (CS) = .744
R2 (CL) = .715
Goodness-of-fit statistics: isfaction through perceived disconfirmation. That is, perceived
2 = 924.887, d.f. = 410, p < .001, 2 /d.f. = 2.256, RMSEA = 0.065; CFI = .918;
disconfirmation acted as a mediator in the relationship between
NFI = .863
these components of DINESCAPE and customer satisfaction in the
Note. FA: facility aesthetic; AM: ambience; LI: lighting; TS: table settings; LA: lay- proposed model. In addition, results showed that facility aesthetic
out; SS: service staff; DI: disconfirmation; CS: customer satisfaction; CL: customer
(ˇFA-DI-CS-CL = .538, p < .01), lighting (ˇLI-DI-CS-CL = .243, p < .05), lay-
loyalty.
*
p < .05. out (ˇLA-DI-CS-CL = .136, p < .05), and social factors (ˇLI-DI-CS-CL = .216,
**
p < .01. p < .05) significantly affected customer loyalty through perceived
disconfirmation and satisfaction. Thus, it can be concluded that
both disconfirmation and satisfaction had a significant mediat-
fit was significantly improved compared to the previous CFA model ing role between these variables and customer loyalty. Further,
(2 = 157.452, d.f. = 30). Table 1 shows the results of the CFA satisfaction was found to mediate the effect of perceived discon-
including descriptive statistics, correlations among constructs, reli- firmation on loyalty (ˇDI-CS-CL = .316, p < .01).
ability, and Average Variance Extracted (AVE).
All composite reliabilities were above the recommended value
4.4. Invariance models
of .70, ranging from .764 to .930 (Nunnally and Bernstein, 1994).
The results indicated a strong reliability of measures. All AVE val-
The respondents were divided into first-time (n = 110) and
ues exceeded the recommended value of .50 (Fornell and Larcker,
repeat-visitor groups (n = 188) before testing group differences for
1981). The squared correlation value between a pair of constructs
Hypothesis 5. Measurement invariance was first tested. A non-
was lower than the AVE of each construct. These findings indicated
restricted model was run using CFA without constraining any factor
that both convergent and discriminant validity are evident (Fornell
loading across groups, and a full-metric invariance model was run
and Larcker, 1981).
using CFA while constraining all factor loadings to be equal across
groups. The results indicated that full-metric invariance was sup-
4.3. Structural model ported in that the chi-square difference between two models was
not significant (2 (22) = 28.224, p > .01) (see Table 4). This find-
The Structural Equation Modeling (SEM) was utilized to test ing fulfilled the requirement for the invariance test of the structural
relationships among study constructs. Fig. 2 and Table 2 present the model.
results of the SEM, including goodness-of-fit statistics and coeffi- As a next step, a baseline model was run by including proposed
cients. The model adequately fits the data (2 = 924.887, d.f. = 410, paths among the study variables. The model presented a satisfac-
p < .001, 2 /d.f. = 2.256, RMSEA = 0.065; CFI = .918; NFI = .863). The tory fit to the data (2 = 1494.580, d.f. = 842, p < .001, 2 /d.f. = 1.775,
relationship between the components of DINESCAPE and perceived RMSEA = 0.051; CFI = .901; NFI = .801). This baseline model was
disconfirmation was tested. The regression paths from facility compared with a series of nested models using a chi-square dif-
aesthetic (ˇ = .652, t = 3.051, p < .01), lighting (ˇ = .294, t = 2.069, ference test. In particular, the equality of a particular parameter
p < .05), layout (ˇ = .165, t = 1.985, p < .05), and social factor (ˇ = .262, between two groups was tested by constraining a specific path of
t = 2.793, p < .01) to disconfirmation were positive and significant, interest to be equal across groups in sequence (nested models). The
supporting Hypotheses 1a, 1c, 1e and 1f. However, the paths from findings are presented in Table 5.
ambience (ˇ = .134, t = 1.465, p > .05) and table settings (ˇ = .100, The results showed that the paths from facility aesthetic
t = .950, p > .05) to perceived disconfirmation were not significant. (2 (1) = 9.040, p < .01), lighting (2 (1) = 7.051, p < .01), table set-
Thus, Hypotheses 1b and 1d were not supported. The regres- tings (2 (1) = 4.552, p < .05), and social factors (2 (1) = 5.260,
sion paths from perceived disconfirmation to customer satisfaction p < .05) to perceived disconfirmation significantly differed across
(ˇ = .862, t = 16.441, p < .01) and customer loyalty (ˇ = .509, t = 5.080, the first-time and repeat-visitor groups. However, the links
p < .01) were significant. Thus, Hypotheses 2 and 3 were supported. between ambience and perceived disconfirmation (2 (1) = 2.022,
Lastly, as expected, the linkage between customer satisfaction and p > .05) and between layout and perceived disconfirmation
loyalty was positive and significant (ˇ = .367, t = 3.720, p < .01), sup- (2 (1) = 1.004, p > .05) were not significant between groups. Thus,
porting Hypothesis 4. This model achieved a satisfactory level Hypotheses 5b and 5e were not supported. Results further reveal
of goodness of fit in predicting the total variance of perceived that the effects of facility aesthetic (FVG: ˇ = .349, p < .01 versus
disconfirmation (R2 = .554), customer satisfaction (R2 = .744), and RVG: ˇ = .841, p < .01), lighting (FVG: ˇ = .262, p < .05 versus RVG:
customer loyalty (R2 = .715). ˇ = .423, p < .01), table settings (FVG: ˇ = .075, p > .05 versus RVG:
Indirect effects of the components of DINESCAPE and per- ˇ = .369, p < .05), and social factors (FVG: ˇ = .217, p < .05 versus
ceived disconfirmation were examined (see Table 3). The findings RVG: ˇ = .289, p < .01) on perceived disconfirmation were greater in
indicated that facility aesthetic (ˇFA-DI-CS = .563, p < .01), lighting the repeat-visitor group. It should be noted that the link between
(ˇLI-DI-CS = .254, p < .05), layout (ˇLA-DI-CS = .143, p < .05), and social table settings and perceived disconfirmation for the first-time cus-
factors (ˇLI-DI-CS = .226, p < .05) significantly affected customer sat- tomers’ group (FVG: ˇ = .075, p > .05) was not significant, but this
 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611 607

Facility
Aesthetic H1a: .652** (3.051)

Ambience
H1b: .134 (1.465)

Customer
Lighting H1c: .294** (2.069) Satisfaction
H2: .862** (16.441)

Disconfir
mation H4: .367** (3.720)
H1d: .100 (0.950)
Table
Settings
H3: .509** (5.080)
H1e: .165* (1.985) Customer
Loyalty
Layout
*p < .05, **p < .01
H1f: .262** (2.793)
Goodness-of-fit statistics:
Service χ 2 = 924.887, df = 410, p<.001, χ2/df = 2.256,
Staff RMSEA = .065; CFI = .918; NFI = .863

Fig. 2. Causal relationships among latent variables.

link was significant for the repeat customers’ group (RVG: ˇ = .369, not significant, while this link was significant for the repeat visi-
p < .05). Similarly, the link between layout and perceived disconfir- tors’ group (RVG: ˇ = .202, p < .05). Overall, these findings supported
mation for the first-time visitors’ group (FVG: ˇ = .157, p > .05) was Hypotheses 5a, 5c, 5d, and 5f.

Table 4
Results of the measurement invariance.

Models 2 d.f. RMSEA CFI NFI

Non-restricted model 1423.456 796 .052 .902 .806

Full-metric invariance of CFA model 1451.680 818 .051 .901 .802
Chi-square difference test:
 (22) = 28.224, p > .01 (insignificant) → full-metric invariance (supported)
2

Table 5
Results of the invariance tests for the paths.

Paths Fit of the model with the path Chi-square difference

test

Baseline model Nested model

(freely estimated) (constrained to be equal)

H5a: FA → DI (S) FVG: ˇ = .349** (t = 3.010) 2 (843) = 1503.620 2 (1) = 9.040, p < .01
RVG: ˇ = .841** (t = 5.980) (significant)
2 (842) = 1494.580
H5b: AM → DI (NS) FVG: ˇ = .135 (t = .724) 2 (843) = 1496.602 2 (1) = 2.022, p > .05
RVG: ˇ = .191 (t = 1.587) (insignificant)
2 (842) = 1494.580
H5c: LI → DI (S) FVG: ˇ = .262* (t = 2.198) 2 (843) = 1501.631 2 (1) = 7.051, p < .01
RVG: ˇ = .423** (t = 3.213) (significant)
2 (842) = 1494.580
H5d: TS → DI (S) FVG: ˇ = .075 (t = .717) 2 (843) = 1499.132 2 (1) = 4.552, p < .05
RVG: ˇ = .369* (t = 2.457) (significant)
2 (842) = 1494.580
H5e: LA → DI (NS) FVG: ˇ = .157 (t = 1.478) 2 (843) = 1495.584 2 (1) = 1.004, p>.05
RVG: ˇ = .202* (t = 2.101) (insignificant)
2 (842) = 1494.580
H5f: SS → DI (S) FVG: ˇ = .217* (t = 2.270) 2 (843) = 1499.840 2 (1) = 5.260, p < .05
RVG: ˇ = .289** (t = 3.301) (significant)
2 (842) = 1494.580

Note. Fit statistics of the baseline model: 2 = 1494.580, d.f. = 842, p < .001, 2 /d.f. = 1.775, RMSEA = 0.051; CFI = .901; NFI = .801. FA: facility aesthetic; AM: ambience; LI: lighting;
TS: table settings; LA: layout; SS: service staff; DI: disconfirmation; CS: customer satisfaction; CL: customer loyalty; S: supported; NS: not supported; FVG: first-time visitors’
group; RVG: repeat visitors’ group.
*
p < .05.
**
p < .01.
608 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611
5. Conclusion
5.1. Summary and discussion
This study extended the existing literature by proposing a con-
ceptual model to explore the impact of customer perceptions of
physical environments on perceived disconfirmation, customer
satisfaction and customer loyalty in an upscale restaurant context.
Moreover, this study investigated whether there was a difference
between first-time and repeat customers with regard to the impact
of the perceived physical environment on perceived disconfirma-
tion for the first time. The findings of the present study revealed that
the proposed model could accurately predict customers’ perceived
disconfirmation, satisfaction, and loyalty, implying its applicability
in the hospitality industries is strong. This paper makes an impor-
tant contribution to the literature by examining the combination
of the effects of physical environments, perceived disconfirma-
tion, customer satisfaction, and customer loyalty for first-time and
repeat customers. Consequently, the present study raises some
interesting conclusions with significant implications from both the-
oretical and practical standpoints.
5.2. Theoretical and managerial implications
The current study has implications related to the understanding
of the disconfirmation framework. First, the relationship between
customers’ physical environmental perceptions in the dining area
and disconfirmation is a particularly salient topic for the consump-
tion experience in a fine-dining restaurant context since customers
are mainly driven by hedonic purposes such as the need for plea-
sure, fun and excitement. The results of this study indicated that
key dimensions of the physical environment directly affecting per-
ceived disconfirmation were facility aesthetics, lighting, layout, and
service staff. Among the six physical environmental dimensions
studied, facility aesthetics most significantly influenced perceived
disconfirmation. This finding stresses the important role of facility
aesthetics in creating a unique and innovative fine dining atmo-
sphere; aesthetics should be stressed since they are most likely
to differentiate an upscale restaurant from its competition. The
study results suggest restaurateurs who plan to redesign their
facilities should assess customer perceptions of facility aesthet-
ics (e.g., ceiling/wall décor, carpeting/flooring, paintings/pictures,
plants/flowers, furniture, and color) before making any significant
investment, bearing in mind these perceptions can vary depend-
ing on individual differences (e.g., first-time visitors versus repeat
visitors) and different time periods (e.g., 1 month after renovation
versus 1 year after renovation).
The findings of this study reinforced the importance of under-
standing the impact of perceived disconfirmation on customer
satisfaction and customer loyalty. Results showed that perceived
disconfirmation positively and directly influenced customers’ sat-
isfaction and loyalty. In other words, perceived disconfirmation
seems to enhance customer satisfaction and engender customer
loyalty. For instance, customers in the upscale restaurant can be
pleasantly surprised by the elegance of facility aesthetics (e.g.,
paintings/pictures, plants/flowers, furniture, color, and ceiling/wall
décor). This surpassing of expectations is likely to enhance cus-
tomer satisfaction and loyalty. Therefore, it is recommended that
restaurateurs take into account customers’ evaluations on an ongo-
ing basis. For example, whenever the management identifies some
physical environmental features (e.g., unpleasant genre of back-
ground music) that do not meet customers’ expectations, it needs
to fix or adjust these atmospheric components rapidly to avoid
customer disappointment.
Results further reveal that positive disconfirmation was a strong
determinant of customer loyalty. Results indicated that the positive
disconfirmation derived from the physical environments deter-
mined the extent to which customers intended to come back and to
recommend the restaurant to friends or others. Hence, restaurant
management should understand how important physical envi-
ronments are in inducing positive disconfirmation in restaurants.
Additionally, it was not surprising that the findings of this study
reinforced the positive impact of customer satisfaction on customer
loyalty, suggesting a fundamental way to improve customer loyalty
is to enhance customer satisfaction levels. This positive causal rela-
tionship is consistent with previous studies across various settings
(Bigne et al., 2008; Han and Ryu, 2009).
The findings of the present study indicated that both perceived
disconfirmation and satisfaction had significant mediating roles in
the proposed framework that explains the formation of customer
loyalty. These results indicated that disconfirmation and customer
satisfaction are important to the loyalty formation process, and
the effects of physical environment in this process become even
stronger when restaurant customers perceive high levels of positive
disconfirmation and have satisfactory dining experiences. Accord-
ingly, to take full advantage of an eatery’s physical environment, it is
critical for restaurant operators to enhance perceived disconfirma-
tion and satisfaction levels. These variables should also be utilized
as valuable concepts by restaurant researchers who aim to develop
a conceptual framework that explains loyalty formation.
The hypothesized moderating effect of frequency of past visits
(first-time versus repeat customers) on the relationships between
physical environment and perceived disconfirmation was partly
supported. The results showed that the frequency of past visits
moderated the relationship between four DINESCAPE dimensions
(i.e., facility aesthetics, lighting, table settings, and service staff)
and perceived disconfirmation. More specifically, in comparison
to first-timers, repeat visitors’ perception towards the quality
of physical environment was a much greater predictor of per-
ceived disconfirmation. This finding implied that repeat customers
were more likely to base their perceptions about the perceived
disconfirmation on how the atmosphere (i.e., facility aesthet-
ics, lighting, table settings, and service staff) made them feel.
This makes intuitive sense, as repeat patrons tend to have more
salient perceptions of how the physical surroundings will make
them feel based on their past experiences, while first-time vis-
itors must draw their expectations of the physical environment
and overall dining experience from whatever information that
they may have received (e.g., word-of-mouth reports, advertising,
and price). This could also be attributed to the high expecta-
tions customers have towards an upscale restaurant. First-time
customers might expect a relatively higher quality of physical sur-
roundings than repeat customers. When the atmosphere did not
match first-timers’ high expectations, they were likely to evalu-
ate it somewhat unfavorably. Or, a simple confirmation condition
could occur if the quality of physical environment was just as
expected. Of all the DINESCAPE antecedents, facility aesthetics had
the strongest impact on perceived disconfirmation, suggesting that
restaurateurs wishing to position themselves with the use of atmo-
sphere (physical environment) should pay substantial attention to
their facility aesthetics (e.g., ceiling/wall décor, paintings/pictures,
plants/flowers, furniture, flooring/carpeting, color, cleanliness) to
retain repeat customers. For example, restaurateurs can change or
arrange table flowers to elicit positive emotional responses from
repeat customers, such as positive surprise or delight at exceeded
expectations, which in turn would exert a strong influence on
perceived disconfirmation, customer satisfaction, and customer
loyalty.
It was further revealed that facility aesthetics, lighting, and ser-
vice staff were significant determinants of both first timers’ and
repeaters’ perceived disconfirmation. However, it was worth not-
ing that layout and table settings were significant predictors of only
 K. Ryu, H. Han / International Journal of Hospitality Management 30 (2011) 599–611
repeat visitors’ perceived disconfirmation. This implies that layout
and table settings play a more important role for repeat visitors than
for first-time visitors. It is also very important to notice that these
two dimensions can be controlled to a large extent by restaurant
management in building and maintaining personal bond with cus-
tomers. That is, marketing strategies for repeat customers should
highlight the restaurant’s personal relevance by delivering emo-
tional or relational benefits by making them feel special. In terms
of layout, the restaurant management must be aware of where
repeat customers want to be seated and how they want to move
through the dining room. Then, the managers should train or edu-
cate employees to meet repeat customers’ special needs or priority
with regard to the layout. For example, a restaurant host or host-
ess should provide greater care by seating repeat visitors to comply
with their preferences within the seating locations (e.g., seat with
enough comfort and tangible privacy from other customers) with-
out spending extra human and monetary resources. In addition,
the management need to pay close attention to foster customers’
perception of table setting since is an important determinant in
the upscale restaurants to deliver a prestigious image to retain
upper-class customers. Thus, restaurateurs need to make sure cus-
tomers are provided with high quality flatware (e.g., chopsticks,
knives, spoons, forks), china (e.g., plate/china, dishes, cups), glass-
ware (e.g., glass), linen (white table cloths, napkin presentation),
menu with variety of wines as well as attractive food presenta-
tion and innovative menu design. The way in which the table is
decorated should make repeat customers feel prestigious or even
pleasantly surprised.
From a marketing management perspective, the present study
suggests that managing disconfirmation in conjunction with the
physical environments is very important for both first-time and
repeat visitors. Restaurant marketers need to understand how
customer perceptions of physical environments can be properly
managed. Every physical environmental element at each dining
experience should be managed appropriately, and promises should
be fulfilled to result in a happy experience for customers. A key fac-
tor in an upscale restaurant’s success is to generate the greatest
favorable response with regards to the physical environment from
customers so they will return to the restaurant again and again.
5.3. Limitations and future research
Limitations of the research stem from the use of a convenience
sample. Since the data were also collected in three upscale restau-
rants in South Korea, the current result should not be generalized
to other restaurant segments and other places. Given the great
diversity of hospitality and tourism industries, more research is
necessary to determine if similar results would be derived from
different samples across various hospitality and tourism indus-
tries. This study did not attempt to specify hypothesis regarding
the characteristics of the moderation (first-time versus repeat vis-
itation) in conjunction with the physical environments because of
the lack of theoretical support in the previous literature. Future
research can extend the current study by further developing the
specified hypotheses. There are also many other opportunities for
future research. In future research, it would be advisable to incor-
porate the possible role of demographic differences (e.g., gender
and age) since customers’ reactions to physical environments may
vary depending on their demographic characteristics. Moreover,
incorporating other antecedents or consequences of disconfirma-
tion would be a fruitful avenue for future research. For instance,
examining how customers’ positive or negative disconfirmation
of expectations influence their affective states, such as emotions
or mood states, in the hedonic consumption services would be an
interesting study. Additionally, the differences between first-time
and repeat visitors could have many other explanations (e.g., expe-
609
rience newness, reasons for returning). Investigating these issues
would provide other opportunities for future research. Finally,
additional research is needed to assess other moderating variables
that may affect the associations between these constructs. The pur-
pose of dining (e.g., business, leisure, special occasion) could have
an effect on repeat business, and the other measures. For instance,
customers who visited for the leisure purpose might prefer pleas-
ing and relaxing music with enough volume while customers who
visited the restaurant for the business purpose might not prefer
listening to music, which can be considered as noise during their
conversation. Moreover, the restaurant itself in conjunction with
other variables such as the food quality and service quality in the
restaurant and external cues (e.g., critics) could have effects on dis-
confirmation and customer satisfaction. In addition, it would be
interesting to examine if the Korean cultural expectations of fine-
dining restaurants might differ from other cultures. Therefore, in
further research, it will be appropriate to test these moderating
effects in order to improve the interpretation of certain results in
this study.
Appendix A.
Measurement items used in the study
Factors Questions
Facility aesthetics Paintings/pictures are visually attractive.
Wall decorations are visually appealing.
Painting/pictures are visually attractive.
Colors used create a warm atmosphere.
Furniture (e.g., dining table, chair) is of high quality.
Lighting Lighting creates a warm atmosphere.
Lighting makes me feel welcome.
Lighting creates a comfortable atmosphere
Ambience Background music relaxes me.
Pleasing music.
Temperature is comfortable.
Air aroma is enticing.
Layout Seating arrangement gives me enough space.
Layout gives me enough tangible privacy.
Layout makes it easy for me to move around.
Table settings Tableware (e.g., glass, china, silverware) is of high
quality.
The linens (e.g., table cloths, napkin) are attractive.
The table setting is visually attractive.
Service staff Employees are neat and well dressed.
Attractive employees make me feel good.
An adequate number of employees makes me feel
cared for.
Disconfirmation Overall dining experience is worse than–better than
expected.
Quality of physical environments is worse
than–better than expected.
Customer satisfaction Overall, I am satisfied with this restaurant.
The overall feeling I got from this restaurant put me
in a good mood.
I really enjoyed myself at this restaurant.
Customer loyalty I would like to come back to this restaurant in the
future.
I would recommend this restaurant to my friends or
others.
I would more frequently visit this restaurant.
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