Demystifying the Relationship between Restaurant Innovativeness, Customer Engagement, and Customer Willingness to Pay a Higher Price

Abstract

Despite consistent investment in innovation by the hospitality industry, it remains unclear how a restaurant’s innovativeness influences customers’ willingness to pay a higher price. Moreover, the role of customer engagement in enhancing prices in upscale restaurants is not well known. Correspondingly, the aim of this study is to establish a research model that illustrates the relationships between customers’ perceptions of a restaurant’s innovativeness (CPRI), customer engagement, and customer willingness to pay a higher price (WPHP) in upscale restaurants. The study also examines whether the impact of restaurant innovativeness and customer engagement on customer WPHP is moderated by boundary conditions of gender. Data were obtained through a questionnaire survey administered to 322 customers across multiple high-end restaurants located in the capital city of India, New Delhi. The results reveal that CPRI and customer engagement are important drivers of customers’ WPHP for upscale restaurant customers in India. Additionally, CPRI was found to have a positive effect on customer engagement. The results further indicate that gender moderates the effect with respect to the observed relationships. This study expands the theoretical foundation of these constructs and offers promising marketing strategies to create differentiation and enhance firm value.