Despite ongoing challenges and disruptions in global markets, innovativeness serves as a buffer against negative market projections ^[1,2]. The impact of business innovation is widespread and crosses industry boundaries. Innovative products and services have enabled companies such as TATA, Apple, and ITC to secure a competitive advantage, regardless of the sector or region in which they operate. Consequently, scholars worldwide have highlighted the importance of innovativeness in driving market share and profitability ^[3,4]. Additionally, researchers have called for further investigation into the antecedents, mechanisms and contexts through which firm innovativeness creates value for both businesses and customers ^[5]. Nevertheless, despite these calls, studies exploring its antecedents and outcomes remain limited ^[6,7]. Furthermore, existing research has largely examined innovativeness from the perspective of firms and business owners, while customer perceptions of innovation have received comparatively little attention ^[8,9]. In other words, there is limited understanding of how customers recognize and respond to a company’s innovative efforts ^[10], which is crucial because innovation is ineffective if it is not perceived as such by the target audience.

Significant progress has been made in understanding the role of business innovativeness in sectors such as manufacturing and retail. However, key service industries, particularly upscale restaurants, have received comparatively little attention ^[11,12]. Upscale restaurants contribute substantially to global economies, yet there is limited research on the innovation ecosystems within these establishments and how such innovations influence customer behaviour ^[13,14]. Implementing innovative practices in restaurants is particularly valuable, as it can enhance operational efficiency, reduce environmental impact and promote overall sustainability ^[10,15]. For instance, innovations in restaurant design such as the use of eco-friendly materials, energy-efficient lighting and appliances and sustainable waste management practices can substantially lower a restaurant’s carbon footprint. These measures can also generate long-term cost savings, improving the economic sustainability of the business ^[16].

Researchers suggest that businesses exhibiting insincere or self-serving behaviour risk negative responses from their customers ^[17]. Conversely, when customers are treated thoughtfully and their needs are addressed, they can become valuable sources of opportunities for the business. This underscores the importance for brands to continually explore innovative strategies to engage their customers effectively ^[18].

Additionally, the Marketing Science Institute encourages scholars to explore questions such as which strategies are most effective in fostering strong and lasting customer engagement with firms. Furthermore, previous studies have emphasized the need for empirical research examining the antecedents and outcomes of customer engagement across diverse industries and geographic regions ^[19,20].

Addressing the research gaps highlighted above, the present study examines the impact of customers’ perceptions of restaurant innovativeness on their willingness to pay higher prices. Customers’ perceived restaurant innovativeness is defined as “a foodservice business’s range of activities that demonstrate its capability and willingness to implement ideas, services and promotions that are ‘unique’ and ‘meaningfully different’ from alternatives, as perceived by customers” ^[21]. Understanding customer willingness to pay a higher price remains a complex issue, despite extensive recent research on the topic ^[22,23]. Given that upscale restaurants typically charge premium prices, scholars have emphasized the need to identify the factors that influence customers’ willingness to pay higher prices (WPHP) in such establishments ^[24,25]. Customer WPHP is defined as “the amount a customer is willing to pay for their preferred brand over comparable or lower-priced brands offering the same package size or quantity” ^[26].

In this context, studies highlight numerous innovative strategies employed by restaurants to engage customers, including theme-based servicescapes, creative menus and experiential offerings, which may help explain why certain luxury restaurants successfully command premium prices ^[27]. Customer engagement, a term widely used in academic literature, is recognized as a key driver of beneficial customer behaviours, such as loyalty and retention ^[28,29]. However, its influence on customers’ willingness to pay higher prices in upscale restaurants remains underexplored, a gap addressed by the current study. Customer engagement is defined as “the degree to which an individual customer is cognitively, emotionally and behaviourally involved with a brand in a context-dependent manner during direct brand interactions” ^[30]. It is a vital determinant of a restaurant’s success ^[31]. When customers are actively engaged in the service process, they often take responsibility for sharing positive experiences and fostering social connections ^[32]. Prior research further emphasizes the need to investigate the mechanisms that drive interactive engagement across diverse contexts ^[10,20,33].

Interestingly, the extent to which the effect of restaurant innovativeness on customers’ willingness to pay higher prices (WPHP) is influenced by factors such as gender remains a topic of debate among scholars and practitioners ^[34]. Conflicting findings in prior research highlight the need to clarify the moderating role of gender in these underexplored relationships, a gap that the present study aims to address.

Next, the study outlines the stimulus-organism-response (S-O-R) framework as the theoretical foundation for the proposed conceptual model (Figure 1), followed by the formulation of the relevant hypotheses. The paper then presents the research methodology and empirical findings, concluding with a discussion of the study’s theoretical and practical contributions, as well as its limitations.

Figure 1. Concept Model of the proposed study

This study draws on the stimulus-organism-response (S–O–R) framework ^[35], as adapted by researcher, to underpin the proposed conceptual model ^[36]. The S-O-R theory posits that specific environmental attributes trigger cognitive and emotional states in customers, which in turn influence their behavioural responses ^[37]. The framework is structured around three core elements: stimulus, organism, and response.

The stimulus component is defined as “the influence that provokes an individual” ^[38]. Specific features act as cues that capture customers’ attention and motivate them to respond ^[39]. In the context of this study, the stimulus pertains to the innovative attributes of a restaurant that customers experience and use to form their evaluations.

The organism component represents “the affective and cognitive state of the customer” ^[38]. Given that cognition, emotion, and activation are the three central dimensions of customer engagement ^[40], this study proposes that customer engagement viewed as an organism state will be influenced by customers’ perceptions of a restaurant’s innovative attributes. The conceptualization of customer engagement as an organism state is further supported by previous research ^[37,41].

The response component is defined as “the acceptance or avoidance of behaviour in reaction to perceived stimuli” ^[38]. When customers interact with an innovative restaurant, they are exposed to a range of experiences. Positive experiences can shape customers’ perceptions of the restaurant, enhance their trust and increase their willingness to pay a higher price (WPHP).

This study examines how customers’ perceptions of restaurant innovativeness and their engagement influence their willingness to pay a higher price (WPHP). When customers recognize innovation across a restaurant’s products, services, servicescape, marketing mix, and post-consumption service delivery, the overall experience acts as a stimulus. This stimulation is perceived as value creation that outweighs the costs incurred throughout the consumption process. As a result, customers develop identification with the restaurant’s image, fostering attachment and trust ^[42]. Experiencing value in a unique and memorable way strengthens customers’ cognitive and emotional connection to the restaurant, which in turn encourages favourable behaviours such as a higher willingness to pay ^[43].

The S-O-R framework provides a useful lens for understanding how customers’ perceptions of restaurant innovativeness shape positive customer behaviours, as it emphasizes that these perceptions drive customers’ cognitive, emotional and behavioural responses ^[44].

Restaurants face the ongoing challenge of attracting and retaining customers ^[45,46]. Traditionally, many have relied on strategies focused on cost reduction and high-quality service delivery ^[47]. However, such approaches have often been counterproductive, resulting in lower profitability and difficulty covering operational costs. In response, restaurants increasingly emphasize innovative services to differentiate themselves and draw in customers ^[48,49]. Innovation in restaurants is most effective when it is customer-focused, as patrons are the ultimate recipients of these offerings, making a strong customer-oriented innovation strategy essential ^[50,51]. The literature identifies several dimensions of restaurant innovativeness, including creative menus, experiential innovation, innovative servicescapes, technological innovation and marketing innovation ^[24]. Creative menus, for example, feature dishes that incorporate global flavours and unconventional culinary designs.

In summary, when customers recognize a range of innovative initiatives by a restaurant that aim to surpass their expectations, they are more likely to invest in the brand by paying a premium compared to competitors ^[49,52]. Put differently, customers’ perceptions of restaurant innovativeness enhance the restaurant’s brand image in their minds, signalling that the establishment delivers substantial value ^[24,34]. Consequently, customers demonstrate a greater willingness to pay higher prices. Based on this reasoning, the study proposes the following hypothesis:

Hypothesis 1 (H₁): Customers’ perceptions of a restaurant’s innovativeness positively influence their willingness to pay premium prices.

Customers’ perceptions of restaurant innovativeness (CPRI) stimulate and motivate customer behaviour ^[25,45]. The value and experiences provided by the restaurant contribute to enhancing customer engagement. While customer engagement is a highly desired outcome for businesses, it often remains challenging to achieve ^[53,54,55]. Scholars have emphasized the need to identify the factors that foster customer engagement, particularly within the restaurant context ^[20,33].

The restaurant industry is highly competitive and relying solely on price reductions or promotional strategies is unlikely to ensure sustainable success in the long run ^[7,14]. In contrast, customer engagement fosters loyalty and commitment, thereby creating a significant competitive advantage for restaurants ^[50,56]. Customer-perceived restaurant innovativeness (CPRI) plays a crucial role in enhancing such engagement, as it cultivates an environment where customers view the restaurant’s emphasis as being on delivering transformative experiences and meaningful value, rather than focusing only on transactional exchanges ^[57,58]. Consequently, CPRI facilitates a strategic shift from a transactional approach to a relationship marketing orientation, which prioritizes enduring, value-rich interactions with customers ^[28]. Drawing on the Stimulus-Organism-Response (SOR) framework, CPRI is posited to evoke curiosity, excitement and enriched transactional experiences among customers ^[42,46]. When exposed to innovative practices within restaurants, customers are likely to exhibit emotional, cognitive and behavioural engagement with the brand. Based on these arguments, the present study proposes the following hypothesis:

Hypothesis 2 (H₂): CPRI fosters enhanced levels of customer engagement.

Customer engagement is widely recognized as a critical antecedent of desirable outcomes such as customer loyalty and satisfaction ^[33,59,60]. This is largely because engagement fosters trust and a sense of interdependence between customers and businesses ^[61,62]. Within the restaurant industry, however, research on customer engagement has primarily focused on outcomes limited to satisfaction and loyalty ^[63,64,65]. Yet, sustaining such loyalty remains a significant challenge, as customers continuously seek novel menus, evolving lifestyle choices and enriched dining experiences that elevate their consumption journeys ^[66,67].

Notably, only a limited body of research has examined the relationship between customer engagement and the willingness to pay a premium price (WPHP) in service contexts ^[68,69]. Drawing on the Stimulus-Organism-Response (SOR) framework, this study posits that customer engagement elicits strong behavioural responses, particularly in the form of WPHP. This occurs because engaged customers perceive added value in their association with the restaurant; the cumulative experience they derive is considered to outweigh the perceived monetary costs ^[70,71]. Accordingly, the following hypothesis is proposed:

Hypothesis 3 (H₃): Customer engagement positively influences willingness to pay a higher price.

A notable gap in the existing literature concerns the role of personal characteristics, such as gender, in shaping consumer behaviour ^[72]. This issue is particularly relevant because key constructs in consumer behaviour, including customer engagement, may vary across individual traits, as evidenced in prior studies ^[37,73]. Within the restaurant context, gender emerges as an important factor when examining customers’ willingness to pay a higher price (WPHP) ^[67]. Men and women often hold distinct values and demonstrate differences in how they assess value in transactional settings ^[74].

Although the influence of gender has been examined in broader marketing research, limited evidence exists regarding its effect on customer engagement ^[61,75]. Likewise, investigations into whether gender moderates the relationship between customer-perceived restaurant innovativeness (CPRI) and WPHP remain scarce. From the perspective of the Stimulus-Organism-Response (SOR) theory, it can be argued that both men and women are expected to respond to innovative services and experiences offered by restaurants. Nonetheless, it is yet to be firmly established whether the magnitude of such responses differs across genders ^[76].

Prior research indicates that men and women often exhibit divergent preferences and motivations in dining contexts, which can shape their responses to innovative restaurant concepts ^[77]. For instance, men may be more inclined toward establishments that provide novel and stimulating experiences, whereas women may place greater emphasis on comfort, familiarity and opportunities for social interaction. Moreover, gender differences have also been observed in spending patterns and motivational drivers. Men are generally more responsive to marketing messages that highlight performance and status, while women are more likely to be influenced by appeals centred on practicality and emotional connection ^[78].

As a result, men and women may attribute different values to various elements of the dining experience when determining their willingness to pay. Accordingly, the following hypothesis is proposed:

Hypothesis 4a (H_4a): The impact of CPRI on WPHP differs between male and female customers.

Hypothesis 4b (H_4b): Gender moderates the relationship between customer engagement and WPHP.

Data for this study were obtained through a questionnaire survey administered to 357 customers of upscale restaurants located in New Delhi, the capital city of India. The restaurant sector in India has witnessed substantial expansion in recent years, with the food service market valued at approximately US$47.9 billion in 2025 and projected to grow at a compound annual growth rate (CAGR) of 11.1%, reaching nearly US$80 billion by 2028 ^[79]. This rapid growth underscores the importance of examining factors that may contribute to the industry’s sustained development over the long term ^[55].

Participants were approached at restaurant entry and exit points and invited to complete the survey. To encourage participation, selected respondents received coffee vouchers worth INR 150. A total of 360 individuals completed the questionnaire, of which 357 valid responses (196 male and 161 female) were retained for subsequent analysis. Table 1 provides a detailed overview of the demographic characteristics of the respondents.

Table 1. Analysis Demography

The survey instrument consisted of structured questions divided into two sections. The first section gathered demographic and personal information from the respondents, while the second section focused on measuring the constructs incorporated in the proposed model, namely customer-perceived restaurant innovativeness (CPRI), customer engagement and willingness to pay a higher price (WPHP). As summarized in Table 2, established measurement scales were employed. Specifically, CPRI was evaluated using 18 items adopted from ^[21], customer engagement was assessed through 10 items adapted from ^[40] and WPHP was measured using three items from Netemeyer et al. (2004) ^[26].

Minor modifications were introduced to the questionnaire to ensure clarity, remove potential ambiguities and align the items with the study context. All items were measured on a seven-point Likert scale ranging from “1 = strongly disagree” to “7 = strongly agree.”

CR – Composite Reliability, AVE – Average Variance Extracted

Table 2. Confirmatory Factor Analysis

Data Analysis

Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM) were employed to test the proposed hypotheses. The CFA results indicated strong reliability and validity of the constructs. As shown in Table 2, all item loadings, Cronbach’s alpha coefficients and Composite Reliability (CR) values exceeded the threshold of 0.70, confirming the reliability of the scale. In addition, both the Average Variance Extracted (AVE) values and item loadings were greater than 0.50, thereby establishing convergent validity in line with the guidelines ^[80].

The researchers assessed discriminant validity by comparing the shared variance among constructs with their corresponding AVE values. As presented in Table 3, the square root of each construct’s AVE exceeded the inter-construct correlations, thereby confirming the presence of discriminant validity ^[80].

N.B. – Bold numbers depict the square root of the AVE; Correlation is significant at 0.05 level; n = 357

Table 3. Correlation

Model fit was assessed using several indices, including the Chi-square statistic (χ²), Root Mean Square Error of Approximation (RMSEA), Comparative Fit Index (CFI), Tucker-Lewis Index (TLI), and Normed Fit Index (NFI), following the guidelines ^[81]. The results indicated an acceptable overall model fit (χ² = 437.197, df = 169, χ²/df = 2.586, CFI = 0.917, TLI = 0.922, RMSEA = 0.068), consistent with the suggested thresholds ^[80]. For hypothesis testing (Table 4), CPRI was found to positively influence both WPHP (β = 0.311, t = 6.977, p < 0.01) and customer engagement (β = 0.293, t = 5.139, p < 0.01). Furthermore, customer engagement also showed a significant positive effect on WPHP (β = 0.251, t = 4.221, p < 0.01). These results provide support for all three hypotheses (H₁, H₂ and H₃).

Table 4. Structural Equation Modeling Results

To examine the moderating role of gender, the dataset was divided into two subgroups i.e., 196 males and 161 females. Structural Equation Modeling (SEM) was then applied to each subgroup, following the procedure ^[82]. Pairwise comparisons were conducted to assess differences between the groups. As presented in Table 5, the influence of customer engagement on WPHP was stronger among females (β = 0.319, t = 4.799, p < 0.05) compared to males (β = 0.202, t = 3.668, p < 0.05), thereby supporting H_4a. In contrast, the effect of CPRI on WPHP was more pronounced for males (β = 0.288, t = 4.361, p < 0.01) than for females (β = 0.183, t = 3.146, p < 0.01), lending support to H_4b.

Table 5. Moderation Analysis Results

The primary objective of this study was to explore the interrelationships among CPRI, customer engagement and customers’ willingness to pay higher prices (WPHP) in the context of upscale restaurants in India, while also examining the moderating effect of gender on these relationships. The findings highlight that both CPRI and customer engagement serve as significant determinants of WPHP among upscale restaurant patrons. These results are consistent with earlier research, which suggests that when customers perceive a restaurant as innovative and engaging, they are more likely to form a positive emotional attachment and demonstrate stronger intentions to return ^[24,83]. Such emotional connections further translate into a greater willingness to pay premium prices for the overall dining experience ^[34,70].

These findings carry strategic significance for restaurants operating in emerging markets such as India. Traditionally, service firms in these contexts have prioritized economic objectives ^[84]. However, with rising affluence and shifting consumer expectations, customers are increasingly seeking innovative and experience-driven offerings. Diners tend to prefer restaurants that are perceived as adopting innovative approaches ^[85]. To meet these evolving expectations, restaurants in emerging markets must move beyond mere customer satisfaction and place greater emphasis on service innovation and customer engagement ^[86]. By aligning with this growing demand for experiential and innovative services, firms can secure a sustainable competitive advantage ^[87].

The results also demonstrate that gender moderates the examined relationships. Specifically, the first moderation hypothesis showed that the influence of customer engagement on WPHP was stronger among females than males. A plausible explanation is that women often place greater emphasis on social and emotional aspects of dining ^[88], making them more willing to pay a premium for restaurants that foster higher levels of engagement ^[72]. This tendency may also reflect differences in gender socialization, with females being more inclined toward interactive and immersive dining experiences. Conversely, the second moderation hypothesis revealed that the impact of CPRI on WPHP was stronger for males than females. One possible reason is that men may place greater importance on novelty and innovation in their dining choices ^[76,89], perceiving such offerings as more appealing and therefore worth paying extra for.

These findings are consistent with prior research suggesting that gender moderate customer behaviour toward service firms ^[28,76]. However, they stand in contrast to earlier studies that argue the gender gap in service consumption is narrowing ^[53]. By extending these theoretical perspectives to a distinct geographical and contextual setting, this study contributes to the existing body of knowledge. The implications of these results are elaborated in the following section.

This study makes several important theoretical contributions. While prior conceptual research has examined the influence of restaurant innovativeness on value co-creation and customer loyalty ^[24,90], empirical evidence remains limited regarding how innovativeness enables restaurants to command higher prices. By addressing this gap, the present study is among the few empirical investigations to assess the impact of CPRI on customers’ willingness to pay higher prices (WPHP) in the context of upscale dining.

This research responds to the call for further investigation into the effects of innovativeness on related outcomes ^[21]. By providing empirical evidence, this study bridges that gap by examining the relationships between innovativeness, customer engagement and customers’ willingness to pay higher prices (WPHP) in the context of upscale restaurants. The results indicate that innovativeness can strengthen customer engagement and increase customers’ willingness to pay a premium, thereby extending the theoretical linkages among these constructs to a new contextual setting.

The findings of this study confirm that the perceived innovativeness of a restaurant brand exerts a significant influence on customers. It not only shapes strong brand impressions but also nurtures enduring emotional connections, which ultimately enhance customers’ willingness to pay premium prices for the restaurant’s offerings ^[91].

Moreover, this study addresses the limited research on the moderating role of gender in the relationship between perceived CPRI and WPHP. These insights are valuable for practice, as they enable restaurant managers to determine whether gender-specific strategies should be designed and implemented to better target male and female customers.

In addition, this study contributes to the academic literature by underscoring the critical role of customer engagement in shaping customers’ willingness to pay higher prices (WPHP) in upscale restaurants. While many restaurants seek differentiation to maintain their niche positioning, achieving true distinctiveness remains a challenge. This study highlights that a strong emphasis on customer engagement, combined with innovation, is essential for establishing and sustaining such differentiation ^[24].

Finally, this study employs the SOR theory as its theoretical foundation to support the proposed conceptual model, offering a logical explanation of how external stimuli such as restaurant innovativeness can shape internal responses like customers’ willingness to pay higher prices (WPHP). In doing so, the study extends the applicability and generalizability of the SOR framework to a broader contextual setting.

This study offers valuable implications for restaurant managers. In today’s highly competitive and uncertain market environment, many restaurants attempt to raise prices primarily as a response to inflation. However, the findings indicate that customers’ perceptions of restaurant innovativeness play a more meaningful role in engaging patrons who are willing to pay higher prices. Innovativeness thus emerges as a universal safeguard against adverse market conditions, suggesting that restaurants that prioritize innovation are better equipped to navigate disruptions and maintain competitiveness in the global marketplace.

Innovative menu offerings, exceptional customer service and a thoughtfully designed servicescape are key elements that can enhance customer perceptions of a restaurant. Sustaining such innovativeness, however, calls for continuous employee training and a strong commitment to identifying and addressing latent customer needs. Ultimately, restaurants are more likely to succeed when customers perceive price premiums as a reflection of innovation and value creation rather than merely a consequence of inflation.

Recognizing gender-based differences in consumer behaviour is crucial for restaurant managers when shaping marketing strategies, menu design and customer engagement initiatives, as these differences carry significant economic implications. The findings reveal that female customers exhibit a stronger willingness to pay higher prices (WPHP) when dining experiences are engaging and they are also more inclined to share such memorable experiences with friends or on social media. Consequently, managers should prioritize the development of initiatives, events and offerings that specifically foster engagement among female customers.

The study also shows that effectively managing customer perceptions of innovativeness can yield significant benefits, particularly by enhancing male customers’ willingness to pay premium prices. Beyond short-term gains, a sustained focus on innovation can support long-term financial stability and ensure business sustainability in an increasingly competitive marketplace.

Maintaining pricing strategies while sustaining profitability has long been a challenge for service firms in emerging markets ^[72]. The findings of this study suggest that a proactive, engagement-driven strategy combined with a strong focus on innovation may serve as a vital solution for the restaurant industry. In rapidly developing economies with expanding affluent populations, managers must increasingly address customers’ social and experiential expectations through innovative service offerings and strategic brand positioning to remain competitive and sustainable.

Impediments & Directions of Future Research

Like any study, this research has certain limitations that open avenues for future investigation. First, the analysis was confined to examining the relationships among CPRI, customer engagement and WPHP along with the moderating role of gender. Other potential factors such as income, age, cultural background, service quality, food quality and ambience may also influence customers’ willingness to pay and should be explored in future studies. Second, the focus on upscale restaurants in India may limit the generalizability of the findings to other types of restaurants or to different geographical contexts. From a broader theoretical standpoint, applying and testing the proposed model across other domains of the hospitality and tourism sector, such as airlines or travel agencies, may produce different outcomes. Future research adapting and extending this model could therefore generate valuable insights for various segments of hospitality and tourism.

Funding – This research did not receive any external funding.

Conflict of Interest - The authors declare no conflicts of interest.

Data Availability Statement – Subjected to personal requests.

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