Effects of Physical Environment on Experiential Value and Willingness to Pay a Premium in Fine Dining: The Role of Biophilic Design
Article information
Abstract
Background and objective
The physical environment of fine dining restaurants plays an important role in shaping consumer experience. This study examines how specific physical environment attributes—ambient conditions, spatial layout, and decoration—differentially influence consumers’ willingness to pay a premium through the mediating roles of extrinsic and intrinsic experiential value.
Methods
An online survey was conducted with 230 consumers who had prior fine dining experience were analyzed for final analysis. Environmental attributes were conceptualized as ambient conditions, spatial layout, and decoration. Experiential value was divided into extrinsic and intrinsic dimensions, and willingness to pay a premium was measured. Structural equation modeling was employed to test the proposed relationships among variables, including confirmatory factor analysis and mediation analysis using bootstrapping procedures.
Results
The structural equation model revealed attribute-specific effects of the physical environment on experiential value and willingness to pay a premium. Spatial layout showed a significant positive effect on extrinsic experiential value (β = 0.511, p < .001), as did decoration (β = 0.404, p < .05), whereas ambient conditions were not significant. With respect to intrinsic experiential value, ambient conditions exhibited a significant positive effect (β = 0.314, p < .05), as did decoration (β = 0.754, p < .001), while spatial layout was not significant. Regarding direct effects on willingness to pay a premium, extrinsic experiential value did not show a significant influence, whereas intrinsic experiential value demonstrated a significant positive effect (β = 0.831, p < .01). Bootstrapping analysis further confirmed that experiential value functioned as a mediating mechanism linking physical environment attributes to premium price acceptance. Intrinsic experiential value mediated the effects of ambient conditions, spatial layout, and decoration, whereas extrinsic experiential value mediated only the effect of decoration.
Conclusion
These results indicate that premium price acceptance in fine dining settings is primarily shaped by experiential value emerging from interactions with physical environment attributes. In particular, decorative elements function as a strategic resource by simultaneously enhancing functional evaluations and emotional engagement. This study highlights the importance of experience-centered environmental design as a core mechanism for sustaining premium pricing strategies in fine dining restaurants. In doing so, this offers conceptual support for biophilic strategies as a value-creating resource in fine dining contexts.
Introduction
Fine dining has evolved beyond a food-centered consumption format into a highly experience-centered domain in which customers evaluate not only culinary excellence but also the symbolic and sensory qualities of the physical environment. In contemporary upscale markets, competition among fine dining restaurants increasingly depends on the ability to justify premium pricing through differentiated experiential value rather than through product quality alone. As consumers become more attentive to well-being, authenticity, and immersive consumption, the physical environment has emerged as a strategic medium through which restaurants communicate exclusivity, craftsmanship, and brand meaning.
From an environmental psychology perspective, physical surroundings function as stimuli that shape affective and cognitive appraisals, which subsequently influence behavioral responses (Bitner, 1992; Rosenbaum and Massiah, 2011). In restaurant settings, customers continuously interact with ambient conditions (e.g., lighting, music, scent), spatial layout (e.g., seating configuration, privacy, flow), and decorative elements (e.g., artworks, materials, visual themes), each of which provides functional, symbolic, and emotional cues.
Ryu and Jang (2008a) demonstrated that these environmental attributes differentially influence emotional responses and behavioral intentions in restaurant contexts, suggesting that servicescapes operate through multiple psychological pathways rather than as a single holistic construct.
The contemporary relevance of biophilic design must be understood within this broader environmental framework. Biophilic design—characterized by the integration of natural materials, greenery, organic forms, and nature-inspired aesthetics—has gained attention primarily for its restorative and well-being effects. However, in fine dining contexts, its significance extends beyond psychological comfort. Nature-oriented decorative elements can function as symbolic cues associated with sustainability, craftsmanship, and experiential richness, which are particularly salient in premium consumption environments. Recent empirical research demonstrates that biophilic design enhances customers’ experiential value perceptions in hospitality settings (Lee et al., 2022). Importantly, Lee et al. (2022) found that biophilic environmental cues enhance both hedonic and utilitarian experiential value, thereby shaping customers’ overall value perceptions within hospitality environments.
This dual value mechanism is particularly relevant for understanding willingness to pay a premium. Premium price acceptance in high-end service contexts is not merely a function of satisfaction but is strongly associated with perceived experiential value (Homburg et al., 2005). In the context of environmentally certified hotel restaurants, experiential value has been shown to positively influence willingness to pay a premium (Ko et al., 2023). Ko et al. (2023) demonstrated that experiential value significantly transmits the influence of environmentally certified restaurant environments to customers’ premium price acceptance. These findings suggest that psychological responses elicited by environmental design—whether through spatial coherence, symbolic decoration, or nature-based elements —may be translated into economic evaluation through experiential value appraisals.
Despite these advances, prior research presents two important limitations. First, many studies treat the restaurant environment as a unified construct, thereby overlooking the differentiated roles of ambient conditions, spatial layout, and decoration. Second, although biophilic design has been associated with emotional immersion and psychological comfort, insufficient attention has been given to how such affective outcomes are converted into economic behaviors such as willingness to pay a premium. In other words, the theoretical bridge between restorative design and price justification remains underdeveloped.
To address these gaps, the present study integrates servicescape theory with experiential value theory to examine how distinct physical environment attributes—ambient conditions, spatial layout, and decoration—affect willingness to pay a premium through extrinsic and intrinsic experiential value. Within this framework, ambient conditions are conceptualized as atmospheric regulators that shape mood and sensory comfort; spatial layout as a functional and symbolic organizer that enhances efficiency, privacy, and experiential flow; and decoration as a strategic aesthetic resource that provides symbolic and experiential cues. By disaggregating environmental attributes and specifying their experiential mediation pathways, this study clarifies how emotional and cognitive evaluations of fine dining environments are transformed into premium price acceptance.
In doing so, the study advances two primary contributions. First, it empirically demonstrates the differentiated roles of ambient conditions, spatial layout, and decoration in shaping extrinsic and intrinsic experiential value, thereby refining the structural understanding of servicescapes in fine dining contexts. Second, it explicates the mediating role of experiential value in linking environmental stimuli to premium price acceptance, offering a clearer theoretical explanation of how affective and cognitive evaluations are translated into economic behavior in upscale dining environments. In this study, biophilic design is not examined as an independent construct but is conceptually positioned as a nature-oriented component embedded within the broader decorative dimension of the fine-dining servicescape.
Stimulus-Organism-Response (S-O-R) as an Integrative Mechanism
A rigorous theoretical articulation of the proposed framework can be achieved by situating the fine dining servicescape within the Stimulus-Organism-Response (S-O-R) paradigm (Mehrabian & Russell, 1974). The S-O-R model posits that environmental stimuli influence individuals’ internal psychological states, which subsequently lead to behavioral responses. This framework provides a systematic explanation of how external environmental cues are cognitively and affectively well-processed before manifesting as evaluative judgments or behavioral intentions.
Within hospitality and tourism research, the S-O-R paradigm has been extensively employed to explain the mechanisms through which physical and experiential attributes of service environments shape customer outcomes. In restaurant and hotel contexts, servicescape elements are typically conceptualized as multidimensional stimuli encompassing ambient conditions, spatial layout, and design-related features (Bitner, 1992; Ryu and Jang, 2008a). The organism component is generally operationalized as cognitive and affective evaluations—such as perceived value, emotional responses, or satisfaction—that mediate the relationship between environmental stimuli and behavioral outcomes. Behavioral responses, in turn, include intentions such as revisit intention, word-of-mouth, loyalty, and willingness to pay (Jang and Namkung, 2009).
A recent systematic review further confirms that S-O-R has become one of the dominant theoretical frameworks in hospitality and tourism research, particularly in studies examining servicescape stimuli and downstream behavioral intentions (Asyraff et al., 2023). By applying the S-O-R framework to fine dining environments, the present study conceptualizes ambient conditions, spatial layout, and decoration as stimulus variables; extrinsic and intrinsic experiential value as organism-level evaluative states; and willingness to pay a premium as the behavioral response. This theoretical positioning clarifies the mediating role of experiential value and provides a structured explanation for how servicescape attributes translate into premium price acceptance.
Biophilia Hypothesis and Biophilic Design as a Meaning-Rich Form of Decorative Stimulus
The study focusing on “biophilic design” can be anchored in the biophilia hypothesis, which posits an innate human tendency to affiliate with life and life-like processes. This hypothesis provides a foundational explanation for why nature-integrated design cues (e.g., plants, natural materials, nature-inspired artworks/forms) can exert disproportionately strong psychological effects compared with purely artificial décor (Kellert and Wilson, 1995). Within servicescape research, biophilic design can be conceptualized as a strategic subset of decoration cues that do more than enhance visual aesthetics. Biophilic elements (greenery, natural textures, organic forms, daylight, natural patterns) are theorized to operate as affective-symbolic stimuli that elevate perceived experiential quality by intensifying sensory pleasure and emotional immersion and signaling authenticity, craftsmanship, and premium positioning.
Restorative Environment Theory as the Psychological Mechanism
Restorative environment theory provides a theoretical bridge linking biophilic design to experiential value formation.
This perspective is grounded in Stress Recovery Theory (SRT), which posits that exposure to natural elements reduce psychophysiological stress and promotes positive affect (Ulrich, 1983), and Attention Restoration Theory (ART), which argues that nature facilitates cognitive recovery by restoring directed attention through effortless engagement (Kaplan, 1995). In hospitality settings, biophilic elements—such as greenery, natural materials, and organic forms—may therefore function as restorative stimuli that enhance emotional comfort and perceptual clarity. These restorative processes strengthen intrinsic experiential value by increasing enjoyment and immersion, while also supporting extrinsic experiential value through improved overall experiential appraisal. Restorative environment theory thus offers a coherent psychological explanation for how nature-integrated servicescape cues translate into enhanced experiential evaluation and, ultimately, greater willingness to pay a premium.
Social Exchange Theory as the Economic-Psychological Justification
To understand the “value and willingness to pay a premium” pathway, Social Exchange Theory (SET) can be applied to explain premium price acceptance as a reciprocal response to perceived benefits and fairness in the exchange (Blau, 1964). SET posits that individuals evaluate exchange relationships based on perceived rewards, costs, and distributive equity; when perceived benefits outweigh costs and are considered meaningful, individuals reciprocate with favorable responses, including loyalty, support, and increased price tolerance (Cropanzano and Mitchell, 2005).
Within the present framework, experiential value represents the consumer’s integrated assessment of exchange rewards. When the fine dining environment—particularly symbolic and biophilic decorative cues—communicates and delivers experiential benefits such as emotional restoration, aesthetic pleasure, and perceived exclusivity, customers may interpret a higher price as fair and justified within the exchange relationship.
Physical Environment, Experiential Value, and Willingness to Pay a Premium
The physical environment of fine dining restaurants constitutes a central component of the overall dining experience, integrating premium cuisine, professional service, and refined spatial design (Chen et al., 2015; Batat and De Kerviler, 2020). Prior research conceptualizes the physical environment as a combination of tangible elements, such as spatial layout, furniture, and decoration, and intangible atmospheric cues, including lighting, scent, and music (Bitner, 1992; Hoffman and Turley, 2002). In upscale dining contexts, these environmental attributes function as symbolic and sensory signals through which customers infer service quality and brand image. Building on this perspective, Ryu and Jang (2008a) identified ambient conditions, spatial layout, and decoration as core dimensions of the physical environment in fine dining restaurants, emphasizing their relevance in shaping customers’ perceptual and emotional responses.
Experiential value emerges from customers’ interactions with the physical environment and reflects both utilitarian and hedonic evaluations of the dining experience. Prior studies suggest that experiential value can be conceptually distinguished into extrinsic value, associated with functional benefits such as efficiency, convenience, and economic worth, and intrinsic value, which reflects emotional pleasure, enjoyment, and aesthetic appreciation (Hendriyani, 2018; Cetinsoz, 2019). Empirical evidence across various dining sectors consistently demonstrates that atmospheric and spatial attributes positively influence customers’ experiential value by enhancing emotional engagement and perceived benefits (Jung and Yoon, 2010; Ahn and Kim, 2017). Recent findings further indicate that environmental factors such as aesthetics, cleanliness, and convenience exert differentiated effects on economic and hedonic value dimensions, highlighting the multifaceted role of the physical environment in experiential value formation (Lee, 2024).
Willingness to pay a premium reflects consumers’ readiness to accept higher prices in exchange for perceived superior value and equitable experiential returns (Netemeyer et al., 2004; Homburg et al., 2005). In fine dining and luxury hospitality contexts, previous studies suggest that customers’ acceptance of premium pricing is strongly linked to their evaluation of experiential quality, including ambiance, service excellence, and overall dining atmosphere (Lee, 2015; Kiatkawsin and Sutherland, 2020). Moreover, experiential value has been identified as a key mechanism through which service environments influence favorable behavioral outcomes, such as loyalty and premium price acceptance, across hospitality and service industries (Hussein et al., 2018; Darmawan and Yasa, 2022). Collectively, these findings imply that the physical environment of fine dining restaurants indirectly contributes to consumers’ willingness to pay a premium by enhancing both extrinsic and intrinsic experiential value.
Research Hypotheses
Grounded in the stimulus-organism-response (S-O-R) framework, and informed by complementary perspectives on biophilic design and social exchange processes, the following hypotheses are proposed.
H1. Physical environment attributes (ambient conditions, spatial layout, and decorative elements) positively influence extrinsic experiential value.
H2. Physical environment attributes (ambient conditions, spatial layout, and decorative elements) positively influence intrinsic experiential value.
H3. Experiential value (extrinsic and intrinsic) positively influences willingness to pay a premium.
H4. Experiential value (extrinsic and intrinsic) mediates the relationship between physical environment attributes and willingness to pay a premium.
This study proposes a conceptual model of the relationships among the physical environment, experiential value, and willingness to pay a premium (See Fig. 1).
Research model.
Research Methods
Survey Design
Fine dining restaurants were operationally defined as establishments, regardless of cuisine type (e.g., Korean, Chinese, Japanese, or French), that emphasize the use of fresh ingredients, provide premium food quality, offer curated alcoholic beverages such as wine, and deliver a high level of table-side service in a refined dining environment. Based on this definition, the study focused on customers who had previously visited restaurants where the average per-person food expenditure (excluding alcoholic beverages) was approximately KRW 100,000 for lunch and KRW 200,000 for dinner. In addition, to minimize potential common method bias, several procedural remedies were implemented during the survey design stage. Respondent anonymity and confidentiality were assured to reduce evaluation apprehension. Independent and dependent variables were psychologically separated by organizing them into different sections of the questionnaire. Scale formats were varied where appropriate, and items were carefully worded to avoid ambiguity and double-barreled expressions. These procedural controls follow the recommendations of Podsakoff et al. (2012). To further ensure ethical research practices, participants were informed that their responses would be used solely for academic purposes. Participation was voluntary, and respondents were free to withdraw from the survey at any time if they felt uncomfortable.
Fine dining patrons constitute a specialized consumer segment that is difficult to access through conventional survey recruitment procedures. Because no comprehensive and publicly accessible database of this population exists, probability-based random sampling was not feasible. Accordingly, a non-probability sampling approach was adopted. Specifically, snowball sampling was employed, whereby initial respondents referred other individuals who met the study criteria (Ting et al., 2025). The survey was conducted between May 16 and June 10, 2023, using both online (via Google Forms) and offline questionnaires. A total of 230 valid and complete responses were retained for analysis.
The collected data were analyzed using SPSS Statistics 20.0 and AMOS 20.0. Descriptive statistics and reliability tests were first conducted, followed by confirmatory factor analysis and correlation analysis. To examine the proposed hypotheses, structural equation modeling was subsequently applied.
Measurement
Based on the definitions provided by Hoffman and Turley (2002) and Ryu and Jang (2008b), the physical environment is defined as the tangible and intangible elements of a restaurant that create overall impressions for customers. In this study, the physical environment was operationalized through three dimensions: ambient conditions, spatial layout, and decoration. Measurement items were adapted from Ryu and Jang (2008b), consisting of four items for ambient conditions, three items for spatial layout, and four items for decoration. Further, experiential value refers to consumers’ evaluations derived from consumption experiences and consists of extrinsic and intrinsic dimensions (Mathwick et al., 2001). Extrinsic value includes customer return on investment and service excellence, whereas intrinsic value includes aesthetics and playfulness. In this study, extrinsic value was measured using four items, and intrinsic value was measured using five items. Measurement items were adapted from Mathwick et al. (2001) and Wu and Liang(2009). In addition, willingness to pay a premium refers to a consumer’s propensity to perceive greater value in a specific product or service and to accept a higher price in exchange for that value. Drawing on prior research (Netemeyer et al., 2004; Zeithaml et al., 1996), this construct was operationalized using three measurement items. All items were measured using a five-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree).
Results
Demographic Characteristics of the Respondents
The sample consisted of 230 respondents (See Table 1). Females accounted for a slightly larger proportion of the sample (55.7%) than males (44.3%). With regard to age, respondents were primarily concentrated in their 30s and 40s (each 28.7% and 27.8%), followed by those in their 50s (20.4%), 20s (13.9%), and 60 years or older (9.1%). Most respondents were married (55.7%), while 38.7% were single. In terms of dining companions, respondents most frequently dined with friends or colleagues (36.5%), followed by family members (29.1%) and partners (22.2%). Regarding monthly income, the largest proportions reported earning between 3.0 and 3.9 million KRW (27.0%) and between 4.0 and 4.9 million KRW (24.8%), indicating a predominantly middle-to upper-middle-income sample. Most respondents held at least a bachelor’s degree (50.8%), and 9.1% had completed graduate education, suggesting a relatively well-educated sample overall. Occupationally, office workers (33.0%) and service employees (20.9%) constituted the largest groups. In terms of fine dining expenditure per visit, the majority of respondents reported spending between 100,001 and 200,000 KRW (38.3%) and between 200,001 and 300,000 KRW (28.7%), indicating moderate to high engagement with fine dining consumption.
Demographic characteristics of the respondents (N = 230)
Result of Measurement Model
Internal consistency reliability was assessed using Cronbach’s alpha coefficients. As shown in Table 2, the Cronbach’s alpha values for all constructs ranged from 0.763 to 0.892, exceeding the recommended threshold of 0.60 (Lee, 2006). These results indicate that all measurement items demonstrate satisfactory internal consistency reliability. In addition, composite construct reliability (CCR) was evaluated to further confirm reliability. The CCR values ranged from 0.879 to 0.961, all of which exceed the recommended cutoff value of 0.70 (Kim, 2007), providing additional evidence of the reliability of the measurement scales (See Table 2).
Confirmatory factor analysis and reliability analysis
Construct validity was examined through convergent validity and overall model fit. Convergent validity was assessed using average variance extracted (AVE) and standardized factor loadings. Following established guidelines, AVE values greater than 0.50 and factor loadings above 0.50 indicate acceptable convergent validity (Kim, 2007). In the initial analysis, one item from the ambient condition construct and one item from the decoration construct exhibited factor loadings below 0.50. These items were therefore removed, and the final model was estimated using the remaining items. As shown in Table 2, the AVE values range from 0.719 to 0.867, and all standardized factor loadings exceed 0.534, supporting convergent validity (See Table 2).
Confirmatory factor analysis (CFA) was conducted to verify whether the hypothesized measurement model adequately fits the observed data (Noar, 2003). Maximum likelihood estimation was employed.
Model fit was evaluated using multiple fit indices, including the Goodness-of-Fit Index (GFI), Adjusted Goodness-of-Fit Index (AGFI), Normed Fit Index (NFI), Comparative Fit Index (CFI), and Tucker-Lewis Index (TLI), with values of 0.90 or higher indicating good fit. Additionally, Root Mean Square Residual (RMR) values below 0.05, and Root Mean Square Error of Approximation (RMSEA) values below 0.08 indicate acceptable fit (Woo, 2022; Hu and Bentler, 1999).
The results indicate that the measurement model demonstrates an acceptable level of fit: χ2 (df = 156) = 426.520, p = .000, CMIN/df = 2.734, GFI = 0.857, AGFI = 0.789, RMR = 0.031, NFI = 0.888, CFI = 0.925, TLI = 0.898, and RMSEA = 0.078. Although some fit indices (e.g., GFI, AGFI, NFI, and TLI) fall slightly below the recommended threshold of 0.90, previous studies have noted that model fit indices should not be interpreted as stand-alone criteria (Hooper et al., 2008). Moreover, strict adherence to cutoff values may lead to the rejection of theoretically meaningful models (Marsh et al., 2004). Therefore, the overall model fit is considered acceptable. Furthermore, all retained items show standardized factor loadings greater than 0.534, indicating that the observed variables adequately represent their corresponding latent constructs (See Table 2 ). Table 2 . Confirmatory factor analysis and reliability analysis
Examination of Correlations Among Latent Factor
The correlations among the measurement variables in this study were analyzed, as summarized in Table 3. Discriminant validity is established when the squared correlation coefficients (r2) are smaller than the corresponding Average Variance Extracted (AVE) values (Fornell and Larcker, 1981). As shown in Table 3, the correlation coefficients among the constructs ranged from 0.547 to 0.841. Since the squared correlation coefficients (r2) were lower than the AVE values for each construct, the criteria for discriminant validity were satisfied (Fornell and Larcker, 1981).
Inter-variable correlation analysis
Hypotheses Testing
The final path coefficients validated through the structural equation model are presented in Table 4. The analysis results indicate that the goodness-of-fit indices of the final model were χ2 (df = 160) = 468.513 (p = .000), CMIN/df = 2.928, GFI = 0.849, AGFI = 0.781, RMR = 0.031, NFI = 0.876, TLI = 0.887, CFI = 0.914, and RMSEA = 0.079. Although some fit indices fall slightly below the 0.90 threshold, model fit should be evaluated using multiple criteria, as strict cutoff adherence may reject theoretically sound models (Hooper et al., 2008; Marsh et al., 2004). Therefore, the model can be considered to exhibit an acceptable level of fit overall.
Structural model estimation results
Based on the structural equation modeling results (See Table 4), the hypotheses were tested as follows. First, regarding the effects of the physical environment on external value, Hypothesis 1a, which posited a positive effect of ambient conditions on external value, was not supported. In contrast, hypothesis 1b was supported, indicating that layout has a significant positive effect on external value (β = 0.511, t = 4.276, p < .001). Similarly, Hypothesis 1c was supported, as decoration was found to significantly influence external value (β = 0.404, t = 2.529, p < .05).
Second, with respect to internal value, hypothesis 2a, which examined the effect of ambient conditions on internal value, was supported (β = 0.314, t = 2.361, p < .05). However, hypothesis 2b, which proposed the effect of layout on internal value, was not supported. In contrast, hypothesis 2c was supported, indicating that decoration has a strong and significant positive effect on internal value (β = 0.754, t = 3.943, p < .001).
Finally, Hypothesis 3 was not supported, indicating that external value does not have a significant effect on willingness to pay a premium. However, Hypothesis 4 was supported, as internal value was found to significantly enhance willingness to pay a premium (β = 0.831, t = 3.070, p < .01).
Overall, the findings suggest that among the physical environment attributes of fine dining restaurants, decoration plays a particularly critical role in enhancing both internal and external value. Moreover, both dimensions of perceived value serve as significant antecedents of willingness to pay a premium.
Based on the mediation analysis using bootstrapping with phantom variables (Woo, 2022), the mediating roles of external value (E-value) and internal value (I-value) in the relationships between the physical environment attributes of fine dining restaurants and customers’ willingness to pay a premium (WPP) were examined (See Table 5).
Results of hypothesis testing for mediating effects
First, regarding external value (E-value) as a mediator, the indirect effects of ambiance and layout on WPP through E-value were not significant; therefore, the mediating effect was not supported. In contrast, decoration exhibited a significant indirect effect on WPP via E-value (β = 0.062, p < .001).
Second, with respect to internal value (I-value) as a mediator, the indirect effect of ambiance on WPP through I-value was significant, and the mediation hypothesis was supported (β = 0.261, p < .05). In addition, layout demonstrated a significant indirect effect on WPP via I-value (β = 0.105, p < .01). Furthermore, decoration exerted a significant indirect effect on WPP through I-value (β = 0.627, p < .001), confirming the presence of a mediation effect.
Furthermore, the sequential multiple mediation effects of E-value and I-value were examined. The indirect effect of ambiance on WPP through the sequential mediation of E-value and I-value was significant (β = 0.006, p < .05). In addition, layout demonstrated a significant indirect effect on WPP through the sequential mediation of E-value and I-value (β = 0.148, p < .001), indicating the presence of a sequential mediation effect. Similarly, decoration exhibited a significant indirect effect on WPP through the sequential mediators E-value and I-value (β = 0.117, p < .001), supporting the sequential mediation effect.
Discussion
This study examined how specific physical environment attributes of fine dining restaurants—ambient conditions, spatial layout, and decoration—affect consumers’ willingness to pay a premium through extrinsic and intrinsic experiential value. Consistent with the experience-oriented nature of fine dining emphasized in the introduction, the findings demonstrate that the effects of physical environment attributes are not uniform but instead vary according to the symbolic and experiential functions of each attribute.
First, spatial layout and decoration were found to significantly enhance extrinsic experiential value, whereas ambient conditions did not show a significant effect. This finding partially supports prior studies suggesting that spatial configuration and visual design contribute to customers’ functional evaluations, such as perceived service efficiency and value for money (Ryu and Jang, 2008a). In fine dining contexts, spatial layout may facilitate smooth service flow, privacy, and comfort, thereby reinforcing perceptions of operational excellence. In contrast, the non-significant effect of ambient conditions suggests that elements such as lighting, music, and color may function as baseline expectations rather than as differentiating cues in high-end restaurants, where atmospheric quality is generally standardized at an elevated level.
Second, ambient conditions and decoration emerged as the physical environment attributes that significantly influenced intrinsic experiential value. Ambient conditions—such as lighting, music, and atmospheric comfort—may contribute to customers’ emotional immersion and sensory pleasure, thereby enhancing intrinsic experiential value in fine dining contexts where dining is often perceived as a holistic sensory experience rather than merely a functional consumption activity. At the same time, decorative elements—such as curated artworks, plant-based features, natural materials, and visually expressive design components—serve not merely as aesthetic embellishments but as symbolic stimuli that evoke emotional engagement, pleasure, and psychological comfort. This finding aligns with experiential value theory, which emphasizes that intrinsic value is shaped primarily by affective and hedonic responses rather than by functional efficiency alone (Mathwick et al., 2001; Wu and Liang, 2009). In fine dining environments, both ambient conditions and decorative elements function as experiential cues that shape customers’ emotional responses.
Third, intrinsic experiential value significantly increased willingness to pay a premium and played a central mediating role between physical environment attributes and price acceptance, whereas extrinsic experiential value did not show a significant influence on willingness to pay a premium. This result suggests that premium price acceptance in fine dining contexts is shaped primarily by customers’ emotional and experiential evaluations rather than by purely functional or utilitarian assessments. This finding is consistent with prior research suggesting that fine dining consumption is inherently experience-oriented, and that emotional responses play a more decisive role in shaping customers’ willingness to pay a premium (Ko et al., 2023).
Finally, the mediation analysis revealed differentiated pathways through which physical environment attributes influence willingness to pay a premium (WPP) through experiential value. Intrinsic experiential value played a central role in this process, mediating the relationships between multiple environmental attributes and WPP. Ambient conditions influenced WPP exclusively through intrinsic experiential value. Atmospheric cues such as lighting, music, and sensory comfort may enhance customers’ emotional engagement and enjoyment during the dining experience. In fine dining contexts, where dining is perceived as a multisensory and immersive activity, these atmospheric elements contribute to hedonic appreciation, which subsequently increases customers’ WPP.
Spatial layout also affected WPP only through intrinsic experiential value. Functional characteristics of the dining environment, including seating arrangement, spatial flow, and perceived privacy, may enhance customers’ experiential comfort and immersion. These experiential responses then translate into a greater willingness to pay a premium.
Decoration, in contrast, demonstrated mediation effects through both extrinsic and intrinsic experiential value. Decorative elements such as artistic design, curated visual features, and nature-inspired materials may signal service quality and refinement, thereby strengthening extrinsic experiential value. At the same time, these aesthetic cues evoke emotional immersion and aesthetic appreciation, which enhance intrinsic experiential value. Through these experiential evaluations, decorative features ultimately contribute to customers’ WPP. In addition, the significant sequential mediation through extrinsic and intrinsic experiential value suggests that consumers’ willingness to pay a premium in fine dining may be formed through a progression from functional evaluation to emotional experiential appreciation.
Collectively, these findings extend servicescape and environmental psychology research by demonstrating that physical environment attributes in fine dining influence willingness to pay a premium through differentiated experiential pathways. Specifically, atmospheric and spatial cues operate primarily through intrinsic experiential value, whereas decorative elements contribute through both extrinsic and intrinsic experiential value.
Conclusion
Grounded in environmental psychology and service-scape theory, the study conceptualized the dining environment as a system of ambient conditions, spatial layout, and decoration, and empirically tested how these environmental attributes are perceived, interpreted, and transformed into experiential and behavioral responses. From a theoretical perspective, this study offers several important contributions to servicescape and experiential value research.
First, these findings extend servicescape and environmental psychology research by demonstrating that physical environment attributes operate through qualitatively different psychological mechanisms rather than through a single undifferentiated pathway. While previous studies have widely acknowledged that restaurant environments influence customer attitudes and behavioral intentions, they have often conceptualized the environment as a holistic construct. By disaggregating the environment into ambient conditions, spatial layout, and decoration, this study reveals that each element contributes to value formation in a distinct way. In particular, decorative features serve as a primary source of intrinsic experiential value by stimulating aesthetic pleasure and emotional engagement, while simultaneously reinforcing extrinsic value through cues of quality and exclusivity, which aligns with recent findings on the experiential impact of biophilic and visual design elements (Lee et al., 2022). Ambient condition and spatial layout influence price acceptance only when it is interpreted by customers as enhancing the quality of the overall experience, supporting the proposition that consumer responses are driven less by physical space itself than by the meanings constructed through experiential appraisal.
By linking these environmental effects to experiential value, this study clarifies how environmental design features are translated into customers’ willingness to pay a premium in fine dining settings, with experiential evaluations playing a key role in this process. Together, these results highlight that premium price acceptance emerges from the interaction of cognitive assessments of service excellence and affective reactions to aesthetic and symbolic stimuli. In addition, the sequential mediation identified in this study suggests that environmental cues in fine dining environments may first shape functional and symbolic evaluations before developing into emotional experiential appreciation, which ultimately contributes to customers’ willingness to pay a premium.
From a managerial perspective, the results underscore that physical design should be treated as a strategic tool for experience creation rather than as a purely functional or decorative concern. First, decoration should be approached as a core experiential resource. Carefully curated artworks, distinctive materials, thematic installations, and brand-specific visual narratives—when combined with biophilic elements such as greenery and natural textures—can intensify customers’ aesthetic appreciation and emotional engagement, thereby strengthening intrinsic experiential value (Hung and Chang, 2021; Jung and Lee, 2025).
Second, landscape and biophilic design represent particularly promising yet still underexploited levers for value creation in fine dining. The incorporation of gardens, indoor greenery, outdoor terraces, and framed natural views expands the servicescape beyond interior boundaries and generates restorative and emotionally engaging experiences. Consistent with recent empirical evidence, high-quality biophilic design enhances guest well-being and perceived experiential value, which in turn strengthens willingness to pay premium prices (Elshaer et al., 2025).
Third, spatial layout should be configured to support experiential immersion rather than merely operational efficiency. The use of private or semi-private dining areas, deliberate sightline management, and layouts that foreground open kitchens or chef performances enables guests to perceive the dining space as part of an unfolding narrative. Such spatial strategies enhance experiential coherence and perceived value for money, reinforcing findings that experiential flow and spatial storytelling are critical drivers of customer evaluations in fine dining contexts (Ko et al., 2023).
Finally, the physical environment should be designed to visibly embody the restaurant’s concept and the founder’s core values. Whether a brand prioritizes sustainability, regional identity, culinary artistry, or luxury craftsmanship, these orientations should be expressed through materials, spatial organization, decorative choices, and nature-integrated design features. When guests can experience these values through the environment itself, the dining space becomes a symbolic medium that deepens experiential value and reinforces brand meaning (Rosenbaum and Massiah, 2011).
Despite its contributions, this study has limitations that suggest directions for future research. Methodologically, the use of cross-sectional, self-reported survey data limits causal inference and may be subject to recall bias. Future research could employ longitudinal or experimental designs and incorporate real-time or observational measures to provide a more comprehensive understanding of how human responses to experience-centered and biophilic dining environments evolve across diverse contexts. Further, a measurement-related limitation should be acknowledged regarding the operationalization of the decoration construct. The items used to assess decoration included not only biophilic features (e.g., plants, natural materials, and natureinspired artworks) but also broader aesthetic elements such as visually salient design and refined table-setting arrangements. Accordingly, the construct reflects overall decorative and aesthetic quality rather than a pure measure of biophilic design. The present findings should therefore be interpreted as evidence of the experiential relevance of decorative cues in general, within which biophilic elements may represent one contributing component. Future research should employ biophilic-specific measurement instruments or experimental approaches to disentangle the distinct contribution of nature-integrated design features.