The Influence of Diminishing Marginal Utility on Customer Satisfaction and Repeat Dining Behavior in the Restaurant Industry

Abstract This paper explores the role of Diminishing Marginal Utility (DMU) in customer satisfaction and repeat behavior in the restaurant sector. DMU proposes that satisfaction decreases with repeated exposure to the same experience. This principle is rarely applied in service sectors like hospitality where repeat engagement is crucial. Primary data from over 200 respondents in five Indian metro cities-Bangalore, Mumbai, Chennai, Delhi, and Hyderabad-was analyzed using inferential statistics such as T-tests, ANOVA, Correlation, and Regression. The results indicate that while customers report high satisfaction on the first visit, their interest gradually declines, often due to lack of novelty. Key drivers that mitigate this trend include menu variety and affordability, while overly familiar ambiance may contribute negatively. These insights have implications for restaurant marketing and operations, urging managers to innovate periodically to sustain customer loyalty.