Balancing customer retention and acquisition in the restaurant context: Dynamic optimal strategies for responding to negative online reviews

Both reviewer-role participants and review readers observe how managers respond to negative online reviews, yet existing research often evaluates response effectiveness from a single audience. To address this limitation, this study adopts a dual-audience perspective and identifies dynamic optimal response strategies that balance customer retention and acquisition across negative online reviews. Three scenario-based experiments and an integrative analysis examined five types of negative reviews (reliability, responsiveness, assurance, empathy, and tangibility) and four response strategies (explanation, compensation, refutation, and non-response) in a restaurant context. Study 1 examined reviewer-role participants’ repurchase intentions (n = 1170), Study 2 analyzed the potential purchase intentions of review readers (n = 3399), and the integrative analysis integrated both studies, employing a Composite Purchase Intention Index ( CPII )—a weighted combination of repurchase and potential purchase intentions—to reflect alternative acquisition-retention priority structures (n = 4569). Study 3 tested whether interactional justice and distributive justice mediated the effects of response strategies on both intention outcomes (n = 705). For reviewer-role participants, explanation was most effective across review types, while compensation also performed strongly for assurance, empathy, and responsiveness reviews. For review readers, explanation, compensation, and refutation are viable for reliability reviews, while explanation and compensation are generally preferred for the other reviews. Under CPII , compensation was most consistently optimal for empathy reviews, whereas explanation was generally preferred for other review types under alternative priority structures. Explanation and compensation outperformed refutation and non-response on both behavioral intentions, with interactional justice and distributive justice playing mediating roles. These findings reframe review responding as a dual-audience optimization problem and offer guidance for tailoring strategies according to review type and managerial acquisition-retention priorities.