Consumers develop their perception about the quality of services provided by restaurants based on the facilities the restaurant has and the behavior of their employees with consumers. The study was aimed at evaluating the causal effect of physical facilities and the behavior of employees of a restaurant. The data for the study was collected from the consumers immediately after they had enjoyed the services of restaurants located at Gwalior through survey using separate structured questionnaire on each variable. The physical environment of a restaurant has positive signicant effect on both the employee behavior and consumer perception. Employee behavior signicantly effects consumer perception. Therefore, the ambience (majorly contributed by physical environment) of the restaurant contributes signicantly to the employee behavior and perception, consumers form about the restaurant.
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