The purpose of this study was to determine the detailed customer satisfaction and dissatisfaction factors of family restaurants in Korea, and to then classify the factors into 3 groups, inlcuding core service, quality service, and basic service. ‘Core service’ represents the critical factors that generate both satisfaction and dissatisfaction; ‘quality service’ generates only satisfaction; and ‘basic service’ generates only dissatisfaction. This categorization is based on Herzberg’s motivation-hygiene theory (1976) as well as Cadotte & Turgeon (1988). Based on the characteristics of the three groups, differentiation strategies in managing customer service were suggested to the family restaurant managers. A qualitative research method, termed the critical incident technique (CIT), was used in the study. This method helps researchers find new factors or attributes by grouping key issues from the anecdotes (critical incidents) and then categorizing common factors from the key issues. This research categorized key satisfiers and dissatisfiers into 33 factors, which were from 402 critical incidents described by 261 respondents. Eleven factors (response to service failures, food taste and quality, attention paid to customers, coupon/mileage point/discount card, customer’s ordinary requests, waiting, food diversity, food price, facility sanitation, checking out, customer’s special requests) were classified into core service, which required maximum management not regarding the level of customer satisfaction. Six factors (employee attitude, event, education and explanation, complementary food, customer’s mistakes, attention paid to children) were classified into quality service, which required differentiation strategy management. Finally, nine factors (speed of food service, employee’s mistakes, food sanitation, atmosphere and interior, seating, forcing orders, parking, other customers, reservations) were classified into basic service, which required minimum management at the level of the industry standards.