Purpose: The purpose of this paper is to examine the role of empathy and apology in service recovery, and more specifically, establish how these factors promote positive service outcomes, typified by reconciliation and mitigate negative occurrences, characterised by customer retaliation and avoidance. Design/methodology/approach: This study used an online panel to collect data from 213 US residents, who were asked to recall a service failure episode they experienced within the past six months, write briefly about it and answer a questionnaire measuring constructs of interest in relation to their previous experience. Structural equation modelling was used to analyse the quantitative data. Findings: Both service employee empathy and apology were found to have a moderating effect on the relationship between service failure severity and reconciliation, retaliation and avoidance. Originality/value: The combination of empathy and apology as moderators into a single framework represents a unique contribution of this research. Furthermore, outcome variables of reconciliation, retaliation and avoidance are utlilized to measure relationship outcomes following service failure. This study highlights the need for managers to design hiring and training policies to promote empathy and the use of sincere apologies throughout customer interactions.