This study aims to examine the effects of entrepreneurial orientation and learning mechanisms on business performance, considering the mediating role of knowledge-based dynamic capabilities in restaurants in Mashhad. This applied study employed a descriptive–correlational design. The statistical population consisted of food service businesses in Mashhad, from which 190 managers were selected using convenience sampling. Data were collected through standardized questionnaires measuring entrepreneurial orientation, learning mechanism, knowledge-based dynamic capabilities, and performance. Structural equation modeling based on partial least squares was conducted using SPSS and SmartPLS software. The results indicated that entrepreneurial orientation had no significant direct effect on performance (t=1.66) but significantly influenced learning mechanism (β=0.503, t=10.84) and knowledge-based dynamic capabilities (β=0.587, t=13.88). Learning mechanism did not directly affect performance (t=1.59) but had a significant positive effect on knowledge-based dynamic capabilities (β=0.314, t=6.07). Knowledge-based dynamic capabilities strongly and significantly affected performance (β=0.641, t=7.66). Moreover, the mediating role of knowledge-based dynamic capabilities in the relationships between entrepreneurial orientation and performance (β=0.376) and between learning mechanism and performance (β=0.201) was confirmed. The findings demonstrate that entrepreneurial orientation and learning mechanisms enhance performance primarily through strengthening knowledge-based dynamic capabilities, highlighting these capabilities as the core driver of sustainable competitive advantage in food service businesses.