A blended model of restaurant deliveries,dine-in demand and capacity constraints |
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| Affiliation: | 1. School of Management, Lanzhou University, Tianshui Road, Lanzhou 730000, Gansu, China;2. Department of Hospitality Business Management, Alfred Lerner College of Business & Economics, University of Delaware, 14 W. Main Street, Newark 19716, DE, United States;1. School of Management Studies, Cochin University of Science and Technology, Kochi, Kerala, India;2. Indian Institute of Management Kozhikode, IIMK Campus P.O., Kozhikode, Kerala, India 673 570;3. University of Puerto Rico Graduate School of Business, San Juan, PR, USA;4. Distinguished Scholar, Indian Institute of Management (IIM-K), Kerala, India;1. School of Management, Harbin Institute of Technology, 92 West Dazhi Street, Harbin, China;2. Howard Feiertag Department of Hospitality and Tourism Management, Pamplin College of Business, Virginia Tech, Blacksburg, VA 24061, USA;1. Management and Marketing Department, College of Business, Louisiana State University Shreveport, One University Pl, Shreveport, LA 71115, United States;2. Hospitality and Tourism Management, College of Health and Human Sciences, Purdue University, 900 W. State Street, West Lafayette, IN 47907, United States;1. The School of Hospitality Business, Broad College of Business, Michigan State University, 667 N. Shaw Lane, East Lansing, MI 48825, USA;2. Rosen College of Hospitality Management, University of Central Florida, 9907 Universal Boulevard, Orlando, FL 32819, USA;3. Dedman School of Hospitality, Florida State University, B4113 University Center, 288 Champions Way, Tallahassee, FL 32306, USA;1. Montpellier Business School, France, and Lancaster University Management School, UK;2. Isenberg School of Management, University of Massachusetts-Amherst, 121 President Dr, Amherst, MA 01003, USA |
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| Abstract: | The fast-growing food-delivery services are expected to continue to expand following Covid19. While considered a favorable strategic initiative, delivery might not be profitable for all restaurants. Accordingly, this study provides an analytical model to assess the impact of adding delivery service to a traditional dine-in restaurant. The theoretical contribution is a mathematical model depicting the strategic allocation of the restaurant’s production capacity, revealing a surprisingly complex balance between production (capacity constraints), marketing (customer utility), cannibalism and markets interdependency, leading to a range of business outcomes. A large-scale empirical investigation uses over a million unique transactions to test some of the model’s insights. The results show the introduction of delivery may increase transactions and revenue. However, the theoretical model suggests capacity constraints can limit growth potential over time. Correlations between dine-in and delivery demand reveal weekday patterns between both channels as an important indicator for how delivery may impact restaurant operations. |
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| Keywords: | Restaurants Food delivery Performance Analytics Capacity constraints |
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