Increasing effectiveness of management in foodservice sector through dynamic delivery pricing model

Abstract

Purpose: Due to the COVID-19 pandemic, the foodservice sector's activities have not only been limited but have also experienced a change – increase in demand for online order and delivery of food. Thus, improving the cost-effectiveness of food delivery is not so much as recommended, as it is necessary. Design/methodology/approach: The aim of this study is to propose a dynamic model of delivery valuation. Using SWOT analysis, the significance of delivery presents itself as a factor influencing competitiveness. An IDI with suppliers allowed for the identification of weaknesses in the current delivery price models. Subsequently, a dynamic price model, based on the possibility of usage of publicly accessible data, was proposed. Findings: Fixed delivery costs can reduce revenues and generate losses in the event of a high fluctuation in fuel prices. Therefore, it is crucial to properly evaluate delivery costs, taking into account not only the distance, but also other variables. The key factors of delivery costs include: one-time cost for the courier’s course, distance, opportunity cost of a given delivery expressed as the possibility of making another delivery defined as delivery time. It should be emphasized that it ought to be determined by the volume of traffic at a given moment. Originality/value: The proposed model provides solutions for the foodservice industry, allowing for optimization of delivery costs. The implementation of the dynamic model in a new market sector can be described as an innovation, which could help not only entrepreneurs, but also customers. Keywords: foodservice sector, online order, food delivery, dynamic pricing model. Category of the paper: Research paper.