Food Delivery Platforms Research Articles

Contracting and competing on a food delivery platform

Contracting and competing on a food delivery platform

Market Thickness in Online Food Delivery Platforms: The Impact of Food Processing Times

Problem definition: Online food delivery (OFD) platforms have witnessed rapid global expansion, partly driven by shifts in consumer behavior during the COVID-19 pandemic. These platforms enable customers to order food conveniently from a diverse array of restaurants through their mobile phones. A core functionality of these platforms is the algorithmic matching of drivers to food orders, which is the focus of our study as we aim to optimize this driver-order matching process. Methodology/results: We formulate real-time matching algorithms that take into account uncertain food processing times to strategically “delay” the assignment of drivers to orders. This intentional delay is designed to create a “thicker” marketplace, increasing the availability of both drivers and orders. Our algorithms use machine learning techniques to predict food processing times, and the dispatching of drivers is subsequently determined by balancing costs for idle driver waiting and for late deliveries. In scenarios with a single order in isolation, we show that the optimal policy adopts a threshold structure. Building on this insight, we propose a new k-level thickening policy with driving time limits for the general case of multiple orders. This policy postpones the assignment of drivers until a maximum of k suitable matching options are available. We evaluate our policy using a simplified model and identify several analytical properties, including the quasi-convexity of total costs in relation to market thickness, indicating the optimality of an intermediate level of market thickness. Numerical experiments with real data from Meituan show that our policy can yield a 54% reduction in total costs compared with existing policies. Managerial implications: Our study reveals that incorporating food processing times into the dispatch algorithm remarkably improves the efficacy of driver assignment. Our policy enables the platform to control two vital market parameters of real-time matching decisions: the number of drivers available to pick up and deliver an order promptly, and their proximity to the restaurant. Based on these two parameters, our algorithm matches drivers with orders in real time, offering significant managerial implications. Funding: This research is supported by the Ministry of Education, Singapore, under its 2019 Academic Research Fund Tier 3 grant call [Award ref: MOE-2019-T3-1-010]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2021.0354 .

The effect of short-form video content, speed, and proportion on visual attention and subjective perception in online food delivery menu interfaces

Given the rising popularity of utilizing short-form videos as visual cues, employing short-form videos to showcase food visual information in online food delivery menu interfaces could be a promising approach. However, it remains unclear about the effect of short-form video attributes on visual attention and perception of online food delivery consumers. In an experimental study with 36 participants, we combined eye-tracking technology and a perceived quality scale to assess consumers’ visual attention and subjective perception while they performed simulated ordering tasks on designed menu interfaces featuring different video contents, speeds, and proportions. Our results indicated that videos showcasing food tasting and food plating garnered more frequent visual attention and better ordering experience, respectively. Conversely, videos showcasing food cooking led to higher cognitive effort and received worse assessment. Furthermore, we found no significant evidence linking faster video speeds to increased cognitive effort, despite a slightly longer fixation duration in fast-speed videos. Besides, large video formats attracted more visual attention and created better user experiences compared to small formats, with medium formats also performing well in terms of subjective perception. These insights shed light on the optimal strategies for implementing short-form video presentations on online food delivery platforms, thus contributing to the development of user-friendly online menu interfaces for consumers.

Restaurants’ Platform Partnership for Social Promotion and Resilient Revenue: Is Reward-Based Traffic Really Rewardful?

Restaurants have traditionally operated offline only, but the growth of food delivery platforms has prompted a shift toward online sales. In practice, consumers who share digital coupons offered by the platforms (e.g. Uber Eats and Meituan) in social networks (e.g. Facebook, Twitter, and WeChat) will be rewarded for the social traffic, which effectively attracts many restaurants to open online store. However, this also leads to intensified competition with the restaurant's physical (offline) store. In this article, we formulate the restaurant's tradeoffs among platform traffic benefits, consumers’ heterogeneous utility, and the platform's commission in the online selling decision. Interestingly, we find that the increased platform traffic may be harmful to the restaurant, and even the entire channel system. The platform offering high subsidies may trap restaurants in a pricing dilemma. We also find that restaurants’ online selling will induce a negative externality due to online/offline order congestion, but it will not qualitatively change the main findings.

APPLICATION OF UTAUT IN ASSESSING VIRTUAL KITCHEN ADOPTION AMONG LICENSED RESTAURANTS IN KENYA

The growing demand for dine-out consumption in Kenya, fueled by the influx of online food delivery (OFD) platforms, necessitates the adoption of a new restaurant business model known as virtual kitchens (VKs). As an emerging phenomenon in Kenya, this study used the UTAUT theory to evaluate the determinants of VK adoption among licensed restaurants in Kenya by surveying 149 restaurant managers/owners. The regression analysis results show that performance expectancy, effort expectancy, facilitating conditions, and price value all have a significant effect on the intention to use VKs (F [4, 144] = 20.662, p < .01, R2 =.365). The study not only adds to the existing body of knowledge debate on VK adoption by providing informative insights on VK adoption in Kenya, but it also contributes to industry practice.

How Information and Communications Technology Affects the Micro-Location Choices of Stores on On-Demand Food Delivery Platforms: Evidence from Xinjiekou’s Central Business District in Nanjing

The digitization of consumption, led by information and communications technology (ICT), has reshaped the urban commercial spatial structure (UCSS) of restaurants and retailers. However, the impacts of ICT on UCSS and location selection remain unclear. In this study, based on on-demand food delivery data and real-time traffic data, we used two types of machine learning algorithms, random forest regression (RFR) and the density-based spatial clustering of applications with noise (DBSCAN), to study the spatial distribution patterns, driving factors, and new geographical location phenomena of ‘brick-and-click’ (B&C) stores in Xinjiekou’s central business district (CBD) in Nanjing, China. The results show that the UCSS in the CBD is being decentralized, but the degree of influence is related to the business type. Additionally, the scale of demand and the distance from core commercial nodes greatly affect the scales of B&C stores. Moreover, the agglomeration of high-sales B&C stores seems to indicate a micro-location advantage, characterized by the concentration of delivery riders, which is usually located in the commercial hinterland with dense traffic. This makes stores situated in traditionally advantageous locations more attractive for online sales. Thus, ICT enhances the Matthew effect in business competition. These findings deepen our understanding of urban digital planning management and business systems.

Cloud-Kitchens: Value Creation Through Co-Location

“Cloud Kitchens” are delivery-only facilities that house multiple restaurants. Food-delivery platforms operate such kitchens to exploit two advantages: (a) Location advantage, arising due to a cloud-kitchen’s central location—this enables lower delivery times to customers. (b) Consolidation advantage, which accrues when multiple restaurants choose to co-locate at the cloud kitchen—this enables the platform to use a common pool of delivery drivers, thereby reducing costs. However, a cloud-kitchen’s eventual impacts on both the restaurants and the platform are intricately connected through their respective decisions—namely, the restaurants’ location decisions and the platform’s delivery capacity and delivery time. We examine conditions under which a cloud kitchen simultaneously benefits the primary stakeholders: delivery platform, restaurants, and customers. Our game-theoretic analysis considers two restaurants and a delivery platform. The restaurants simultaneously decide whether to stay at their initial (extreme) locations or relocate to a centrally located cloud kitchen. The platform decides the driver headcount and the delivery times for customers. In line with industry trends, we show that as population density increases beyond a threshold, the restaurants co-locating at the cloud kitchen is first a Pareto-dominant equilibrium and then the unique equilibrium. The platform and customers also prefer this equilibrium, leading to a win-win-win for the stakeholders. A cloud-kitchen’s benefit to the platform further increases as the drivers’ operational environment becomes more constrained, i.e. drivers’ carry-limit and speed decrease, and driver cost increases.

Transient Customer Response to Data Breaches of Their Information

Cybersecurity breaches pose a substantial concern in the digital era. We investigate how customers respond to multiple unexpected data breaches of their information in India. Difference-in-differences estimates show that digital payments declined by 9% relative to cash payments immediately after an unexpected data breach in a food delivery platform, but the gap disappeared three months later. Customer entry and exit also exhibit weak, short-lived changes. Additional analyses on bank and online grocery data breaches uncover even weaker effects of data breaches. Our findings imply that the perceived benefits of convenience outweigh the costs of payment security risks. This paper was accepted by David Sraer, finance. Funding: This work was supported by the MOE (Ministry of Education in China) Project of Humanities and Social Sciences [Project 20YJC790183], National University of Singapore [Start-Up Grant A-0003870-00-00], the National Natural Science Foundation of China [Grant 72150004], and the National Nature Science Foundation of China [Grant 72203112]. Supplemental Material: The online appendices and data are available at https://doi.org/10.1287/mnsc.2021.01335 .

Global Financialization and Local Labour Acquisition in China's Platform Economy

Abstract The emergence of digital platforms has been viewed in scholarly narratives as a “technological fix” of global capital, to use Beverly Silver's classic term. That is, capital continues to devise innovative strategies to restructure the labour process and avoid employer legal liabilities. This study reveals an important but somewhat overlooked “financial fix” aspect of the platform economy. Through a case study of a Chinese food delivery platform, the author shows that global speculative capital and its cash-burning games have generated a form of market-value fetishism in this sector. In response, platform companies have devised innovative labour acquisition strategies to expand their market share that have profoundly shaped the work and employment dynamics within the sector. In particular, the platform companies engaged in a subsidy rivalry with their competitors in order to attract crowdsourcing/gig workers for their regular services and at the same time established a highly structured subcontracting system to secure a more reliable and committed workforce to target the relatively high-end consumer market. The author argues that the interaction between global financialization and local capital's strategic choices accounts for the peculiar structure and employment dynamics in the Chinese platform economy.

Algorithmic control and gig workers’ facades of conformity: A work stress perspective

I examined the relationship between algorithmic control and gig workers’ facades of conformity by investigating the underlying mechanism. Drawing on the challenge???hindrance stress model, I explored the mediating role of challenge stress and hindrance stress in this relationship. Then, by using data collected from an online food delivery platform in China, I demonstrated that hindrance stress positively mediated the relationship between algorithmic control and facades of conformity, but the mediating effect of challenge stress was not significant. This study contributes to the emerging research field of algorithmic control by not only empirically examining its effect on gig workers’ psychological and behavioral outcomes, but also exploring the underlying mechanisms between algorithmic control and gig workers’ facades of conformity. It offers a reference point and guidance for managers of gig economy enterprises.

Balance between profit and fairness: Regulation of online food delivery (OFD) platforms

The rapidly developing online food delivery business is a novel “ecosystem” involving digital platforms, restaurants, delivery-workers, and customers. Continuous expansion of its market size is accompanied by problems of economic fairness such as “wage distribution” and “revenue sharing”. This study proposes an overall modeling framework to examine how regulators could best achieve optimal regulatory balance between “protecting the restaurant margins” and “protecting the interests of delivery-workers” in both monopoly and duopoly competition environments. We show that wage floor regulation can benefit delivery-workers under certain conditions but come at the expense of the ecosystem's other stakeholders. By contrast, a policy of commission cap could increase both restaurants' revenues and the ecosystem's overall welfare. The results of this study provide feasible insights for improving the regulatory effectiveness of digital platforms in fast-evolving businesses such as prepared food delivery.

Working with algorithmic management: Design logic, algorithmic unfitness, and labor repair behind the wall

The current literature on algorithmic management primarily explores its external ramifications for workers. Drawing upon the case of Meituan Waimai, China’s dominant food-delivery platform, this article delves into the internal logic that guides the design of algorithmic management. I highlight how an optimal mindset and a mechanized view of human labor drive the formulation of algorithmic management, leading to what I call “algorithmic unfitness.” This concept represents a dissonance between algorithmically programmed, reductionist visions of food delivery and real-world experiences on the ground. In response, the platform constantly delegates tasks from machines to laborers who engage in repair work. The design logic positions couriers as adaptable robots, whose compliance and flexibility are simultaneously requested by the platform. By shedding light on the design choices behind algorithmic management, the article also offers methodological insights for scholars researching algorithmic power in general.

COVID-19 containment policies, digitalization and sustainable development goals: evidence from Alibaba’s administrative data

The impact of digital platforms on the implementation of the United Nations’ (UN) Sustainable Development Goals (SDGs), especially the business sustainability of micro, small and medium-sized enterprises (MSMEs), under different containment policies during and after the COVID-19 pandemic has not yet been studied in detail. Using detailed administrative data from Alibaba Group’s online on-demand food delivery platform, we found that the digital platform contributed to the food security, wellbeing, employment and business sustainability of MSMEs both during and after the pandemic. We uncovered merchants’ heterogeneous responses to the COVID-19 pandemic during and after the implementation of different containment policies in China. On the extensive margin, the period of complete lockdown left long-term scarring on online merchants by decreasing the number of entrants, especially in the cooked food industry. In contrast, on the intensive margin, chain stores, especially those with large chain networks or multiapp stores, exhibited stronger resilience than their counterparts during and after lockdown. Thus, specialization (at the outlet level) and wider coverage (at the network level) emerged as key factors that enable business sustainability under challenging economic circumstances.

Management of Dual-Channel Pricing Strategies for Restaurants Introducing Food Delivery Services

In recent years, with the rapid development of mobile internet and the widespread application of online payment technologies, an increasing number of brick-and-mortar restaurants are willing to join food delivery platforms to provide consumers with new purchasing channels. However, for these restaurants, offering food delivery services represents both opportunities and challenges. On the one hand, introducing food delivery services can expand the market coverage of restaurants, providing consumers with more purchasing channels. However, due to the limited capacity of restaurant kitchens, an increase in demand may lead to overcrowding, thus prolonging consumer wait times. On the other hand, with the introduction of food delivery services, restaurants need to manage two sales channels simultaneously, each with its unique characteristics. Coordinating and managing product pricing between these two channels has become a challenge for restaurants. To address this issue, this study focuses on the dual-channel supply chain composed of a restaurant and a food delivery platform, aiming to maximize restaurant profits. The study examines the issue of restaurant pricing strategy selection and investigates the impacts of consumer waiting costs and consumer heterogeneity on restaurant pricing, demand, and profits. The results indicate that under a uniform pricing strategy, as consumer marginal waiting costs increase, the restaurant can alleviate congestion by raising food prices, resulting in a shift in demand from the dine-in channel to the delivery channel. However, this approach cannot alter the downward trend in restaurant profits. In contrast, under a differential pricing strategy, the restaurant's food prices are unaffected by consumer marginal waiting costs. However, we find that regardless of the pricing strategy adopted by the restaurant, as the proportion of tech-savvy consumers increases, the restaurant should raise food prices for both channels.

Inevitable, Vulnerable, Unprofitable: An Inquiry into Food Delivery Platforms in Europe

Inevitable, Vulnerable, Unprofitable: An Inquiry into Food Delivery Platforms in Europe

An Online Randomised Controlled Trial of Price and Non-Price Interventions to Promote Sustainable Food Choices on Food Delivery Platforms

An Online Randomised Controlled Trial of Price and Non-Price Interventions to Promote Sustainable Food Choices on Food Delivery Platforms

Online food delivery – easy access to food/meal order vs. limited access to food information

Online food delivery (OFD) platforms are very popular. More and more consumers use them to order meals. The market of OFD is growing very fast. It is a very comfortable way of ordering food and offers access to many restaurants at the same time. However, important disadvantages were identified about the access to food information. Five most popular OFD platforms in Poland were chosen and three most popular meals. Then the access to basic food information was revised (firstly allergens as it is a legal requirement and also ingredients or nutritional value). Lack of information was indicated for each platform and meal. On the basis of the legal requirements of food labelling and the revision of the OFD platforms offers of the most popular meals in Poland, it was shown that there is a big gap in the full access to food information. OFD platforms inform only about the food allergens or do not include any information about them. Consumer also do not have access to the full list of ingredients or the nutritional value. It shows the lack of equal access to food information to consumers who order meals in this way, and also may cause some health problems. These health problems may by caused by the consumption of food containing allergens without knowing about it and also by the highest than accepted fat or salt daily intake.

Meituan’s Real-Time Intelligent Dispatching Algorithms Build the World’s Largest Minute-Level Delivery Network

Over the past decade, Meituan, China’s premier online food delivery (OFD) platform, has witnessed remarkable growth. Central to this expansion is its state-of-the-art real-time intelligent dispatch system. This advanced system harnesses the power of operations research and machine learning algorithms to fine-tune order assignments, simultaneously addressing the needs of consumers, couriers, merchants, and the platform itself.

Rethinking algorithmic management in minor key: The case of housecleaning platform labour in Denmark

Algorithmic management has been a prominent focus of platform labour studies and is lately receiving increasing academic and policymaking interest. Conceptualisations of algorithmic management are mainly premised on ridehailing, crowdwork and food delivery platform research, while literature on algorithmic management of housecleaning and domestic work platforms is limited. This article draws on research in housecleaning platform labour in Denmark, demonstrating how algorithmic management unfolds in these platforms, which are the institutional devices which support algorithms in practice, and how platform workers experience, make sense of and resist this type of management. The analysis of the findings highlights two factors that greatly influence the algorithmic management process. The first is the role of customer support departments in underpinning – and sometimes substituting – the functions widely considered to be carried out by algorithms. The second factor is that intersectional subjectivities of – predominantly migrant and female – workers of Danish housecleaning platforms affect the ways in which workers experience and respond to their algorithmic management. The article concludes in proposing minor algorithmic management, as a concept more fitting to simultaneously describe the entanglement of human, social, and algorithmic components comprising housecleaning platforms’ algorithmic management and the contingent nature of migrant platform housecleaners’ compliance with such management.

Exploring how adapting Marketing Strategies to Local Culture can enhance Consumer Engagement and Trust on Online Food Delivery Platforms

Exploring how adapting Marketing Strategies to Local Culture can enhance Consumer Engagement and Trust on Online Food Delivery Platforms