CHAPTER 1

INTRODUCTION

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 1.1 INTRODUCTION

The restaurant industry in Goa has been growing at a rapid pace over the last decade or
so and the growth story is set to continue for the next foreseeable future. The internet
and technological advancements are having a great impact on restaurant operations.
With most people spending a big part of their day on the internet, it provides a huge
market potential for restaurants. The demand for online restaurant ordering continues
to grow among restaurant consumers. Restaurant owners and managers consistently
look for solutions that allow customers to place orders online and have food delivered
fast. Indeed, online ordering and delivery systems are slowly becoming a norm as more
restaurants adapt to this business model.

The internet gave rise to the concept of food aggregators. The ability of the internet to
connect the entire world made it easy to use such programmes. People no longer feel
the need to physically visit a location because they can order from anywhere in the
world. Food delivery applications make it easy to order and get food from your favorite
restaurants. With just a click, you may now satisfy your midnight hunger. Following
the analysis of this survey, Restaurants choose to work with food aggregators since they
bring in more consumers and incentives of lowered costs. Swiggy and Zomato are the
two primary competitors, and they compete by offering clients fantastic deals and
coupon codes.

The distance of your favourite restaurant doesn’t matter anymore because the food
delivery apps have got all this covered. It is expected that the use of food delivery apps
will show a continuous rise in upcoming years. The discounts and offers provided by
the food delivery apps have made it pocket friendly for people to order on an everyday
basis. Dining out with family and friends has been replaced by the concept of eating-
in; someone having a long, tiring day at work and does not have the strength to prepare
food or wants to skip home-cooked meals can order through online with just a single
tap on their smartphones.

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 1.2 BACKGROUND

Located on the Western coast of India, Goa is renowned for being a tourist’s paradise.
It boasts a burgeoning food and beverage industry that serves both locals and a
plenitude of foreign and domestic tourists. Its popularity is attributed to its pristine
beaches and delightful tropical weather. Whether summer or winter it never goes out of
the limelight. The Goan tourism and hospitality industry have emerged as one of the
key drivers of growth among the services sector in Goa. Tourism in Goa has significant
potential considering the rich cultural and historical heritage, variety in ecology,
terrains and places of natural beauty spread across the State. Tourism is an important
source of foreign exchange, an increase in GDP, boosts the revenue of the economy,
creates thousands of jobs and develops the infrastructures of the state. Every restaurant
in the food industry in Goa, irrespective of its classification, location, aspires to grow
and expand. The food business requires manpower right from the receipt and storage of
raw materials to the production and sale of prepared products to customers. This has
given a chance to many people, educated and uneducated, professional and
unprofessional to showcase their interests in the food industry. The concept of part time
and weekend employment is also making a space in the food business to overcome the
operational challenges of maintaining the quality of both food products and services
during peak business hours while ensuring an adequate workforce and optimum labour
costs.

The restaurant industry went through a technological revolution in the past few years
with the emergence of the online food ordering service. This is due to the emergence
of Food Aggregators. “Food aggregators facilitate orders and provide customer support.
They act as mediators between customers and local restaurants, offering access to
various cuisines through a single website or Smartphone application.” (Sufi, Ahmed
2021). Their debut in 2018 in the goan market was marked by a spike in trends of
downloading these apps from the playstore, restaurants were thus able to capture a large
chunk of this new market of young people namely Millennials and Generation Z. The
trend gave rise to many restaurants who began partnering up with food ordering
startups. Ordering food was now possible with the press of a button and Goan
consumers couldn’t be happier. Goa has always been a unique market to enter and
impress in. Millennials and the Gen Z’s have already adapted to the concept of

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convenient food delivery right to their doorstep. Brands like Swiggy and Zomato have
really revolutionized the concept of food delivery today. With almost everyone having
a smartphone, applications providing precise, easy, and convenient solutions are
already all the rage. The last few years have seen a considerable increase in demand for
services like food delivery, as customers keep experiencing an increase in the pace of
their lifestyle.

Prior to the entry of these Food Aggregators in the market the service options offered
by restaurants were chiefly dine-in and takeaway. The few who could afford in-house
delivery did not extend beyond a short radius. In-house delivery means owning and
controlling your last mile delivery method. It is observed that most restaurants use a
combination of these service options with or without Food Aggregator partnerships.
The combination of different service options enables restaurants to tap into a wider
market.

1.3 OBJECTIVES

In the light of the above background this study has the following objectives:

1. To make a comparison between the three categories of restaurants on the selected

parameters:
a. Restaurants with FAs only
b. Restaurants with FAs and in-house delivery
c. Restaurants with no delivery services

2. To understand the role of FAs in increasing sales of the selected Restaurants

3. To understand the role of FAs in increasing customer base of the selected restaurants

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 1.4 RESEARCH METHODOLOGY

1.4.1 Problem Statement

This paper aims to study the role of Food Aggregators on the sales of restaurants. It also
aims to understand the role of food aggregators in increasing the customer base of the
selected restaurants.

1.4.2 Research Design

Sample Area: The study was conducted in South Goa in the talukas of Salcete and
Mormugao.

Figure 1.
Administrative
map of Goa with
Salcete and
Mormugao
talukas
highlighted.

Source: Wikipedia

Sample Size: The sample size was 74 restaurants. Due to time and resource restrictions
it was not possible to conduct a census of the entire population of restaurants located in
South Goa.

Sample Technique: Convenience sampling method was used for sample

selection. A pilot survey was conducted of a sample size of 10 to review the
questionnaire design using the convenient sampling technique.

Data Collection: Primary source of data was collected for this study. The method for
primary data collection included personal interviews and google form questionnaire.

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The sample size for this study was 74 restaurants arbitrarily selected in Salcete and
Mormugao Talukas, South Goa. There is no recurrence in the data.

Sales is measured in terms of Rupees (average monthly sales) and Customer

Base is measured in terms of orders (average monthly orders).

1.5 SCOPE

The study’s scope is based on a survey of restaurant staff and owners. The research was
conducted after learning about the perspectives of managers and business owners on
the impact of partnering with food aggregators. The sample size for this study was 74
restaurants arbitrarily selected in Salcete and Mormugao Talukas, South Goa. There is
no recurrence in the data. Using the method of questionnaire, we attempted to gather
information on both quantitative and qualitative aspects.

The study is limited to educational purposes only. Time bar of this project consists of
2-3 months of data collection in areas of South Goa talukas Mormugao and Salcete.
The study is an attempt to understand the role of food aggregators on restaurant sales
in South Goa. This research aims to understand the role of food aggregators in
increasing the customer base of the selected restaurants. This study in a small way is an
attempt to understand the role of food aggregators in increasing the sales and customer
base of selected restaurants. The study provides an insight into the role of food
aggregators on sales of restaurants. The study will provide gainful information and will
be helpful for some other researchers who are interested in doing further research on
the same topic. Future researchers can also take up similar studies in other areas. It may
help to highlight the major problems faced by the restaurant owners and food
aggregators and the Government can take some measures in this regard.

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 1.6 CHAPTER OUTLINE

This study is divided into the following chapters:

Chapter 1: Introduction: Provides an overview of the Research Study

Chapter 2: Literature Review: Compilation of past research works and their findings

Chapter 3: Data Analysis: Analysis of qualitative and quantitative data collected via
questionnaire

Chapter 4: Regression Analysis: Statistical testing of our models to estimate

relationship between our dependent and independent variables

Chapter 5: Autoethnography: The subjective experience of the authors

Chapter 6: Policy Recommendations: Suggestions and policy recommendations for

Restaurants, Food Aggregators and the Government

Chapter 7: Conclusion: Includes the concluding statements, limitations and scope for
further research

Chapter 8: Appendix: Questionnaire that was used for restaurant survey

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 CHAPTER 2
REVIEW OF LITERATURE

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 2. Literature Review

Angad Munshi published in “The Indian Journal of Public Administration” (2019) a

study entitled “Assessment of Competitiveness of Food-tech Start-ups in India” . He
attempted to explain that The Start-up India action plan of the government is a very
important step in strengthening the entrepreneurial ecosystem in the country. The
Indian food start-ups are now playing a pivotal role in accomplishing transformation,
and trying and testing innovative technologies and business models. The innovations in
this segment have been the result of improving technology in three segments: ordering
food, food preparation and finally delivery. To seize the opportunity for the food
industry, it is important to understand the dynamics around the start-up ecosystem. As
a result of the research done in the article, it has been pointed out that tech start-ups
introduce cost-effective solutions for food delivery that can be used by retailers to
compete more aggressively online. Zomato and Swiggy; each is doing around 0.5
million food deliveries per day as per the research done in this article which is relevant
to this research project. On an average, out of 90 meals a month (three per day), Indians
get food delivery or dine out 3–4 times a month. (A Munshi 2019)

“Online Food Delivery: Study with Special Reference to Food Aggregators” Is a

research article written by Dr. Manish Kumar Srivastava and Mr. Atul Kumar
Srivastava, published in the journal “International Journal of Multidisciplinary
Research and Analysis”. In this paper, an attempt has been made by the authors to
identify the preferred food aggregators operating in the Indian online food delivery
market and to find the major reasons behind ordering food through these food
aggregators. The Food and Restaurant Industry has started making efficient use of
technology. In recent times, consumers have shown an inclination towards ordering
foods from hotels and restaurants and having them at the convenience of their homes.
Due to this online food delivery has emerged as a fast-growing services sector.
(Srivastava, 2021)

“Food Channel Distribution In The Internet Era-The Aggregator Model Boost To

Channel Power” is an article published by Shifa Hasan, Anant Deogaonkar, Shekhar
Seelam and Dr. Chandan Vichoray in the journal - International Journal of Management
(IJM) March (2020). The paper highlights the significant impact of the use of ‘channel
power’- structural shift pattern of delivery in the food industry during the internet era

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and a seismic shift in the relationships between consumers, retailers, distributors,
manufacturers and service providers. It has been researched that the aggregator gathers
a fixed margin of the order, which is paid by the restaurant, and the restaurant handles
the actual delivery. The intention is to get better prices from vendors by ordering
smarter, leveraging detailed purchase history, to increase profitability by eliminating
unnecessary and wasteful purchases, to target the enhancement of the regular restaurant
services, to lessen the work of the waiters in assisting the customers, to overcome delays
in traditional food ordering system and to remove the paper restaurant menu form and
bring significant benefits to the industry. Online food aggregators typically charge a
15% – 25% commission on the order bill amount received by the restaurant.
Aggregators continuously try to get restaurants on board to be available on the
website/app exclusively. On this account, certain benefits are given to restaurants like
greater visibility and sometimes a drop in the commission of about 2% – 3%. But since
the resulting benefit is far more than the drop-in revenue, aggregators do this
aggressively. (S Hasan, 2020)

Mohit Tyagi & Nomesh Bolia in his paper, published an article “Approaches for
Restaurant Revenue Management” aimed to explain a comprehensive literature review
of the implementation of Revenue Management strategies in the restaurant industry in
such a way as to maximize its productive utility while having tie ups with online food
third party sources. Online Delivery is emerging as a key development in the e-
commerce space. Accordingly, it has become an important aspect of RRM. The
restaurants nowadays hire third parties for their delivery services which help them in
expanding their reach considerably. Partnering with the third parties helps the
restaurants avoid investment on a number of fronts such as hiring delivery persons,
providing delivery vehicles, investing in delivery tracking apps and secure payment
methods. Unless restaurants are careful, they can easily get caught up with the multiple
issues online deliveries bring for them such as drop in food quality during delivery, loss
of communication with customers and loss of control over prices. (M Tyagi, 2021)

Goh See-Kwong, Wong Shiun-YI, Chong Lily published an article “Outsourcing To

Online Food Delivery Services: Perspective Of F&B Business Owners” in a journal
named Journal of Internet Banking and Commerce. In this article, it is studied that there
are two main purposes for this study. The first aims to provide a comprehensive review

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on the past literature review on outsourcing in the food service business sector by
identifying the commonalities and filling in the gaps. The second purpose is to
contribute to the limited research works that cover this field of study. The research on
business owner's perspective in relation to outsourcing food delivery service is found
to be scarce. The findings in this research work suggests that there are three main
driving factors to the business owners' behavioural intention to outsource food delivery
service to third-party online food delivery service providers. These factors are listed as
increase of revenue, wider customer reach and expanded customer base. The findings
propose that business owners should consider and pay close attention to the changes in
the consumer preference as it still remains dynamic, if they want to remain competitive
in the food service industry. This research work also provides insights and
recommendations to third-party online food delivery service providers. This is one of
the few research works that study the determining factors for restaurant businesses to
outsource to online food delivery service providers.It may be difficult for business
restaurant owners to explore the opportunities or challenges associated with the
outsourcing to online food delivery service. This study identifies the areas that are less
explored, in the views of restaurant business owners. (Goh See-Kwong, 2017)

“The Current State of Online Food Ordering in the U.S. Restaurant Industry” is a
research article written by the author Sheryl E. Kimes. The article describes a study of
372 U.S. restaurant operators (of all sizes) that accept takeout orders and found that
about one-quarter of those surveyed have adopted online ordering. Just over one-fourth
of those surveyed use some form of online ordering. These restaurateurs have been
pleased with the technology, and all of them indicated that online ordering has met or
exceeded their expectations on ROI. Although convenience and control are both drivers
of the move toward online ordering, this study found that consumers and operators
differed on the ranking of those two factors. Operators thought that consumers like
online ordering for its convenience, but an earlier study of consumers found that what
they like is control over the ordering process. Contrary to some reports, the restaurants
in this study did not find substantial increases in average check, but they did report
considerable increase in order frequency. For this sample, the top benefit of online
ordering was a savings in labor, since employees are not tied up on the phone or at the
counter. Order accuracy was another benefit cited by these restaurant operators. (SE
Kimes, 2011)

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“Enhancing the Usage of Mobile Food Delivery Applications Special Reference to
Cloud Kitchen”, a research article written by the authors Norman Borlaug & Deepika
R. The authors researched empirical findings to identify the factors that drive Indian
consumers towards cloud kitchens through mobile food delivery applications, but the
context derived is in reference to the impact on business sales. Further, The growing
popularity of online food delivery in India, driven by lifestyle changes and extensive
use of mobile phones and internet, has resulted in an increased presence of food
aggregators and cloud kitchen-based mobile food delivery services. A deductive
approach is followed in this research. In this work, ten hypotheses were framed based
on a survey of literature and a quantitative approach was used to examine the factors
that affect the behaviour, intention and use of cloud kitchen-based mobile food delivery
apps. A theoretical model was developed and data was collected using an online
questionnaire survey. The collected data were analysed using SPSS and AMOS. All ten
hypotheses were supported, with four factors facilitating conditions, social influence,
online coupons and various food choices being the most influential ones in determining
user intention to use cloud kitchen-based mobile food delivery apps. The contributions
of this research include identification and understanding of the factors that induce or
inhibit cloud kitchens use among users of mobile-based food delivery apps. The results
from this research help iv cloud kitchen operators and mobile food delivery aggregators
address the factors that would affect them. (Deepika R, 2020)

“The Changing Market for Food Delivery” is a research article written by the authors
Carsten Hirschberg, Alexander Rajko, Thomas Schumacher, and Martin Wrulich
McKinsey&Company. The authors described with a motive of knowing how the food
delivery mechanism has impacted on the economic growth of the market structure.
Random sampling of 7 different countries' growth rates and their statistical data
(secondary data) was used to undergo the study. Internet platforms are attracting
considerable investment and high valuations. Online penetration of the total food-
delivery market broke 30 percent in 2016. It is believed that penetration rates will grow
further as the market matures, eventually reaching 65% per year. The market has
become more bullish on the sector, giving the players that are still private significantly
higher valuations and higher levels of funding than earlier companies achieved at the
same stage. The authors further implies and describes the initial emergence of this new
tier mode of delivery. Two types of online platforms have risen to fill that void. The

12
first type is the “aggregators,” which emerged roughly 15 years ago; the second is the
“new delivery” players, which appeared in 2013. Both allow consumers to compare
menus, scan and post reviews, and place orders from a variety of restaurants with a
single click. The key catalysts for the adoption of online food delivery are the overall
level of funding for the industry and the size of marketing budgets. Technology
penetration—mainly smartphone and online penetration—has only been slightly
relevant to the speed of adoption so far due to the geographic expansion of food players.
(M Wrulich, 2016)

Robert Goch & Jeremiah Titone, Faculty Works Business in their research article, “The
Economics of Quick Service Restaurant Delivery Partnerships” stated with a motive
that to explore the economics of delivery fee determination and allocation, paying close
attention to scalability and efficiency. How the business entities tie up with aggregators
rather than delivery themselves. The research methods mainly used for study are mainly
secondary data sources of various trends of restaurants using aggregator sources. Large
chain fast food restaurants, also known as quick service restaurants (QSR) are known
for price and convenience. For restaurants that offer delivery, the increased availability
to the consumer can offer a substantial competitive edge. Restaurants that simply lack
an online presence can look to order aggregators to fill their needs. Due to the low
average price point in the QSR business, delivery charges can have a significant impact
on margins. The purpose of this research is to explore the economics of delivery fee
determination and allocation, paying close attention to scalability and efficiency. Some
of the results of this article were that restaurants can take comfort in the fact that growth
through third party delivery is the largest incremental. Less than 20% of delivered meals
replace a restaurant visit. Restaurants can pursue third party delivery without the fear
that they are simply rearranging their existing customers. Based on rapid adaptation and
integration of order aggregation and third-party delivery services in the restaurant
industry, it appears likely that the industry will experience continued financial success.
As the market matures, the “dust will settle” and effective strategies will become more
apparent. (R Goch, 2018)

“A Descriptive Analysis on Sustainable Business Strategy of Online Food Service

Industry” an article written by the authors Dsouza Prima Frederick and Sachin K.
Parappagoudar, in the International Research Journal of Modernization in Engineering

13
Technology and Science. Researched upon with the motive to identify the various
environmental factors affecting the online food industry, analyze the implication of
Porter’s Five Force Model and the Pestle Framework analysis, the research methods
and tools mainly used were current literature was systematically analyzed by the use of
Porter’s Five Force Model.secondary data. Data for the study was collected from
published sources from sales reports from the official websites of different firms, survey
reports, journal research papers, reports issued by different marketing research
agencies, and government agencies. Porter’s Five Force industry analysis model and
PESTLE framework has been used in the study with optimistic managerial
implications. The analysis shows that the online food industry has good growth
opportunities but to sustain itself in the market, they require to adapt more expansion
or competitive strategies to widen their operation capabilities with an increasing
customer base. The results of the study stated the strategies for business to irradiate
threats on businesses. The study reflects that the online food delivery industry must
introduce new features by upgrading their apps and offer more promos or discounts to
retain the existing customers and also for increasing their customer base. However, the
boom in this industry has increased the level of work openings for youngsters in the
sector and has raised the quality of living. India's GDP will rise as a result of emerging
trends in the online foodservice industry. (DP Frederick, 2021)

“Digital Food Delivery Apps Revolutionizing Food Products Marketing in India” is a

research article written by the author N. Thamaraiselvan, G. R. Jayadevan, K. S.
Chandrasekar. The main objectives of this research article by the author were To
examine the growth and relevance of digital apps in the food delivery systems run by
the food providers particularly fast food companies in India and a few strategies which
could be adopted by them for sustainable business in the days to come. The research
methodology used for this study was purely analytical based on the available secondary
data. The result of the research has found that The business format of delivering ready-
to-eat food over a digital platform either through a web portal or mobile apps has
captured more customers to its ambit particularly in places like retail malls, housing
apartments and office locations. Rapid urbanization connected with the influx of
professionals in urban centers and exposure to western lifestyle is aiding the spectacular
growth of the food delivery and restaurant segment in India. Adding to this scenario is
the increase in usage of smartphones and food delivery apps. These have become a big

14
hit in the food industry with a growing number of tech-savvy customers using food
delivery apps at the comfort of their homes and offices. Present day food tech spaces
offer many business models. Thus innovation can spin off the restaurant business in a
wholly new direction. Technology and innovation will now dictate the growth of this
sector. Technology is the potential tool to offer high cost and efficiency improvements
for food providers as well as customer ecstasy at the other end. (Jayadevan, 2019)

Charlene, Miranda Mirosa and Phil Bremer in their research article “Review of Online
Food Delivery Platforms and their Impacts on Sustainability” researched upon the
conduct of an interdisciplinary review that brings together academic research on the
broad range of areas impacted upon by the increased use of online Fd. The research
methods used in this research article were More than 60 documents were identified on
‘online food delivery impacts’, The rise of the online Fd industry has provided job
opportunities for many people across a range of types of employment including as chefs
and administrative staff in restaurants, delivery people or as programmers behind the
Apps/online platforms. online Fd is not without its critics, with reports of consumer and
restaurant boycotts. It is, therefore, time to take stock and consider the broader impacts
of online Fd, and what they mean for the stakeholders involved. From an economic
standpoint, while online Fd provides job and sale opportunities, it has been criticized
for the high commission it charges restaurants and questionable working conditions for
delivery people. From a social perspective, online Fd affects the relationship between
consumers and their food, as well as influencing public health outcomes and traffic
systems. Environmental impacts include the significant generation of waste and its high
carbon footprints. Moving forward, stakeholders must consider how best to mitigate
the negative and promote the positive impacts of online Fd to ensure that it is
sustainable in every sense. (C Li, 2020)

Ali Abdallah Alalwan in his research article “Mobile food ordering apps: An empirical
study of the factors affecting customer e-satisfaction and continued intention to reuse”
conducted a study based on structural equation modelling and support the role of online
review, online rating, online tracking, performance expectancy, hedonic motivation,
and price value on e-satisfaction and continued intention to reuse. This study provides
a theoretical contribution and presents practical implications relevant to academics and
practitioners working in areas related to Mfoa. The research methods used were mainly
self-administered online questionnaire, conceptual paper, offline survey, mixed

15
methods: questionnaire and focus group, qualitative exploratory method. The
fundamental purpose of this study is to identify and empirically examine the main
factors predicting the e-satisfaction with Mfoa’s and customers’ intention to reuse such
apps in Jordan. The results section begins by providing preliminary data analysis of the
demographic statistics. It will then present the two-stage structural equation modelling
(Sem) that was adopted to validate the conceptual model and test its associated
hypotheses. The results of the confirmatory factor analysis (cfa). This study has
attempted to provide more understanding regarding the aspects that could shape
Jordanian customers’ satisfaction and continued intention to reuse Mfoa. It began by
reviewing the main body of literature, which revealed that only a few studies have ad-
dressed issues related to Mfoa. (Alalwan, 2020)

A research paper “Influence of Online Food Delivery Apps on The Operations of The
Restaurant Business” published by Shantashree Das and Debomalya Ghose,
interestingly shed light on the benefits of integrating online food delivery apps within
the restaurant business and the influence of online food delivery apps on the inventory
management of the restaurants in India. The study also lists out various issues faced by
the restaurants which the restaurateurs should keep in mind to provide better services
to the customers and earn better profit margins. The restaurant segment and the food
delivery market have enormously changed over the last few years with rapid
urbanization and endless influx from neighbouring places to cities. Ordering a meal
from outside and eating-in has become a tradition these days with the increasing number
of smartphones and food delivery apps. The idea put forward about how the usage of
online food delivery apps can have a positive impact on the restaurant business. The
paper also highlights the inventory management strategies that the restaurants are
following in today's scenario. For effectively managing the restaurant inventory, a few
recommendations are given that might be helpful to the restaurateurs. The issues faced
by the restaurants currently can be solved in the future, which leaves scope for further
research. (Das & Ghose, 2019)

“Impact of Food Aggregators on Conventional Restaurant Business: An Empirical

Study” published by Dr. Shagun Srivastava along with Yash Joshi and Kushank Jain.
The study had set out to gauge the impact of food aggregators on the conventional
restaurant business. The study is the first study which has also taken into account the

16
impact of Zomato’s flagship scheme, Zomato Gold. For the data collection, face-to-
face meetings had been set up with the owners of the restaurants in Jaipur, Ahmedabad
and Mumbai, majorly in Mumbai as there are comparatively more customers and
restaurants. Special care was taken to all types of restaurants so as to have a refined and
diverse set of data. The primary source of data is solely based on the word of the
restaurateurs. The data was analysed through factor analysis, a component of principal
component analysis based on the questions which were on a Likert scale and hence
presented. It was found that these factors would decide the future and feasibility of
online food-delivery start-ups and whether the deep discounting model is sustainable
or not. (Srivastava et al., 2020).

This paper “Growth of Food Tech: A Comparative Study of Aggregator Food Delivery
Services in India” published by Mustafa Abbas Bhotvawala, Harsh Balihallimath,
Nishant Bidichandani and M. P. Khond studies the operating practices that make tech
companies tick in the growing food delivery service sector in India. These aggregator
services run into an initial loss due to focus on customer acquisition, growth and
changing the ecosystem of the market. However, with heavy support from VCs and
investors, these start-ups can suspend focus on profit building. With a funding freeze in
India, it is important for the business model to be sustainable to receive more rounds of
funding. Four distinct models: Swiggy, Zomato Delivery, FoodPanda, and TinyOwl are
compared in the study to determine correlations between success of the growth model
and how the company operates. Lower profit margins necessitate the need for
innovative product strategy that helps cut costs and build customer bases c) Cash-burn:
This paper manages to isolate the root causes for the same. (Bhotvawala et al, 2016).

Jack Collison published “The Impact of Online Food Delivery Services on Restaurant
Sales” as per this study the empirical evidence presents the crowding-out effects and
market expansions are induced by the staggered entry of online food delivery services.
Difference-in-differences methodology reveals that 30-50 cents of every dollar spent
on online food delivery services are incremental, while the rest is drawn away from
brick-and-mortar sales. These findings are statistically significant at the zip code-level
and are heterogeneous across different types of consumption, suggesting that
convenience and pre-existing spending habits drive the level of substitution.
Conducting analyses on a year-by-year basis suggests that there is an increasing level

17
of cannibalization of brick-and-mortar restaurant sales. Back-of-the-envelope
calculations show an increase in restaurants’ revenues but a decrease in profitability.
(Collison, 2020)

“An Analysis of Online Food Ordering Applications in India: Zomato and Swiggy”
published by Anupriya Saxena, studies the insight about emerging innovative
technologies in the restaurant industry and strategies followed by online food start-ups
Zomato, Swiggy. From this research paper drivers of online food sites are understood.
Different services given by applications that make consumers happy and satisfied,
Comfort and Convenience which makes consumers more inclined towards online food
ordering. By giving consistent and effective services this concept with innovation can
be successfully grown. In future companies can target Tier 2 cities for expansion of
business as these cities are also having numbers of working youngsters. The research
concluded that due to urbanization in the Indian landscape, online food delivery
applications are growing with flying colours. Future of online food ordering websites
is bright. Facilities, Comfort, User friendliness are the key features of online websites
success. (Saxena, 2019)

An overview finding from the literature reviews, it is found that there are pros and cons
when partnering with Food aggregators. The influence of food aggregators has
escalated the concept of online food delivery patterns, leading to a considerable
structural shift in consumer behaviour and restaurants partnering. This may impact the
restaurants positively on its sales and sometimes might even negatively reduce its
profitability based on various other factors. Our research study “Role of food
aggregators on restaurant sales:A case study of South Goa” can be safely said that the
research is carried out upon solely how restaurants partnering with food aggregators
impact their sales and customer base along with comparisons between the three
categories of restaurants on the selected parameters of restaurants with FAs only,
restaurants with FAs and self delivery, restaurants with no delivery services- is
significantly different in a small way as compared to the above mentioned literature
reviews.

18
 CHAPTER 3
DATA ANALYSIS

19
 3. Data Analysis

The sample size for this study was 74 restaurants arbitrarily selected in Salcete and
Mormugao Talukas, South Goa. Of these 74 restaurants, 43 had tie-ups with Food
Aggregators, 30 had their own in-house delivery service and 21 offered only dine-in
services. The primary objectives of this research are to determine a relationship between
Food Aggregators and Restaurant Sales, and a relationship between Food Aggregators
and Customer Base. In order to understand this we assessed various Quantitative and
Qualitative variables. For qualitative data we provided the assessees with open ended
questions which we have analysed by picking up certain keywords and ideas present in
the answers. Quantitative data analysis was done by taking into consideration three
variables: monthly restaurant revenue in sales, total monthly orders, total monthly
advertisement cost.

3.1 Qualitative Data

Figure 2.
Percentage Break-
up of Delivery
Options offered by
the Restaurants

Source: Derived from Primary Data

Of our sample size of 74 restaurants, it was observed that 21 had no delivery service
options, 10 offered only in-house delivery, 23 offered delivery only through food
aggregators while 20 restaurants offered both in house and food aggregator delivery
options. The majority of restaurants with no delivery option offered both dine in and
takeaway, with only a slim margin of 1% offering only dine in. 72% of restaurants

20
offered some type of delivery optionThis shows us that there is a certain bracket of
customers that do not prefer dine in whom restaurants feel they should capture by
expanding their services either through takeaway or delivery or a combination of both.

The two prominent Food Aggregator platforms in South Goa are Zomato and Swiggy.
Most restaurants showed a higher affinity for Zomato. Some expressed displeasure at
the commissions and discounts charged by Swiggy. The overall response towards
satisfaction with these Food Aggregators was positive with the majority of restaurant
owners saying they would prefer to continue their partnerships with these Food
Aggregators.

Dissatisfied restaurants expressed their desire to discontinue with the FA’s due to high
commissions, no sales, low profit margins and a lack of resource persons.

Figure 3.
Expectations of
restaurants before
partnering with FAs

Source: Derived from Primary Data

When asked about their initial expectations before joining these FA’s a vast majority
said that they wished to be more accessible to customers and increase their customer
base. Expanding their scale of operations without extending their brick-and-mortar
establishment was also a major reason cited. A few felt that the popularity of the
aggregator platforms made them feel like they would be left out and that they were
attracted to join after seeing their peers succeed. Sales, profitability during the
Pandemic, additional income to cover small expenses, adaptive strategies in order to
mitigate loss of customers to FA’s were other expected outcomes.

21
 Figure 4. The positive
benefits experienced by
restaurants after
outsourcing delivery to
FAs.

Source: Derived from Primary Data

Among the positive outcomes of Food Aggregators cited, some of the most prominent
were: a marginal increase in income (additional income), expanded customers base,
importance during the pandemic, promotional benefits, and low cost of operations.
Many were of the opinion that it brought in many young customers.

Figure 5. Problems
encountered with FA’s
as reported by
restaurants

Source: Derived from Primary Data

Restaurant owners went into detail enumerating the problems or unfavourable incidents
faced with the FA’s. High commissions and discounts were a major complaint, and it
was reported that promotional activity was very little or was a costlier package. Apart
from this there were problems in communication, technical problems and bugs, lack of
transparency, problems in timely delivery, and insufficient packaging material provided
by the Food Aggregator. Some restaurants expressed an overall decrease in profits due
to the presence of food aggregators, which has reduced the overall number of footfalls
in the restaurants. Popular and established businesses felt that their benefits were either
marginal or insignificant, and that the Food Aggregators were not their priority. Some

22
speculated that the review ratings system also hurt their sales. Harsh policies also either
charged restaurants for customer complaints or soft banned them for not complying.
There were stakeholder differences also observed as restaurants focused more on
improving quality, staff satisfaction, and value customers while Food Aggregators
focused primarily on sales. They elaborated further by stating that rewards and special
memberships given by the restaurants were non-exclusive and were used by even non
regular customers which was too expensive to manage.

Figure 6. Reasons
cited by
restaurants for
having their own
in-house delivery

Source: Derived from Primary Data

30 Restaurants offered their own in-house delivery services. In-house delivery has
enabled them to expand their service operations and is more economical for both nearby
customers and the restaurants. They also felt that it was more reliable than FA platforms
as there are too many technical problems and software crashes during peak hours. Other
reasons cited included handling especially for restaurants dealing in cold foods and
seafood, having multiple kiosks or their own online delivery platform, and self-
promotional activities such as encouraging more spending by coupling with attractive
offers such as food delivery above RS. 1000 and advance orders. The mean delivery
radius was 6.8kms, while the mode and median value was 5kms. Most restaurants' in-
house delivery services went only up to 5kms, with the furthest being 15kms and the
shortest distance 3 kms.

23
 Figure 7. Percentage of
restaurants without FA
partnership interested
in joining FAs in the
foreseeable future

Source: Derived from Primary Data

Restaurants that did not have any present tie-ups with food aggregators showed minimal
interest in joining in the near future. 57% expressed no desire to join, while 30% had
no clear answer. A very slim 13% said that they were looking into joining a food
aggregator in the near future or were already in talks. A resounding majority of
restaurant owners felt that a tie up with FA’s would hurt their business as they charged
higher commissions for smaller restaurants. Some restaurants said that they catered to
value customers as a luxury brand and that such tie ups would hurt their brands and
service quality. Contrastingly others felt that their scale of operations were too small
and understaffed, or their locations too remote to benefit from a tie up. Many expressed
their displeasure with FA’s as they felt that they were creating a competition with dine-
in restaurants and hurting their sales. They also felt that a policy clash could arise due
to stakeholder differences. Some restaurants stated that they had already partnered with
Zomato but only for marketing and not for delivery, others felt that instead of offering
discounts and paying a commission, they could be more profitable by increasing
footfalls through attractive offers such as ‘Happy Hours’ etc.

When asked for their own opinions and suggestions restaurant owners felt that there
should be more Government Regulations enforced in order to ensure that stakeholder
interests are properly managed and to regulate commissions. They also felt that such tie
ups could harm small businesses as they are based on increasing sales, and charge a
higher commission for lower sales.

24
 3.2 Quantitative Data

For our quantitative data we considered three variables: monthly advertisement cost,
monthly sales and monthly orders. Since we felt that the number of restaurants offering
only in-house delivery was insignificant, we did not include this data in the analysis.
Advertisement costs included all promotional activities including Food Aggregator
related expenditure, while restaurant sales included the total revenue generated from
monthly sales in rupees. Restaurant orders are the number of orders received in a month.
For sales (revenue) and advertisement cost (expenditure), restaurant owners were given
different ranges to choose from, and the midpoint values have been used for this data
analysis. Customer base is defined by the average number of monthly orders received
by the Restaurant. The impact on customer base has been assessed by using the
percentage contribution of FAs on restaurant orders. Sales are defined based on the
monthly revenue earned by the restaurant and the monthly percentage contribution of
FA to sales.

1) Impact on Restaurant Sales

Figure 8.
Contribution of
FAs to Restaurant
Sales

Source: Derived from Primary Data

25
As can be seen from the pie chart, the percentage contribution of Food Aggregators to
restaurant sales, after computing the average data on sales collected by us from
restaurants, is 17%. The rest of the pie chart depicts the portion of revenue earned
through dine-in, home delivery and takeaway services provided by the restaurant. Thus
17% of the total revenue earned through sales by Restaurants on average comes from
FAs.

2) Impact on Customer Base

Figure 9.
Contribution of
FAs to Restaurant
Orders

Source: Derived from Primary Data

20% of monthly orders received by restaurant’s were attributed to FA’s. However, 80%
of orders were received through other service channels such as dine-in, takeaway and
in-house delivery.

26
 3) Advertisement Cost

Figure 10.
Impact of FAs on
Advertisement
Cost

Source: Derived from Primary Data

The bar graph above is a representation of the average advertisement cost. The average
advertisement cost for restaurants with FA tie-ups is the highest. If we compare
advertisement cost between 64 restaurants with dine in and takeaway, in house delivery,
or food aggregators and a subset of 43 of restaurants having tie ups with FA’s, we see
that the mean values are very close. However, the average advertisement cost for 21
restaurants without any FA partnership is much less. Thus, we can conclude from this
data that the cost incurred by restaurants tying up with Food Aggregators for
promotions on their apps through delivery and listings is relatively higher than the cost
of restaurants without FA tie-ups.

27
 CHAPTER 4
REGRESSION MODELS

28
 4.1 MODEL 1

Sales= ꭤ + ꞵ1 (Adv.Exp.) + ꞵ2 (COFAS) + ꞵ3 (FA) + ꞵ4 (Both)

Dependent Variable

In this regression model, the dependent variable is Sales Average. We measure sales
average in terms of the monetary gains made by restaurants through sales generated
monthly. It is measured in terms of Rupees (Re).

Independent Variables

i. Advertisement Expenditure (measured in terms of Rupees)

ii. Contribution of FAs (Food Aggregators) to Sales (measured in percentage terms)

iii. Dummy Variable 01- Restaurants that deliver through means of Food Aggregators
only

iv. Dummy Variable 02- Restaurants that deliver through means of Food Aggregators
as well as In-House Delivery System

In statistics and econometrics, particularly in regression analysis, a dummy variable is

one that takes only the value 0 or 1 to indicate the absence or presence of some
categorical effect that may be expected to shift the outcome. They can be thought of as
numeric stand-ins for qualitative facts in a regression model, sorting data into mutually
exclusive categories (such as restaurants which are in a tie up with FAs, which have
both in-house delivery and tie ups with FAs and restaurants with no delivery option.)
Reference Category- Restaurants that do not have any delivery system.

29
 Model 1: OLS, using observations 1-64
Dependent variable: Sales Average

Coefficient Std. Error t-ratio p-value

const 10.2405 1.21070 8.458 <0.0001 ***
Ad.ExpenditureAv 0.000232583 4.93351e-05 4.714 <0.0001 ***
erage
ContributionofFAs −6.93631 3.40362 −2.038 0.0460 **
toSales
OnlyFA −0.751141 1.76604 −0.4253 0.6721

Both −0.840405 1.95664 −0.4295 0.6691

Mean dependent var 11.82031 S.D. dependent var 5.932903

Sum squared resid 1470.426 S.E. of regression 4.992242
R-squared 0.336917 Adjusted R-squared 0.291962
F(4, 59) 7.494563 P-value(F) 0.000060
Log-likelihood −191.1137 Akaike criterion 392.2273

Schwarz criterion 403.0217 Hannan-Quinn 396.4798

F (4, 59)
Right-tail probability = 0.05
Complementary probability = 0.95
Critical value = 2.52791

30
 4.1.1 Regression Analysis

1) Relationship Between Sales of Restaurants and their Advertisement Expenditure

Null Hypothesis (H0): There is no significant relationship between Advertisement

expenditure and the average sales of the restaurants.

Alternate Hypothesis (H1): There is a significant relationship between Advertisement

expenditure and the average sales of the restaurants.

The analysis suggests that with every Re 1 increase in advertisement expenditure, the
average sales of the restaurants increase by Re 0.00023. With the p-value being 0.0001,
which is less than 0.05 (at 95% confidence level), we reject the null hypothesis as the
variable makes a significant contribution to the model.

2) Relationship Between Sales and Contribution of Food Aggregators to Sales

Null Hypothesis (H0): There is no significant relationship between contribution of FAs

to sales and the average sales of the restaurants.

Alternate Hypothesis (H1): There is a significant relationship between contribution of

FAs to sales and the average sales of the restaurants.

The analysis suggests that with every 1% increase in contribution of FAs to sales, the
average sales of the restaurants decreased by 6.936%. With the p-value as 0.0460,
which is lesser than 0.05 (at 95% confidence level), we reject the null hypothesis as the
variable makes a significant contribution to the model.

31
The reason behind the negative coefficient was well explained by a sizeable chunk of
interviewees, who highlighted the fact that even though the tie up with the aggregators
has increased their incoming order numbers, this doesn’t always proportionately
translate in the sales figures. Respondents also mentioned that with more and more use
of these FAs, it has become easier and more accessible for the crowd to order online,
which reduces the dine-in customers’ orders by a noticeable margin. Lastly, it was
worth noticing that on an average, the dine-in orders’ monetary values tended to be
higher than orders placed through FAs, therefore making these online orders less
profitable. This is because although the number of orders are high via FAs, the
monetary values of these orders are very small, while on the other hand, people can
order dishes that have a higher price and quantity when dining in. These dishes may not
be available to order online.

3) Relationship between Dummy Variables and Reference Variable

a) Relationship Between Restaurants Which Have a Tie Up With FAs and Those
Which Have No Delivery Service at all

Null Hypothesis (H0): There is no significant relationship between restaurants which

do have a tie up with FAs and restaurants which have no delivery service at all.

Alternate Hypothesis (H1): There is a significant relationship between restaurants

which have a tie up with FAs and restaurants which have no delivery service at all.

The analysis suggests that those restaurants which are in a tie up with FAs will have
0.7511 lesser sales than the restaurants with no delivery at all. With the p-value as
0.6721, which is greater than 0.05 (at 95% confidence level), we accept the null
hypothesis as the variable does not make a difference in comparison to an only intercept
model. Therefore, this variable is rendered as insignificant. This is explained by the
presence of selection bias while collecting data, which led to a sizable chunk of affluent,

32
well-to-do restaurants which usually are not in a tie up with these FAs making the list,
in comparison to small restaurants which were. Furthermore, the data collected is small
and limited in its scope due to time and resource crunch, hence not representative of the
entire restaurant population in South Goa.

b) Relationship Between Restaurants Which Have Both In-House Delivery & a Tie
Up With FAs and Those Which Have No Delivery Service at all.

Null Hypothesis (H0): There is no significant relationship between restaurants which

have both in-house delivery and a tie up with FAs and restaurants which have no
delivery service at all.

Alternate Hypothesis (H1): There is a significant relationship between restaurants which

have both in-house delivery and a tie up with FAs and restaurants which have no
delivery service at all.

The analysis suggests that those restaurants which are in a tie up with FAs and also
have their own in-house delivery will have 0.8404 lesser sales than the reference
category of restaurants with no delivery at all. With the p-value as 0.6691, which is
greater than 0.05 (at 95% confidence level), we fail to reject the null hypothesis as the
variable does make a difference in comparison to a no independent variable model.
Therefore, this dummy variable is insignificant in the model. This is explained by the
presence of selection bias while collecting data, which led to a sizable chunk of affluent,
well-to-do restaurants which usually are not in a tie up with FAs making the list, in
comparison to small restaurants which were. Furthermore, the data collected is small
and limited in its scope due to time and resource crunch, hence not representative of the
entire restaurant population in South Goa.

33
4) Overall Significance of the Model

Null Hypothesis (H0): There is no significant relationship between the dependent

variables and independent variables.

Alternate Hypothesis (H1): There is a significant relationship between the dependent

variables and independent variables.

The regression analysis suggests that the average sales of the restaurants have a
significant relationship with restaurants’ advertisement expenditure, contribution of
FAs to the sales, but an insignificant relationship with dummy variables 1 and 2. The
model’s overall p-value: 0.00006 is lesser than 0.05 (95% confidence level) implies that
the model is significant as a whole and makes a difference in comparison to an only
intercept model.

Furthermore, the calculated F value (4, 59) is 7.494563, is greater than the critical value
2.52791, we reject the null hypothesis to conclude that there is a significant relationship
between the dependent variables and independent variables.
The most common interpretation of R2 is how well the regression model explains
observed data. The R2 value here is 0.3369, which means that 33.69% of the variability
observed in the target variable is explained by the regression model. Generally, a higher
R2 indicates more variability is explained by the model.However, it is not always the
case that a high R2 is good for the regression model. The quality of the statistical
measure depends on many factors, such as the nature of the variables employed in the
model, the units of measure of the variables, and the applied data transformation.

34
 4.2 MODEL 2

Customer Base=ꭤ + ꞵ1 (Adv.Exp.) + ꞵ2 (COFAO) + ꞵ3 (FA) + ꞵ4 (Both)

Model 2: OLS, using observations 1-64

Dependent variable: CustomerBaseAverage

Coefficient Std. Error t-ratio p-value

const 45.2112 11.7177 3.858 0.0003 ***

Ad.ExpenditureAv 0.00190263 0.000469598 4.052 0.0002 ***

erage
ContributionofFAst 69.9882 33.9030 2.064 0.0434 **
oOrders

FA −12.8512 17.5653 −0.7316 0.4673

BothIHDFA −32.8012 19.0618 −1.721 0.0905 *

Mean dependent var 72.03125 S.D. dependent var 55.15734

Sum squared resid 141481.9 S.E. of regression 48.96935

R-squared 0.261835 Adjusted R-squared 0.211790

F(4, 59) 5.231978 P-value(F) 0.001125

Log-likelihood −337.2455 Akaike criterion 684.4909

Schwarz criterion 695.2853 Hannan-Quinn 688.7434

F (4, 59)
Right-tail probability = 0.05
Complementary probability = 0.95
Critical value = 2.52791

35
 Dependent Variable

In this regression model, the dependent variable is Customer Base. We measure

customer base in terms of average number of orders, daily.

Independent Variables

i. Advertisement Expenditure (measured in terms of Rupees)

ii. Contribution of FAs (Food Aggregators) to Orders(measured in percentage terms)

iii. Dummy Variable 01- Restaurants that deliver through means of Food Aggregators
only

iv. Dummy Variable 02- Restaurants that deliver through means of Food Aggregators
as well as In-House Delivery System

4.2.1 Regression Analysis

1) Relationship Between Customer Base of Restaurants and their Advertisement

Expenditure

Null Hypothesis (H0): There is no significant relationship between Advertisement

Expenditure and Customer Base.

Alternate Hypothesis (H1): There is a significant relationship between Advertisement

Expenditure and Customer Base.

The analysis suggests that for every Re 1 increase in Advertisement Expenditure, the
Customer Base increases by 0.00190263 orders.

The reason for this is that advertisement expenditure increases a restaurant’s publicity
and visibility through targeted ads, etc. With increased visibility, more people
automatically become aware of the restaurant and what it has to offer. However, not

36
everyone may want to buy anything from them, aside from a few who might be looking
to try something new. This can be due to skepticism regarding the restaurant, lack of
good reviews, etc.

The p-value being 0.0002, which is less than 0.05 (at 95% confidence level), implies
that this variable is statistically significant. Hence, we reject the null hypothesis, as this
variable makes a significant contribution to the model.

2) Relationship Between Customer Base and the Contribution of Food Aggregators to

Orders

Null Hypothesis (H0): There is no significant relationship between Advertisement

Expenditure and Contribution of Food Aggregators to Sales.

Alternate Hypothesis (H1): There is a significant relationship between Advertisement

Expenditure and Contribution of Food Aggregators to Sales.

The analysis suggests that for every 1% increase in the Contribution of Food
Aggregators to Orders, the Customer Base increases by 69.9882%.

The p-value being 0.0434, which is lesser than 0.05 (at 95% confidence level), implies
that this variable is statistically significant. Hence, we reject the null hypothesis, as this
variable does make a difference in comparison to an only intercept model.

The reason behind the high positive coefficient is due to the increased exposure and
publicity restaurants have received after joining a Food Aggregator, thus increasing
their sales and ultimately broadening or expanding their Customer Base.

37
3) Relationship between Dummy Variables and Reference Variable

a. Relationship Between Restaurants Which Have a Tie Up With FAs and Those
Which Have No Delivery Service at all

Null Hypothesis (H0): There is no significant relationship between restaurants which

have a tie up only with FAs and restaurants which have no delivery service at all.

Alternate Hypothesis (H1): There is a significant relationship between restaurants

which have a tie up only with FAs and restaurants which have no delivery service at
all.

The analysis suggests that those restaurants which have a tie up with FAs only will
have 12.8512 lesser orders than the reference category of restaurants with no delivery
at all.

The reason behind this is because for those restaurants having a tie up with FAs, their
orders get divided between dine in orders and orders placed by means of a food
aggregator, even if joining a food aggregator has increased their overall customer base.
It is also because those restaurants having no delivery service at all do rather well with
only their dine in orders and their customer base is already large, so much so that it
offsets any increase in the customer base of those restaurants who have tie ups with
FAs. This is also a result of the unintentional flawed data collection which led to well
established famous restaurants without any tie ups to make a good portion of the data,
therefore distorting the results.

With the p-value as 0.4673, which is greater than 0.05 (at 95% confidence level), we
fail to reject the null hypothesis as the variable does not make a difference in
comparison to an only intercept model. Therefore, this variable is rendered as
insignificant.

38
b. Relationship Between Restaurants Which Have Both In-House Delivery & a Tie
Up With FAs and Those Which Have No Delivery Service at all.

Null Hypothesis (H0): There is no significant relationship between restaurants which

have both in-house delivery and a tie up with FAs, and restaurants which have no
delivery service at all.

Alternate Hypothesis (H1): There is a significant relationship between restaurants

which have both in-house delivery and a tie up with FAs, and restaurants which have
no delivery service at all.

The analysis suggests that those restaurants which have both, in-house delivery and a
tie up with FAs will have 32.8012 less orders than the reference category of restaurants
with no delivery at all.

As mentioned earlier, restaurants which have a tie up with FAs as well as their own
delivery system, may not receive the same number of orders compared to those
restaurants which have no delivery system at all. This is because those restaurants
which do not have any delivery system do well as they are, receiving far more dine in
orders alone, compared to those which have both, in-house delivery and a tie-up with
FAs. The vast difference in the number of orders between the two categories of
restaurants is what skews the results. This is the reason the restaurants which have no
delivery system feel no need to have a delivery system or collaborate with FAs.

With the p-value as 0.0905, which is greater than 0.05 (at 95% confidence level), we
fail to reject the null hypothesis as the variable does not make a difference in
comparison to an only intercept model. Therefore, this variable is rendered as
insignificant.

39
4) Overall Significance of the Model

Null Hypothesis (H0): There is no significant relationship between the dependent

variables and independent variables.

Alternate Hypothesis (H1): There is a significant relationship between the dependent

variables and independent variables.

The regression analysis suggests that the customer base of the restaurants have a
significant relationship with restaurants’ advertisement expenditure and contribution of
FAs to the sales, but an insignificant relationship with dummy variables 1 and 2.

Furthermore, the calculated F value (4, 59) 5.231978, is greater than the critical value
2.52791. Hence we reject the null hypothesis to conclude that there is a significant
relationship between the dependent variables and independent variables.

The most common interpretation of r-squared is how well the regression model explains
observed data. The R2 value here is 0.2618, which means that 26.18% of the variability
observed in the target variable is explained by the regression model. Generally, a higher
R2 indicates more variability is explained by the model. However, it is not always the
case that a high R2 is good for the regression model. The quality of the statistical
measure depends on many factors, such as the nature of the variables employed in the
model, the units of measure of the variables, and the applied data transformation.

40
 CHAPTER 5
AUTOETHNOGRAPHY

41
 5. Autoethnography

Autoethnography is a form of qualitative research in which an author uses self-

reflection and writing to explore anecdotal and personal experience and connect this
autobiographical story to wider cultural, political, and social meanings and
understandings.

It was interesting to note that online food delivery aggregators, when they first entered
the market, offered pretty low and reasonable commissions to the restaurants. With an
increase in the usage of these Food Aggregator platforms, some of the aggregators are
charging commissions as high as 20-25%. Another worrying observation was that the
walk-in customers are slowly facing dissatisfaction due to the delay in receiving food
as these orders have very little turnaround time (TAT) within which the food is to be
prepared and dispatched to their destination. With a wide range of restaurants providing
a variety of options to choose from, it has become challenging for restaurants to retain
customers in the long run. The customers become loyal to food delivery apps and not
restaurants. Even after offering discounts and various other extra benefits, it is not
always sure that the customers will place the order.

A more common problem among many restaurants was that some of the restaurant
operators experienced machine breakdown. When the machine has technical errors,
orders would not be able to reach the restaurants, which would lead to delivery failure
as the food is not prepared for takeout.

Since the restaurant industry provides self employment and is a family run business in
Goa, it is observed that many of these “restaurants” are micro-enterprises that hire 1-3
employees only. Such restaurants therefore cannot handle more orders or do not have
the equipment to provide bulk orders. Due to their low popularity they are charged
higher commissions.

Conversely, restaurants that are well established have a “pull effect” on the Food
Aggregators. Such businesses are offered more lucrative deals, this is because their
popularity increases online traffic on these applications.

It is better for established restaurants to opt to pay a fixed commission at the end of the
month, while on the other hand a per order commission is better for smaller businesses
with infrequent sales.

42
The increased popularity of cloud kitchens is also slowly ruining the restaurant
business. Since cloud kitchens only require a highly skilled kitchen staff but no wait
staff due to lack of physical space for customers to dine-in, it is considered to be more
cost effective as compared to regular restaurants.

Goa has one of the most liberal alcohol policies and lowest excise rates in India. Many
restaurants here rely on the sale of alcohol to earn profits. FA platforms cannot deliver
alcoholic beverages due to licensing and other restrictions; this causes a great loss of
revenue to the restaurants and a disparity between the cost per customer of dine-in
orders and orders placed through the FA platform.

There were few restaurants who encountered minor problems in relation to the service
provided by third-party online food delivery service. According to them, late delivery
is a frequent problem they face. Some restaurants said that late delivery was not part of
their responsibility when asked for their opinions. From their perspectives, they are
only responsible to get food ready for delivery; any other issues or complaints related
to the delivery process should be attributed to the FA. Other restaurants said that late
deliveries are usually caused by poor traffic conditions during rush hours.

South Goa is still plagued with problems of bad connectivity and network problems.
These FAs are yet to reach the hinterlands of Goa, where there is low demand for online
delivery. Since restaurants also receive orders on the “Partner Apps” of FA’s, bad
network and long buffers, can lead to them losing customers due to bad reputation
caused by a longer response time.

The emergence of FAs in Goa can be attributed to convergence of tastes and cultures
due to the widespread use of technology and social media. This has led to a new market
for goods that are faster and at the convenience of the customer.

The major take-away from this study is that many restaurants prefer having their own
in-house delivery service operations due to its reliability on peak traffic days, less
technical and machine failures, and also since it is cheaper for both restaurant and the
customer. It has also been observed that Food Aggregators reduce the overall number
of footfalls for dine-in service options, thereby harming revenue generation. High
commissions and harsh policies are cumbersome to small restaurants, and established
restaurants have marginal benefits at low costs from these FA tie ups. The main goal of
FA’s is to increase traffic and orders on their ordering platforms, this does not

43
necessarily translate to an increase in sales for the partner restaurants. Restaurants gain
more from dine-in service options, whereas with FA delivery the restaurant loses in
terms of commissions, choice and meal customisation, sale of non-alcoholic beverages
only etc.

44
 CHAPTER 6
POLICY RECOMMENDATIONS

45
 6. POLICY RECOMMENDATIONS

Our findings and research provide us with certain insights that can help restaurants to
better serve customers and improve their profitability models.

(i) FOR RESTAURANTS

● Small restaurants should exercise caution while entering into agreements with these
third-party online food delivery providers. Revenue from these platforms is
marginal but can contribute towards the payment of utilities such as electricity bills,
etc., they do not exponentially increase sales. Thus, restaurants should merely look
at FAs as a source for generating some additional revenue, and not depend solely
on them for the same.
● It is recommended that restaurants increase the prices of food items on FA platforms
to make up for commissions. Such a policy could in turn drive up demand for the
restaurant's in-house delivery and dine-in service options.
● Restaurants should utilize free platforms (such as Facebook, Instagram, Wordpress)
to promote their businesses.
● Promoting dine-in services by introducing dine-in discounts, special menus, “happy
hour” discounts, tabs, etc., instead of providing discounts on FA platforms.
● It is recommended that restaurants sell faster moving items on FA platforms and
reserve certain signature dishes for dine-in experiences.
● Restaurants should impose a minimum price value limit in order to at least ensure
minimum profitability from all orders.

(ii) FOR FOOD AGGREGATORS

 A feature to cap the number of orders during rush or peak hours would help
restaurants tackle the issue of slow dine-in service and overworking staff.
 FAs should lower their commissions in order to incentivise restaurants to tie up with
them. High commission rates lower profit margins for restaurants and can even lead
to losses if they do not generate sufficient revenue.
 Improve the user interface of the applications so that restaurants can handle multiple
orders more efficiently. Glitches in these applications cause significant revenue
losses to restaurants by accidentally showing them as offline or by failing to notify
them. These can be avoided by correcting the algorithm, providing more trained

46
 customer support, and opening a management branch for the Goa area to offset
overload and traffic.
 Promoting restaurants for good service, maintaining food safety and hygiene
standards, or implementing eco-friendly policies can ensure that restaurants
improve their quality controls.
 Introducing eligibility criteria through a point system for premium memberships
would maintain the exclusivity of it and reduce the impact of discounts on
restaurants.
 There are cheaper and more profitable methods of nudging customers in order to
increase sales. Limiting the number of users that can avail of discounts can be done
by taking advantage of their loss aversion through lottery pools, spinning wheels,
raffles, tombola or sweepstakes. This would increase sales and cut spending.
 There should be an ad-hoc committee set up by the FAs to resolve disputes between
the restaurant and Food Aggregator by conducting a root cause analysis and
reaching out to the various stakeholders involved so as to ascertain the most
appropriate action in line with their policies. These committees will have to be
present in different zones.

(iii) FOR THE GOVERNMENT

● Absence of regulation in the e-commerce industry should be solved. Placing a

reasonable ceiling on the commission rates, might bring down the exploitation on
the FAs’ end.
● Additionally, commissions charged by the FA are inclusive of GST. The
Government ought to curb the FA’s from taking profits off of taxation.
● The Government should take steps and measures to ensure that there is complete
transparency between the FA and restaurants.
● It is vital that the CCI conducts regular audits and investigations into allegations
and concerns so as to avoid exploitation and unfair barriers to the industry.

47
CHAPTER 7
CONCLUSION

48
 7.1 Conclusion

When third party online food delivery providers entered Goa in 2018, they dramatically
revolutionised the restaurant industry. Ripples of the popularity and success of these
Food Aggregators in other states contributed to a resounding number of restaurants,
customers and delivery partners hopping on board. In under a year these Food
Aggregators had cemented themselves as a household name and essential part of
restaurant businesses. As of today, these platforms continue to grow and expand. As
budding researchers, we wished to understand what draws so many restaurants to these
Food Aggregators. This could be due to numerous factors such as the fear of missing
out, trend following, impacts on sales, widespread and effective promotional activity,
good exposure etc. In this study the possible cause that we considered was the impact
on their sales and customer base.

The results of the two regression models proved to be contrary to the common belief of
FA’s having a positive impact on restaurant sales, that is to say that FA’s help
restaurants increase their sales and widen their customer base. It was found that even
though FA’s positively contributed in increasing the orders of the restaurants, this did
not translate to increase in sales; furthermore it was found that there was a negative
impact of these food aggregators on the restaurants’ sales.

A possible reason for the positive impact on orders is that, when food from one’s
favourite restaurant is available at the mere tap of a few buttons, people are incentivised
to stay within the comfort of their homes and order in, without the hassle of having to
dress up, leave the house, drive all the way to the restaurant’s location, not to mention
the increased cost of fuel. Another is that due to the increased exposure and publicity
restaurants have received after joining a Food Aggregator, thus increasing their sales
and ultimately broadening or expanding their Customer Base.

Conversely, this isn’t the case with sales because with more and more use of these apps,
it has become easier and more accessible for the crowd to order online, which reduces
the dine-in customers’ orders by a noticeable margin, which isn’t an ideal scenario for
the restaurants because it is observed that the monetary value of dine-in orders is usually
higher than the delivered ones.

49
 It is undeniable that there is a market and consumer demand for Food Aggregator
facilitated delivery services, however this model may not necessarily be profitable for
the average restaurant. Based on the findings of our study we can conclude that these
FAs are a honey trap for smaller restaurants and harsh one-sided policies harm these
players in the industry. Besides this, saturation of restaurants on aggregator platforms
competes with dine-in restaurants, resulting in an overall decline in footfalls. Out of
fear of losing customers to these FA’s, restaurants are misguided into believing that
partnering with them will mitigate such losses. The goal of food aggregators is to
increase traction on their own platforms, or in other words increase the number of
orders, however this contradicts with restaurant motives such as increasing value orders
or making more sales. Thus, there is a clear distinction between the two. Attractive
promotions and discounts are paid out of the restaurant’s pockets, yet these have been
proven to be a sinkhole that affects the quality of customers. Such discounts are not
recommended unless there is a surplus of inventory that needs to be done away with.
“Dilution” of exclusive memberships or credit reward programmes also create such
sinkholes. It is therefore advisable only for restaurants that have the bargaining power
and the robustness to withstand short run losses brought about by extreme discounting
and high advertisement spending to partner up with these FA’s.

7.2 LIMITATIONS OF THE STUDY

This project has certain limitations given the nature of the study.

● Absence of random assignment due to small sample size.

● Research suffers from selection bias and Omitted Variable Bias.
● The sample data collected is limited to the 2 major talukas in South Goa -Salcete and
Mormugao, conclusion of the study cannot be generalised for other areas which we
have not included in our study.
● The findings of the study are based on the data obtained from various stakeholders:
managers, relatives and close confidants of the owners, waiters etc., hence its
authenticity cannot be established.
● The data is collected with the help of Questionnaire and Survey methods therefore the
conclusions are drawn based on individual response.
● There is a high degree of heteroskedasticity.

50
 7.3 Scope for further research:

The study can be extended to the entirety of Goa since there is no study done previously.

Improvisation in methodology needs to be undertaken.

The regression analysis needs to be tested for problems of multiple regression and
further tests of autocorrelation, multicollinearity and heteroscedasticity needs to be
done.

51
Chapter 8
APPENDIX

52
 8.1 Questionnaire

Role of Food Aggregators on Restaurant Sales: A

Case Study of South Goa
We are TYBA students of Economics, studying at Parvatibai Chowgule College of Arts
and Science Margao. The following information will be used only for our Project purpose
and shall remain confidential. The area of our study is Restaurants in South Goa; we are
interested in studying the effect of food aggregators on Restaurant Sales. Food Aggregators
are third party delivery services like Zomato, Swiggy, Food Panda etc.,. This project has
not been funded by any of the abovementioned companies. Please give justifications for
long answer type questions.

* Required

1. Name of Restaurant *

2. Location *

3. Contact No *

4. Service Options *

Check all that apply.

Dine- In
Takeaway
Delivery

5. If you offer Delivery, what is your mode of operation? *

Mark only one oval.

In House Delivery

Food Aggregator

In House Delivery and Food Aggregator

No Delivery

53
6. What are you reasons for having no delivery service? *

7. Which Food Aggregators do you have a tie-up with? *

Mark only one oval.

Zomato

Swiggy

Both Swiggy and Zomato

No Tie Up

Other:______

8. If you don't have a tie up, would you be interested in joining any Food
Aggregators in the future? Elaborate. * (type NA if not applicable)

9. Why did you decide to join these Food Aggregators? * (type NA if not applicable)

10. Have you noticed an increase in sales after joining Food Aggregator Platforms? *

Mark only one oval.

Yes

No

Maybe

Not Applicable

11. If no, what do you think could be the reasons behind this? * (type NA if not applicable)

12. What are the positive outcomes of tying up with Food Aggregators? In what ways have they
benefited your business? * (type NA if not applicable)

13. Are there any problems with Food Aggregators or unfavorable incidences you would like to
illustrate? * (type NA if not applicable)

14. Do you wish to continue/ discontinue with these Food Aggregators in the future? Elaborate. *
(type NA if not applicable)

15. What is the average number of orders you receive? * (please specify the unit i.e., daily/
weekly/ monthly?)

54
16. What are your aggregate sales per month? (Lakh Rupees) *

Mark only one oval.

Upto 2 lakhs

2 lakhs to 5 lakhs

5 lakhs to 7.5lakhs

7.5 lakhs to 10 lakhs

10 lakhs to 12.5 lakhs

12.5 lakhs to 15 lakhs

Above 15 lakhs

17. What are your total expenditures on advertisement and sponsorship in general? *

Mark only one oval.

Less than 10,000

10000 -20000

20000-50000

Greater than 50000

Other: ________

18. What is the percentage breakup of your sales between dine-in, in house delivery, takeaway, 3rd
party delivery? *

19. What is the delivery radius covered by your own in house delivery service? *
(type NA if not applicable)

20. What are your reasons for running your own in house delivery service? * (type NA if not
applicable)

21. Additional Comments or Suggestions, if any.

55
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