RESEARCH

“IMPACT OF FOOD DELIVERY

PLATFORMS ON TRADITIONAL SALES OF
A RESTAURANT”

Institute of Hotel Management, Catering and

Nutrition

NAME – ANANT HANDOO

Roll No. – 2141117033
INTRODUCTION
In the 21st century, India's technological advancements have significantly
boosted its E-commerce industry, particularly in the realm of online food
delivery services. Online meal delivery platforms (OMDPs) are services that
connect consumers with restaurants and allow for food to be delivered (Gunden
et al., 2020). India’s e-commerce market is expected to grow at a compound
annual growth rate (CAGR) of 27% to reach US$ 163 billion by 2026 expected
to reach US$ 350 billion by 2030 (ibef.org). Companies, adapting to shifting
consumer preferences, have transitioned from traditional to digital marketing
strategies. Market leaders like Zomato and Swiggy are at the forefront of this
industry, with Zomato's acquisition of Uber's food delivery business in India
further propelling its growth (IANS, 2020).
Entrepreneurs are strategically capitalizing on this trend to enhance profitability
and stay competitive, but they must weigh the advantages against potential
challenges, including increased costs and service quality concerns.

PAST SCENARIO
In the not-so-distant past, traditional retail, including food sales, was confined to
physical storefronts. Consumers would visit brick-and-mortar stores, including
restaurants, to make purchases, and retailers focused primarily on optimizing
their in-person shopping and dining experiences. The concept of online sales
was in its infancy, and the digital realm was largely uncharted territory. Food
sales, in particular, relied on dine-in experiences, and the idea of ordering meals
online was a distant prospect. Pizza Hut Inc. was the first food outlet to launch
an online food system in 1994, accompanied by worldwide Walter (now known
as walter.com) to launch the first online food or drink services in the U.S. in
1995.
PRESENT SCENARIO
Today, the landscape has undergone a profound metamorphosis. The boundaries
between traditional and online retail have blurred, as businesses across various
sectors, including the restaurant industry, have ventured into the digital realm,
often concurrently maintaining their physical presence. E-commerce's meteoric
rise has made it a force to be reckoned with, impacting not only digital-native
industries but also well-established, offline firms. These businesses now operate
within a hybrid framework that melds the best of both worlds. The restaurant
industry, in particular, stands as a compelling exemplar of this hybridization
phenomenon, epitomized by the rise of online food delivery services.

SIGNIFICANCE
This research aims to gain a comprehensive understanding of the evolving food
service industry, including online food delivery services, helping me identify
potential challenges and opportunities for the future. It's essential for me as a
student of hotel management to grasp the changing dynamics in the food
industry and consumer behaviour. This knowledge will equip me with a
competitive edge in the field, enabling me to adapt to industry trends and make
informed decisions to enhance customer experiences at traditional restaurants
and explore new avenues in online food services.
OBJECTIVES
1. To quantify cannibalization levels in online food delivery, determining
whether they complement or replace traditional restaurant sales.
2. To analyse consumer behaviour and preferences, emphasizing growth
factors such as cuisine variety, affordability, and service quality in the
online food delivery industry.

Review of Literature
 Evaluation of collaborative consumption of food delivery services
through web mining techniques (Correa et al., 2019)
This study aims to evaluate the impact of traffic conditions (through the use of
Google Maps API) on key performance indicators of online food delivery
services (through the use of web scraping techniques to retrieve customer's
ratings and the physical location of restaurants as provided by Facebook). From
a collection of 19,934 possible routes between the physical location of 787
online providers and 4296 customers in Bogotá city, the results showed that
traffic conditions had an impact on OFD services, affecting customer reviews
and delivery times. Providers in areas with heavy traffic during specific times
received more comments, while congested areas had longer expected delivery
times and higher minimum charges. Early deliveries were associated with more
positive customer feedback, indicating the importance of timely service in the
OFD industry. This research sheds light on the role of traffic conditions in OFD
services and its implications for collaborative consumption.

 Assessing the gains from e-commerce (Dolfen et al., 2019)

The goal of this research is to measure the advantages consumers have
experienced due to the growth of online shopping, particularly focusing
on the convenience and variety it offers. To achieve this, the study uses a
vast dataset of Visa card transactions from 2007 to 2017, covering a
significant portion of U.S. consumer spending. The results suggest that
the convenience gains, which represent the ease of shopping online,
contributed to a minor 0.4% increase in consumer spending by 2017. In
contrast, the variety gains, which allow consumers to access a broader
range of online merchants, contributed to a more substantial 1.1%
increase in consumer spending, equivalent to approximately $1,150 per
household.
 Impact of Online Food Delivery Apps on the Restaurants and Food
Outlets in Bhopal City (Raghuvanshi, 2021)
This research project examines the impact of online food delivery apps on restaurants
and food outlets. The objective is to assess the perceived advantages and
disadvantages of these apps. The methodology employed in this study involves the
use of a questionnaire. The results indicate a mixed sentiment among respondents,
with many acknowledging the positive aspects such as increased exposure,
convenience, and ease of ordering, while expressing concerns about the long-term
trustworthiness of the apps. Some respondents cannot afford to use these apps due to
higher expenses. Overall, the study concludes that online food delivery apps have a
predominantly positive impact, and there is a significant difference in expenditure and
income between registered and non-registered respondents.

 A study of negative effects of Online Food Delivery Platforms on

Restaurants Revenue and Customer Relations in Pune City (Sheikh,
2021)
This study investigates the impact of online food delivery platforms on
the restaurant industry, focusing on their effect on revenue and customer
relationships. The objective is to understand how online platforms have
led to a reduction in both revenue and customer loyalty. The research
employs an exploratory methodology, collecting data through
questionnaires and interviews with professionals and entrepreneurs in the
food industry. The findings reveal that online delivery platforms charge
high commissions, limit discounts, manipulate marketing visibility, create
unnecessary competition, and reduce restaurants' profit margins,
ultimately causing a negative impact on the industry's dynamics. This
study highlights the need for regulatory oversight to ensure a fair share of
revenue among stakeholders.

 Factors affecting online food delivery service in Bangladesh: an

empirical study (Saad, 2020)
This study aimed to investigate the key factors influencing consumers' choices in the
online food delivery service industry in Bangladesh. Through a web-based survey of
177 respondents in Dhaka City, the research identified the factors that significantly
impact consumer decision-making. The results indicated that price, service quality,
the attitude of delivery personnel, menu variety, the number of restaurant options,
delivery time, condition of delivered food, and the availability of delivery tracking
services all play a significant role in shaping consumers' preferences in the online
food delivery business. This study sheds light on the crucial elements that drive
consumer behaviour in this growing industry, providing valuable insights for
businesses and consumers alike.
The writer has focused on the fact that restaurant and customer relations and bonding
is reduced due to lack of direct interaction.
 Contribution of Online Food Delivery System on the Growth of
Restaurant Industry in India (Jaiswal, n.d.)
The research aims to discern the scope of the online food sector,
recognize the driving forces behind its demand, and pinpoint the
obstacles it confronts. Employing a conceptual and descriptive approach,
the study draws on secondary data from diverse sources like books,
journals, reports, and research papers. The findings reveal a substantial
surge in India's online food delivery market, propelled by factors such as
escalating income, evolving lifestyles, and the widespread adoption of
smartphones. The demand is largely steered by a youthful, employed
demographic with higher disposable income, seeking convenience,
affordability, and quality in their meals. The study underscores the role of
minimal investment requirements, the emergence of logistics providers,
and the omnipresence of smartphones in fueling this growth. Nonetheless,
it also highlights challenges related to securing quality manpower,
managing fragmented supply chains, and addressing customer concerns.

 Emerging trends towards online food delivery apps in India

(Samuel et al., 2019)
This text provides an in-depth analysis of the online food delivery
industry in India, primarily focusing on the rise of food delivery apps like
Swiggy, Zomato, and Uber Eats. The study's main objective is to explore
the origin, current landscape, and future prospects of these online food
delivery services in the Indian market. The research methodology is
based on the collection of secondary data from various sources, including
online portals, magazines, and academic journals.
It highlights the challenges that online food delivery services face, such
as the need for better logistics control, customer loyalty, and the ability to
handle large volumes of orders efficiently. The text also underscores the
rapid growth of this sector and its potential market value in India. This
growth is attributed to the increasing urbanization, a surge in
professionals relocating to cities, and the changing lifestyle of Indian
consumers.
 Impact of food delivery services on small scale restaurants and food
businesses (Maniar, 2020)
The surge in online food delivery services, especially in the post-COVID-
19 era, has brought remarkable changes to the restaurant industry.
However, the often-overlooked drawbacks include hefty commissions,
averaging 30% of restaurant profits, and fluctuating rates. High fees can
significantly cut into profit margins, particularly during economic
slowdowns. Furthermore, using these services can strain customer
relations, as a significant portion of consumers prefers ordering directly
from the restaurant. High-profile incidents, such as Zomato's delivery
person eating from a customer's order, can tarnish the image of food
delivery services. Developing an in-house ordering system is a viable
alternative, albeit with an initial setup cost that may challenge some
restaurant owners.

 Impact of food delivery apps on small scale restaurants in India.

(Parveen, 2019)
The Indian food delivery industry, led by giants like Swiggy and Zomato,
has witnessed significant growth, yet it has sparked concerns among
small-scale restaurants. These restaurants accuse food delivery apps of
creating entry barriers, offering deep discounts, and abusing their
dominant positions. In response, the National Restaurant Authority of
India (NRAI) initiated the #logout campaign, calling for a resolution
between delivery apps and restaurants. Zomato's founder, Deepinder
Goyal, has sought a truce and expressed a willingness to address past
mistakes. To tackle these issues, strict adherence to India's Competition
Act of 2002 and constructive dialogue among stakeholders are deemed
essential.

 Consumer perception towards online food ordering service in

Hyderabad, India (Shareef et al., 2019)
The primary objective of this study was to gain insights into the factors
that influence consumer choices within the online food ordering industry.
To achieve this, the researchers adopted a convenience sampling
approach, collecting data from 250 respondents in Hyderabad,
representing approximately 20% of India's online food market. The
results of the investigation indicated that Zomato emerged as the favoured
online food delivery service, largely attributable to its compelling offers
and discounts. Notably, cost savings proved to be the primary motivator
for consumers opting for online food orders. Surprisingly, UberEats was
 acknowledged as excelling in on-time delivery. The research underscores
the remarkable growth of India's foodtech industry and its profound
impact on consumer preferences, with Zomato taking the lead.

 The booming, ethically dubious business of food Delivery

(Thompson, 2019)
This article delves into the growing influence of online food delivery and
its impact on the American dining landscape. The study aims to examine
the increasing trend of off-premise spending on food, which includes
deliveries, drive-throughs, and takeout, with a particular focus on the role
of online delivery services such as DoorDash, Uber Eats, and Postmates.
While these services offer convenience and have witnessed significant
growth, they also face challenges such as labor practices and profitability
concerns. The study suggests that the industry may experience a
shakeout, leading to a few dominant players. However, the overall growth
is attributed to the increasing time constraints of American professionals
seeking convenience.

 Is online retail killing coffee shops? Estimating the winners and

losers of online retail using customer transaction microdata (Relihan,
2022)
This research delves into the ramifications of the COVID-19 pandemic's
boost to online retail for traditional brick-and-mortar stores. Its primary
goal is to unravel the factors that determine which businesses thrive and
which ones suffer as a result of this shift. To achieve this, the study
leverages an extensive dataset containing credit and debit card
transactions from millions of anonymized customers. Through a novel
panel approach, it tracks changes in shopping behaviour as customers
transition to online grocery platforms. This study tells us consumers with
higher income and greater time constraints will benefit most from online
options, especially if they have access to services in their
neighbourhoods. Offline retailers can compete effectively by offering
proximity, services, and closer locations, but urban areas may see
stronger online adoption. Time-intensive services will thrive, impacting
local labour markets and commercial property values, potentially
affecting local government revenue sources. Adaptation and coexistence
with online retail are crucial for local economies' well-being.
 Online food delivery services: making food delivery the new normal
(teck chai et al., 2019)
The objective of this research, published in the Journal of Marketing
Advances and Practices, was to investigate the factors influencing the
behavioural intention of Malaysian urban dwellers to use online food
delivery (OFD) services. The study employed a quantitative approach and
collected data from 302 respondents in the Klang Valley, Malaysia. The
research revealed that time-saving orientation, convenience motivation,
and privacy and security positively influenced the behavioural intention
to use OFD services, while perceived ease of use did not have a
significant impact on behavioural intention. These findings provide
insights for OFD service providers to understand the motivations of urban
consumers in adopting such services.

 Outsourcing to online food delivery services: perspective of f&b

business owners (See-Kwong, 2017)
This research, published in the Journal of Internet Banking and
Commerce, aimed to explore F&B business owners' views on outsourcing
food delivery services to third-party online platforms. The study adopted
a qualitative research method, conducting interviews with 12 respondents.
The results showed that the main driving factors for outsourcing were
increased revenue, broader customer reach, and convenience. However,
some businesses refrained from outsourcing due to factors related to food,
location, and cost. The findings highlight the importance of adapting to
changing consumer preferences and the potential of online delivery
services in the foodservice industry, offering insights for both business
owners and online food delivery service providers.
 A study on awareness and customer preference about online food
ordering services in Pune (Pol, 2019)
This study investigates customer awareness and preferences regarding
online food ordering services in Pune. It focuses on the preferences of a
mixed-age group, assessing parameters like website quality, hygiene,
variety, value for money, packaging, delivery staff, billing, accessibility,
and promotional schemes. The findings reveal that Swiggy and Zomato
dominate the market, with strong customer loyalty due to their
maintained standards. Customers are cautious in their choices and
evaluate these services based on various criteria. To remain competitive,
suggestions include innovative promotional schemes, customer feedback
mechanisms, and offering specialty meal options. Overall, the study
emphasizes the importance of customer perceptions and preferences in
the online food ordering industry.

 The Impact of Online Food Delivery Services on Restaurant Sales

(Colisson, 2020)
This delves into the impact of online food delivery services on traditional
restaurants. Using a difference-in-differences methodology, it assesses
the extent of cannibalization from in-person restaurant sales to online
food delivery. The findings reveal that roughly half of the spending on
online food delivery is new revenue, with the other half diverting from
brick-and-mortar sales. The degree of cannibalization varies, with
weekends and colder months experiencing more pronounced effects.
Customers who frequently dine out are more affected, while occasional
restaurant-goers drive online sales. Convenience plays a pivotal role,
particularly during time constraints or adverse weather conditions. The
study also suggests that the trend of substituting brick-and-mortar sales
with online food delivery is on the rise, potentially impacting restaurant
profitability.
  A Study on Impact of Online Food delivery app on Restaurant
Business special reference to Zomato and Swiggy (Gupta, 2019)
This investigates the impact of food delivery startups like Zomato and
Swiggy on the restaurant business in India. The objective is to understand
how these digital platforms have affected the restaurant industry, with a
focus on strategies employed by Zomato and Swiggy. The research
employs secondary data collection and reviews the current scenario of
food delivery apps in India. It explores the positive and negative effects
of these apps on restaurants, highlighting the potential for customer
loyalty and profitability, as well as challenges related to competition. The
findings emphasize the growing influence of digital food ordering in
India's culinary landscape, with significant implications for both
consumers and businesses.

Methodology
LOCALE: The research will be conducted in Delhi (NCR)
DEMOGRAPHIC: Restaurant/ F&B outlet owners
SCALE: Responses are expected to be 30.
Tools & Techniques: Questionnaire along with personal interviews.
Expected results
This research is expected to reveal the extent to which food delivery platforms
impact walk-in sales in India in 2023.
It may show a decline in dine-in customers, a shift in consumer preferences, and
potential economic consequences for restaurants.
The findings will guide restaurant owners in adapting to the changing
landscape.

Webliography
 https://www.nrn.com/technology/delivering-digital-restaurant-how-
convert-fans-through-first-party-channels (accessed 31/10/23)
 https://getgrubly.com/impact-of-food-delivery-services-on-small-scale-
restaurants-and-food-businesses/ (accessed 31/10/23)
 https://www.ibef.org/industry/ecommerce-presentation(accessed 31/10/23)
 https://www.gloriafood.com/restaurant-ideas/advantages-of-online-food-
ordering(accessed 30/10/23)
 https://wikipedia.org(accessed 29-31/10/23)

Bibliography
 A study on awareness and customer preference about online food
ordering services in Pune (Pol, 2019)
 A Study on Impact of Online Food delivery app on Restaurant Business
special reference to Zomato and Swiggy (Dr. Gupta Mithali, 2019)
 The Impact of Online Food Delivery Services on Restaurant Sales
(Colisson Jack, 2020)
 Consumer Perception Towards Online Food Ordering Service in
Hyderabad, India (Dr. Md Sadat Shareef, 2019)
 Contribution of Online Food Delivery System on the Growth of
Restaurant Industry in India (Jaiswal A., n.d.)
 Assessing the gains from e-commerce (Paul Dolfen, Liran Einav, Peter J.
Klenow, Benjamin Klopack, Jonathan D. Levin, Larry Levin, Wayne
Best, 2019)
 Online Food Delivery Services: Making Food Delivery the New Normal
(Lau Teck Chai and David Ng Ching Yat, 2019)
Annexure
Questionnaire 1:
Q1. Name of the restaurants/food outlets?
____________________

Q2. Which category do you fall under?

A. Restaurants
B. Food outlets

Q3. Are you registered in any online food delivery apps?

A. Yes
B. No

Q4. If yes, in which apps you are registered?

A. Zomato
B. Swiggy
C. Other ________
D. None of the above

Q5. If No, what is the reason that you are not registered?
A. Increased expenses
B. Less touch with customers
C. Fear of competition
D. Bad past experience

Q6. Do you think that in future these food delivery apps can divert
restaurants or food outlets consumer base towards them?
A. Yes
B. No
 C. Maybe

Q7. Number of employees work in your restaurant/food outlets?

A. 1-5
B. 5-10
C. 10-15
D. Above 15
Q8. For which meal do you receive the most orders from the online
platforms?
A. Breakfast
B. Brunch
C. Lunch
D. Dinner
E. Snacks

Q9.To what extent do you agree with the following statement that online
food delivery apps help in the growth of a F&B outlet?
A. Strongly agree
B. Agree
C. Neutral
D. Disagree
E. Strongly Disagree

Q10. Rate your satisfaction level provided by these online food delivery
apps?
A) Highly satisfied
B) Satisfied
C) Neither satisfied nor dissatisfied
D) Dissatisfied
E) Highly dissatisfied
Questionnaire 2:
1. How often do you use online food delivery services?
A. Daily
B. Weekly
C. Monthly
D. Rarely
E. Never

2. What factors influence your decision to order food online? (Select all that
apply)
A. Variety of cuisine options
B. Affordability
C. Convenience
D. Promotions and discounts
E. Service quality and speed
F. Healthy food options

3. Do you tend to order from your favorite local restaurants, or do you

explore new ones through online food delivery platforms?
A. I mainly order from my favorite local restaurants.
B. I enjoy exploring new restaurants through online delivery.

4. How important is the variety of food choices when ordering online?

A. Very Important
B. Important
C. Somewhat Important
D. Not Important
5. Are you willing to pay extra for faster food delivery?
A. Yes, I'm willing to pay extra for faster delivery.
B. No, I prefer standard delivery times.

6. What role do online reviews and ratings play in your decision-making

process when ordering food online?
A. I rely heavily on reviews and ratings.
B. I consider them but they're not the primary factor.
C. I don't pay much attention to reviews and ratings.

7. How often do you order online based on special promotions or discounts

offered by the platforms?
A. Frequently
B. Occasionally
C. Rarely
D. Never

8. Have you ever faced issues with the accuracy or quality of your online
food orders?
A. Yes, I have faced issues.
B. No, I haven't faced issues.

9. When using online food delivery services, do you prefer to customize

your orders (e.g., special instructions, modifications)?
A. Yes, I like customizing my orders.
B. No, I prefer standard menu items.
10.What improvements or additional services would enhance your online
food delivery experience?
1. Faster delivery options
2. Improved order accuracy
3. More diverse restaurant options
4. Better customer support
5. Other (please specify): ____________