The Impact of Online Food Delivery Services on Restaurant Sales
- The rapid growth of online food delivery services has disrupted the traditionally offline restaurant industry. This study presents empirical evidence on the crowding-out effects and market expansions 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 of cannibalization of brick-and-mortar restaurant sales. Back-of-the-envelope calculations show an increase in restaurants' revenues but a decrease in profitability.
|Type of resource
|May 14, 2020
|Department of Economics
|online food delivery
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- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
- Preferred Citation
- Collison, Jack (2020). The Impact of Online Food Delivery Services on Restaurant Sales. Stanford Digital Repository. Available at: https://purl.stanford.edu/gy164tb5261
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