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Platform logistics or self-logistics? Restaurants’ cooperation with online food-delivery platform considering profitability and sustainability

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  • Niu, Baozhuang
  • Li, Qiyang
  • Mu, Zihao
  • Chen, Lei
  • Ji, Ping

Abstract

Online food-delivery platforms provide accessible marketplaces for fast-food restaurants. However, who should take charge of logistics, especially when there is increasing consumption of plastic containers, utensils, and other single-use items? In practice, either platform logistics or restaurant's self-logistics is available. For the former, customers pay for food and logistics services separately, while for the latter, “food & logistics” is sold in a bundle. Using game-theoretical approach, we consider a fast-food restaurant selling food in both online and physical stores, which cooperates with an online food-delivery platform under commission contract, and opts to use the platform logistics or self-logistics to deliver online orders. Interestingly, we find that the online “food & logistics” price under two logistics strategies exhibit opposite relationships with respect to the commission rate, and the restaurant's offline food price might first increase and then decrease in the online commission rate. Consequently, the restaurant prefers to use platform logistics when its online market potential is low. We show that the restaurant's preference for platform logistics is non-monotonic in the online market potential. Using the sales quantity-based environmental index (EI) to measure the sustainability performances under the two logistics strategies, we find that the platform logistics strategy is more environment-friendly when the online market potential is high.

Suggested Citation

  • Niu, Baozhuang & Li, Qiyang & Mu, Zihao & Chen, Lei & Ji, Ping, 2021. "Platform logistics or self-logistics? Restaurants’ cooperation with online food-delivery platform considering profitability and sustainability," International Journal of Production Economics, Elsevier, vol. 234(C).
    • Handle: RePEc:eee:proeco:v:234:y:2021:i:c:s0925527321000402
    DOI: 10.1016/j.ijpe.2021.108064
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