Bring me my Meal on your Wheel - An Empirical Analysis on the Impact of Food Delivery Platforms on Local Restaurant Employment

Food delivery platforms employing gig workers (i.e., delivery drivers) have become an established part of urban dining culture. While prior research has studied the socioeconomic consequences associated with the platform economy in general, little is known about how the entry of food delivery platforms into metropolitan areas affect socioeconomic outcomes, such as local restaurant and delivery driver employment. Using a quasi-experimental research design, this paper explores the impact of the US market entry of several established food delivery platforms (i.e., Grubhub, Postmates, UberEats, and DoorDash) on local restaurant and delivery driver employment. Consistent with channel capability theory but contrary to prior empirical findings, the results reveal that food delivery platforms cannibalize the dine-in channel of restaurants, as the entry of delivery platforms significantly decreases the number of restaurant industry workers, and particularly the number of dine-in service workers. The results further show that this decrease is only partially compensated for by an increase in delivery drivers. Additionally, this paper explores how the entry of food delivery platforms affects restaurant and delivery driver employment across different demographic groups. The findings inform the restaurant industry and policymakers on the socioeconomic impact of such platforms. These labor market effects are particularly relevant for the latter, given the generally poor working conditions of gig working delivery drivers.