Can a Restaurant Benefit from Joining an Online Take-Out Platform?

Abstract

In this paper, we study a restaurant’s take-out model choice and the coordination of an online take-out supply chain. To this end, we first derive the restaurant’s optimal price and/or platform’s commission rate under the restaurant’s three possible take-out models: do not provide online take-out service (NTO model), provide take-out service by joining an online take-out platform (TOF model), or provide online take-out service by itself (TOH model). We investigate the restaurant’s optimal take-out model choice. We then derive the optimal decisions of price and the take-out model under centralization, and study the online take-out supply chain coordination problem. We find that, first, the restaurant may not always benefit from providing online take-out service. It will be beneficial only if the incremental demand generated by take-out service is high. Second, under the centralized supply chain, the TOF model is always better than the TOH model. Meanwhile, when the incremental demand is high, the restaurant should choose the TOF model; otherwise, the NTO model is better. Third, we find that the restaurant’s take-out price and model choice decisions under a decentralized supply chain are both inconsistent with that under the centralized supply chain. Last, we design a sales reward contract which can achieve the price and model choice coordination as well as win-win outcomes for all supply chain members.

Keywords

• online take-out service
• take-out model choice
• coordination
• platform