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Understanding Restaurants Reliance on Third-Party Delivery Services During COVID-19

by Placekey

Zhuoxin (Allen) Li, an Assistant Professor at Boston College’s Carroll School of Management, explores the impact third-party platform delivery services that substitute restaurant takeout and dine-in options have on those restaurants. Do these increase business and help these restaurants stay afloat, or does it hurt their bottom line?

Third-party delivery services help businesses stay afloat: but not equally

Third-party delivery services give customers and restaurants the ability to offer flexible access to food services, and a new channel (internet) to reach customers. The potential downside is that these third-party costs eat up their margins, as they take a small platform fee, and that these services are cannibalizing the restaurant’s existing channels.

Their research found that overall, restaurants benefit from these online, on-demand delivery platforms, enabling many stores to remain open during lockdown and social distancing. However, their evidence also suggests that there is a big disparity between the impact this has on big chain vs local businesses, as big chain stores can adopt these more easily, without hurting their bottom line as significantly. They found that big chains saw three times the benefit of local, small businesses.

How Placekey enabled research on restaurant reliance on third-party delivery services during COVID-19

SafeGraph’s foot traffic and mobility datasets were extremely helpful in allowing Li to analyze takeout and dine-in visits, according to device mobility data. They can easily categorize visits based on the time spent at a restaurant, identifying between staff, takeout, and dine-in visits. They can then combine this with revenue data to determine how different restaurants are impacted by COVID-19 mobility restrictions, such as lockdowns and social distancing practices.

SafeGraph leverages Placekey’s universal identifier for physical locations, enabling Li’s team to gain powerful insights about points of interest (POIs) - in this case restaurants - to analyze the mobility data against, creating a clear picture of where people are going. To learn more about how you can benefit from using SafeGraph and Placekey, join the Placekey community and share your ideas with others!

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