Management of Dual-Channel Pricing Strategies for Restaurants Introducing Food Delivery Services

SILC Business School, Shanghai University, Shanghai, 201899, China

^* Corresponding author: huihwang@shu.edu.cn

Abstract

In recent years, with the rapid development of mobile internet and the widespread application of online payment technologies, an increasing number of brick-and-mortar restaurants are willing to join food delivery platforms to provide consumers with new purchasing channels. However, for these restaurants, offering food delivery services represents both opportunities and challenges. On the one hand, introducing food delivery services can expand the market coverage of restaurants, providing consumers with more purchasing channels. However, due to the limited capacity of restaurant kitchens, an increase in demand may lead to overcrowding, thus prolonging consumer wait times. On the other hand, with the introduction of food delivery services, restaurants need to manage two sales channels simultaneously, each with its unique characteristics. Coordinating and managing product pricing between these two channels has become a challenge for restaurants. To address this issue, this study focuses on the dual-channel supply chain composed of a restaurant and a food delivery platform, aiming to maximize restaurant profits. The study examines the issue of restaurant pricing strategy selection and investigates the impacts of consumer waiting costs and consumer heterogeneity on restaurant pricing, demand, and profits. The results indicate that under a uniform pricing strategy, as consumer marginal waiting costs increase, the restaurant can alleviate congestion by raising food prices, resulting in a shift in demand from the dine-in channel to the delivery channel. However, this approach cannot alter the downward trend in restaurant profits. In contrast, under a differential pricing strategy, the restaurant's food prices are unaffected by consumer marginal waiting costs. However, we find that regardless of the pricing strategy adopted by the restaurant, as the proportion of tech-savvy consumers increases, the restaurant should raise food prices for both channels.