Mobile platform expansion: How does it affect the incumbent food delivery app and other sales channels?

Abstract

Food delivery apps (FDAs) are popular sales platforms, and many restaurants rely on multiple FDAs. Adding more FDAs represents a novel type of channel expansion (i.e., platform-to-platform), though no prior studies have examined its performance implications to determine if introducing a new, competing FDA might cannibalize or enhance a restaurant's customer acquisition and sales through the incumbent FDA. Furthermore, introduction timing, local competition, and store characteristics might moderate these effects, with implications for the restaurant's total sales over time. Using associative network theory, together with 557,127 purchase records gathered from 173,537 customers, we apply a panel regression model across 18 store locations of a restaurant chain. The results show that adding a competing FDA has positive synergistic effects on the restaurant's customer acquisition and sales (including sales revenues and order volumes) through the incumbent FDA, especially if it adds the competing FDA long (vs. soon) after the prior FDA and the store is younger (vs. older). Larger stores and those located in competitive areas benefit more from mobile platform expansion. The positive effects of introducing a competing FDA on total sales diminish over time though. These findings can inform both research into and the practice of mobile platform expansions.