Determinants of Online Food Delivery(OFD) Sales during COVID-19

Abstract

Purpose: The outbreak of COVID-19 in early 2020 compelled consumers to abstain from dining out and instead use online food delivery (OFD) services. This study aims to examine the determinants of OFD sales in a restaurant during the COVID-19 crisis. Design/methodology/approach: We analyzed 139,812 restaurant-level credit card OFD transaction data from January 2019 to June 2020 in Seoul, South Korea. Findings: During COVID-19, many restaurants participated and experienced sales growth through the OFD platforms. On the demand side, the composition of customers using OFD services has changed, replacing the demand for dining out. Our estimation results show that the food category, customer composition ratio, and past performance significantly affected restaurants’ OFD revenue during the pandemic. Research limitations/implications: The results suggest implications for the restaurant industry responding to changing customer needs on OFD platforms. Restaurants with high-performing OFDs before the pandemic experienced higher sales during the pandemic period. The results imply that experiences to fit customers’ needs toward OFD are likely to help restaurants overcome the losses incurred due to the COVID-19 outbreak. Originality/value: This study empirically revealed the effect of store category, past performance, demographic, and geographical customer profile on OFD demand for external shocks such as COVID-19.