Spatial differentiation in food service pricing: an explorative study with web-scraped data

Abstract

Food delivery applications have grown rapidly in recent years, fueled by increasing consumer demand for convenience and prepared foods. Previous studies on what factors encourage consumers to use delivery platforms rely largely on survey data, likely due to the lack of availability of restaurant or industry level data. Utilizing web-scraping techniques to collect restaurant level data from one of the biggest delivery applications in South Korea, Yogiyo, this study conducts an analysis on spatial market structure of the restaurant business. Through restaurant level data, market expansion, changes in the number of restaurants to order from, and changes in prices across regions with delivery application are considered. Analysis suggests that the average number of orderable restaurants increased from a nearby 2.3 restaurants to distant 13.5 restaurants with customers willingly paying for delivery fees according to distance via the delivery application. As the restaurant delivery market becomes spatially more competitive with an additional 13.5 restaurants, it is found that aggregate prices totaled with food prices and delivery fees from two restaurants in different locations converge to serve the customers between the two restaurants. In addition, the increased degree of competition due to increased number of restaurants leads the aggregate prices to decrease by between 5.13 and 7.56%, depending on regional characteristics.