"Effect of Delivery App Usage: Approximately 1.93 Million KRW Increase in Monthly Restaurant Sales"

Analysis of the Effect on Monthly Sales Increase in Restaurants

A study has found that when restaurants use delivery platforms, their monthly sales increase by nearly 2 million KRW. Professor Kim Kyung-bae of Sejong University and Lee Gong from the Korea Development Institute (KDI) presented these findings on the 5th at the International Conference of the Korean Economic Association in a paper titled 'Who Benefits from Food Delivery Platforms: Heterogeneous Effects of Platforms on Dining Sales.'

This study analyzed changes in restaurant sales based on one year of credit card payment data from 802,012 dining establishments in 2020, obtained from Shinhan Card. The results showed that monthly sales per restaurant increased by 1,931,556 KRW when using delivery platforms. The paper is significant in that it quantifies the impact of food delivery platforms using restaurant transaction data during the COVID-19 pandemic.

The study categorized restaurants into ▲Korean food ▲fast food (pizza, hamburgers, chicken, etc.) ▲Chinese food ▲others (Japanese, Western, etc.). Dividing the sales in January 2020 into ten deciles, the monthly average sales of small restaurants in the bottom 10% (1st decile) were 321,545 KRW. Large restaurants in the top 10% (10th decile) had sales of 53,506,135 KRW.

When adopting delivery platforms, the sales growth rate for small restaurants in the 1st decile was 97.6%, about 11 times higher than the 8.6% sales growth rate of large restaurants in the 10th decile. This indicates that small restaurants benefit more from adopting delivery platforms. The usage rates of delivery platforms by type of restaurant were fast food (52.3%), Chinese food (28.2%), others (20.2%), and Korean food (12.7%). The estimated monthly sales increase effect when adopting delivery platforms was highest for Chinese food (5,211,786 KRW), followed by fast food (1,959,489 KRW), Korean food (1,691,574 KRW), and others (1,555,171 KRW). Although the usage rate of delivery platforms is low for Chinese food, the high sales increase effect suggests it can help attract additional customers and drive sales growth.

Professor Kim Kyung-bae stated, "It is meaningful that restaurants can enjoy sales growth effects through the use of delivery platforms, especially that relatively small restaurants experience higher sales increases, as demonstrated empirically."