Food delivery: a model to assess the economic sustainability of geo-localised delivery

On-Demand Food Delivery (i.e., the delivery of prepared meals supported by online platforms) is experiencing a considerable growth, as consumers are ever more aware of the benefits entailed by this service: having access to a wide range of food types delivered at the own place in a short time. However, the potentialities stemming from this service are still not fully exploited. In particular, nowadays meals are typically delivered at customers’ address, without considering other locations. The customers could indeed be reached through GPS in their mobile devices. In addition, the literature provides no evidence on the application of GPS in the food delivery segment to track customers in real-time. This paper aims thus at investigating the use of geo-localised deliveries in the on-demand food delivery sector from an economic perspective. The cost to deliver the order to a customer detected through the GPS position is estimated and compared with the delivery cost of delivery in a pre-defined location. Results show the enhanced profitability of this innovative delivery service, as delivery costs are lower than those of traditional delivery. This study contributes to the knowledge in this unexplored field by providing a model that replicates the food delivery process under this new circumstance and evaluates its economical sustainability. Moreover, it is useful to food delivery practitioners evaluating the introduction of geo-localised customers’ solution in their offer, thus enlarging the range of potential delivery locations.