Strategic Drivers for Outsourcing Third-Party Logistics (3PL) in Local Foodservice Establishments: Its Impact to the Financial and Operational Performance
- Donnavic A. Dumapias
- 553-567
- Apr 9, 2025
- Tourism and Hospitality
Strategic Drivers for Outsourcing Third-Party Logistics (3PL) in Local Foodservice Establishments: Its Impact to the Financial and Operational Performance
Donnavic A. Dumapias
Department of Hospitality and Tourism Management, Mindanao State University – Iligan Institute of Technology, Philippines
DOI: https://dx.doi.org/10.47772/IJRISS.2025.914MG0043
Received: 07 March 2025; Accepted: 10 March 2025; Published: 09 April 2025
ABSTRACT
Third-party logistics (3PL) are essential to the operational framework of enterprises, allowing them to focus on their core competencies. This study explores the strategic drivers that influence local foodservice entrepreneurs in Iligan City to outsource 3PL services, particularly concerning their financial and operational performance. Utilizing a descriptive quantitative approach, the research employed Spearman’s rank correlation coeffiecient to assess the significance of relationships among various factors. Data were collected from 20 local foodservice establishments partnered with FoodPanda and GrabFood between 2021 and 2024 through an adapted research instrument. The correlation analysis revealed a strong positive relationship between outsourcing 3PL and financial performance, with operating profit margin identified as the most significant determinant. Regarding operational performance, convenience, flexibility, and quality service emerged as pivotal drivers in the outsourcing decisions of entrepreneurs. While reputation was a consideration, it did not significantly impact operational perfomance. This study underscore the strategic value of outsourcing 3PL to enhance profitability and operational efficiency within the foodservice sector. The findings highlight the strategic importance of 3PL in achieving operational excellence and fostering business growth, providing valuable insights for entrepreneurs in the foodservice industry to optimize their logistics operations for improved performance and long-term success.
Keywords: Third-party logistics (3PL), foodservice establishments, financial performance, operational performance
INTRODUCTION
Third-party logistics (3PL) has emerged as a vital strategy for businesses aiming to optimize their supply chain operations, cut costs, and enhance service quality. In the foodservice industry, where timely delivery, cost efficiency, and service reliability are paramount, outsourcing logistics functions to 3PL providers has become a common practice (Abassi et al., 2024). Although the decision to outsource 3PL is often influenced by the business core competencies and culture, and that some of the businesses with a strong logistics expertise may opt to retain in-house control, while those with limited capabilities may prefer outsourcing (Shen, 2012).
According to United Nations (2024), the local foodservice establishments belongs to the Micro, Small, and Medium Enterprises (MSMEs), and are projected to generate US$12 trillion in global economic output and 380 million employment by 2030. They are also expected to play a pivotal role in reducing poverty and promoting sustainable work practices in developing countries. In the Philippines, MSMEs account for over 99% of businesses in many countries, including the Philippines, where they represent 99.59% of all enterprises, and 77.2% belongs in the foodservice sector (Philippine Statistics Authority, 2023). These enterprises are essential to economic growth, employment development, and sustainable innovation. Despite their significance, the foodservice sector was severely disrupted by the global COVID-19 pandemic, and faced a severe disruptions to the global foodservice sector (Food Logistics, 2020). Government-imposed lockdowns, social distancing, and a lack of alternate sources of revenue significantly affected Philippine MSMEs (ASEAN Policy Brief, 2020; Ashraf, 2020).
To navigate this crisis and enhance competitiveness, many foodservice enterprises have resorted to outsourcing services like third-party logistics (3PL) services making food delivery application the new normal (Madinga et al., 2023; Chen et al., 2021; Chai et al., 2019) this is in order to streamline operations, enhance effeciency, cut costs, and adapt to changing consumer demands (Nurlinda et al., 2021; Skiffington et al., 2013; Mageto et al., 2020; Taponen & Kauppi, 2020).
Outsourcing 3PL is becoming increasingly popular, and one of the primary drivers for outsorcing in the foodservice establishments is the desire to reduce the operational costs. By outsourcing 3PL, businesses can avoid investments in transportation, warehousing, and labor, thereby optimizing their resource allocation (Halldorsson, 2001; Dzogbewu, 2010). For instance, in the study of Dzogbewu (2010), a company reported a consistent revenue growth and improved cost efficiency after outsourcing its logistics activities. Similarly, studies have shown that outsourcing allows enterprises to leverage the economies of scale of 3PL providers, leading to a fixed and variable costs (Maloni, 2006).
Foodservice enterprises often outsource 3PL to focus on their core competencies, such as food preparation, menu innovation, and customer service. This strategic decision enables entrepreneurs to focus on their primary operations while leveraging the expertise of external logistics specialists (Yeng et al., 2021), like FoodPanda and GrabFood. 3PL providers offer a comprehensive range of services, this includes transportation and warehouse management, that enhances the overall efficiency while enabling businesses to focus on core strengths (Taponen & Kauppi, 2020). Outsourcing 3PL has emerged as a crucial strategy for foodservice businesses (Amriel et al., 2022), especially those in Iligan City, to deal with logistical issues in the wake of changing consumer preferences (Mahmood et al., 2022; Akhtar, M., 2023). Outsourcing logistics enables businesses to redirect resources towards strategic activities that drive competitive advantage (Shen,2012; Yao, 2008). This aligns with the resource-based view, which emphasizes the importance of concentrating on internal strengths while outsourcing non-core functions (Mello et al., 2008). Nonetheless, deciding to outsource logistics could potentially had an effect on the financial performance and operational performance of the business, which are both important aspects of its success (Aynera et al., 2021).
The financial impact of outsourcing 3PL is a key performance metric. Enterprises measure the success of 3PL arrangements based on cost savings, return on assets, and overall profitability (Cheng & Tongzon, 2020). Outsourcing 3PL has proven effective in driving financial performance, as evidenced by increase sales growth, sales volume, and operating profit margin. Previous studies highlights that outsourcing 3PL can drive sales growth by expanding market reach and improving customer satisfaction (Collison, 2020; Belotindos, 2017; Panayides, 2007). Studies indicate that partnering with third-party delivery services can increase restaurant sales volume by 10% to 20% (Fundera, 2023). Moreover, according to the study of See-Kwong et al. (2017) outsourcing 3PL providers positively impacts restaurants’ financial performance by driving sales growth, increasing sales volume, and improving the operating profits margins. This is driven by expanding the customer reach and enhancing visibility through the 3PL’s platforms, foodservice establishments can attract new customers and boost order volumes beyong the dine-in limitations. These services enhance customer reach and appeal by making restaurants more accessible to a broader audience. However, while third-party platforms boost sales, their associated fees may prompt businesses to consider independent online ordering systems for greater profitability. Furthermore, by offering quicker delivery choices and better service quality, 3PL services can boost sales volume and frequently lead to repeat business (Sin et al., 2021; Yeung et al., 2006). Reductions in logistics management expenses and economies of scale attained by collaborating with 3PL can help increase the operating profit margin (Liu & Lyons, 2011). Hence, the following hypothesis is proposed:
H1: The decision of entrepreneurs to outsource third-party logistics (3PL) has no significant relationship with the financial perfomance of the business.
Adesunkanmi et al. (2022) highlights that outsourcing 3PL significantly enhances the operational performance of the business. Moreover, it indicates the improvement of cost management, enhances the customer service, and increases production efficiency. Study suggests that operational performance prioritizes on service quality, convenience, flexibility, and reputation, all of which are key factors in preserving competitiveness in a market that is extremely dynamic (Chan et al., 2021; Qureshi et al., 2008; Bayazit & Karpak, 2013). Foodservice establishments can improve service quality through dependable and prompt delivery by outsourcing to 3PL, which is essential for retaining customers (Cha et al., 2020; Voss et al., 1997). In the sudy of Liu & Lyons (2011), it was mentioned that service quality is a critical determinants of the success of 3PL relationships, as factors such as on-time delivery, order accuracy, and responsiveness are essential for maintaining high service standards. Other significant advantages include convenience and flexibility, since 3PL services provide scalable solutions that allow businesses to adapt to fluctuations in demand without having to make expensive infrastructure investments (Aguezzoul, 2014). Additionally, according to Khan & Selamoglu (2024), outsourcing 3PL for food businesses presents several issues and challenges that could impact the reputation of the business. The issue of maintaining consistent food quality is critical as improper handling, storage, or temperature control during the transit might comprimise the safety of the food and its freshness which leads to customer dissatisfaction. Ultimately, by providing reliable, superior logistics services, a carefully selected 3PL partners can improve a foodservice enterprise’s reputation (Braglia & Petroni, 2000). Thus, this hypothesis is proposed:
H2: The decision to outsource third-party logistics (3PL) services doest not significantly influence the operational perfomance of foodservice businesses.
Notwithstanding the clear advantages, there are still issues such as excessive service charges, less control over the customer experience, and possible risks to the reputation of the business. To meet the increasing demand from consumers, local foodservice establishments in Iligan City are progressively outsourcing logistics (Abayan et al.,2021), yet, limited information exists about the specific determinants influencing these decisions or how these partnerships impact their financial and operational performance.
With an emphasis on how these decision affect both financial-specifically, sales growth, sales volume, and operating profit margin-and operational performance-including service quality, convenience, flexibility, and reputation-this study aims to explore the relationships of the determinants that influences local foodservice establishments in Iligan City to outsource 3PL services. By comprehending these factors, this research seeks to provide insights on how outsourcing third-party logistics (3PL) can enhance the business performance and sustainability in a competitive marketplace.
MATERIALS AND METHODS
The study employed a quantitative research design to examine the significant relationships of determinants influencing foodservice entrepreneurs in Iligan City who outsourced third-party logistics (3PL) services from FoodPanda and GrabFood. Data was gathered through adapted survey questionnaires from prior studies to guarantee relevance and reliability.
A pilot test involving twenty (20) local foodservice establishments outside Iligan City that partnered with FoodPanda and GrabFood confirmed the survey questionnaire’s and comprehensibility. Following item analysis, the 37-item instrument produced a Cronbach’s alpha score of 0.964, which is an excellent indicator of internal consistency and reliability. The results of the pilot testing confirmed that the instrument could gather the data needed for the study.
The study focused on twenty (20) local independent foodservice establishments in Iligan City that partnered with FoodPanda and GrabFood between 2021-2024. A population sampling technique was employed, utilizing a list provided by the offices of the 3PL providers in the city. This approach ensured that the sample accurately represented businesses engaged in outsourcing 3PL services for food delivery, yielding valuable insights into the local foodservice industry.
The study’s respondents included entrepreneurs and key decision-makers from selected foodservice enterprises. Their insights were crucial for understanding the factors influencing 3PL service outsourcing and its financial and operational impacts.
As part of the data collection process, preliminary interviews were conducted to ensure the eligibility of establishments and gathered essential information on their operations, experiences during the pandemic, performance before and during 3PL outsourcing, and their willingness to participate. These interviews also helped establish rapport and clarify the study’s objectives.
Data collected from the survey were structured, sorted, and analyzed using Statistical Packages on Sciences Software (SPSS) version 29.0. Frequency and percentage were employed to analyze the distribution of responses, while Spearman’s rank correlation coefficient with 0.005 level of significance was used to measure the signifant relationships of among variables. This approach revealed key trends in the decision-making processes of local foodservice establishments regarding 3PL outsourcing.
RESULTS AND DISCUSSION
To provide a better understanding of the profile of respondents, Tables 2 and 3 showed the descriptive statistics based on how the variables were classified, that is, categorical variables and continuos variables, respectively.
Table 1. Descriptive statistics of the Profile of Respondents (categorical vairables)
Categorical variables | f | % |
Position | ||
Owner | 5 | 25.0 |
Key decision-maker | 15 | 75.0 |
Gender | ||
Male | 6 | 30.0 |
Female | 14 | 70.0 |
Education | ||
With High School Diploma | 2 | 10.0 |
Some College | 4 | 20.0 |
Bachelor Degree | 11 | 55.0 |
Graduate Degree | 3 | 15.0 |
n=20
As seen in Table 1, it revealed that 75% of the respondents hold a position as key decision-makers within their enterprise, and that majority were female respondents (70%). Also, most of the respondents have finished a bachelor degree (55%).
Table 2. Descriptive statistics of the Profile of Respondents and Enterprises (continuous vairables)
Continuous variables | Mean | Std. deviation | Min | Max |
Entrepreneur’s Age | 37.25 | 9.808 | 25 | 60 |
Enterprise Age | 8.85 | 6.002 | 4 | 23 |
Years outsourcing 3PL | 3 | 0.510 | 2 | 3 |
n=20
Table 2 revealed that the average age of respondents is 38 years old, and that these foodservice businesses have been in existence for an average of 8 years. Lastly, in terms of how many years the businesses outsourced 3PL the average is 3 years.
Table 3. Descriptive Statistics Results for the Determinants of Outsourcing 3PL in terms of Financial Performance
Financial Performance | Mean | Std. Deviation | Adjectival Rating | Interpretation |
SALES GROWTH | ||||
Outsourcing 3PL online food delivery services contributes to an increase in my business’s sales. | 4.15 | 0.671 | Agree | Satisfied |
The ability to leverage the marketing and promotional efforts of 3PL online food delivery platforms significantly boosts the sales growth of my business. | 4.20 | 0.616 | Strongly Agree | Very Satisfied |
Outsourcing 3PL online food delivery services has effectively enabled our business to respond to changing customer demands, resulting in sales growth. | 4.30 | 0.571 | Strongly Agree | Very Satisfied |
SALES VOLUME | ||||
Outsourcing 3PL online food delivery services had a significant positive impact on the overall sales volume of my establishment. | 4.20 | 0.523 | Strongly Agree | Very Satisfied |
The increased visibility and accessibility provided by outsourcing online food delivery contribute to higher sales volume for my establishment. | 4.15 | 0.489 | Agree | Satisfied |
Outsourcing to online food delivery services leads to higher sales volume by encouraging repeat orders and customer loyalty. | 4.2 | 0.616 | Strongly Agree | Very Satisfied |
Outsourcing online food delivery provides my establishment with the resources and expertise necessary to handle higher sales volumes and meet customer demand effectively. | 4.35 | 0.489 | Strongly Agree | Very Satisfied |
Engaging a 3PL has a significant contribution to sales volume due to reasonable prices in terms of delivery fees. | 4.25 | 0.639 | Strongly Agree | Very Satisfied |
OPERATING PROFIT MARGIN | ||||
The cost-effectiveness and efficiency obtained by outsourcing 3PL online food delivery services contribute to an increase in my establishment’s operating profit margins. | 4.15 | 0.745 | Agree | Satisfied |
Outsourcing 3PL online food delivery services enables my business to streamline operations and reduce administrative expenses, generating a rise in operating profit margin. | 4.20 | 0.523 | Strongly Agree | Very Satisfied |
The results shown in Table 3 suggested that entrepreneurs were generally very satisfied with the indicators influencing the decision to outsource 3PL for online food delivery services among local foodservice establishments in terms of financial performance, specifically focusing on sales growth, sales volume, and operating profit margin, as shown in the table above.
In terms of sales growth, respondents strongly agree that outsourcing to 3PL positively impacts their business’s financial performance. Respondents recognized that outsourcing 3PLs online food delivery services has effectively enabled their business to respond to changing customer demands, resulting in sales growth, with a mean score of 4.30. The results also showed that enterprises have the ability to leverage the marketing and promotional efforts of 3PL and these platforms significantly boosts the sales growth of the business with a mean score of 4.20. This means that there is a sales turnover growth that is facilitated by the foodservice enterprises to 3PL online food delivery services.
When considering sales volume, respondents overwhelmingly agree that outsourcing to 3PL significantly impacts overall sales volume. The results highlight the expertise and resources provided by 3PL enable establishments to handle higher sales volumes effectively, meeting customer demand and driving profitability with a mean score of 4.35. Furthermore, enterprises engaged in 3PL experienced significant impact to their sales volume due to reasonable delivery fees with a mean score of 4.25. This finding indicates that outsourcing 3PL increases the visibility and accessibility to the consumers, and that contributes to greater sales volume most especially if with efficient delivery and online ordering systems.
Regarding operating profit margin, respondents strongly agree that outsourcing to 3PL contributes to cost-effectiveness, streamlining operations, and reducing administrative expenses. The ability to leverage economies of scale and expertise provided by 3PL platforms is identified as a key factor in increasing operating profit margins. Moreover, effective cost management and resource allocation enabled by outsourcing to 3PL lead to higher profitability for food service establishments. The result is reinforced by prior studies suggesting that effectively incorporating external suppliers such as 3PL with strong external integration capabilities are better equipped to meet their clients’ needs, resulting in improved financial performance such as increased revenue growth or higher operating profit margins.
The results suggests that outsourcing to 3PL for online food delivery services positively impacts financial performance metrics such as sales growth, sales volume, and operating profit margin for local foodservice establishments. These findings underscore the strategic importance of outsourcing to 3PL to drive financial success and competitiveness in the food service industry.
Table 4. Descriptive Statistics Results for the Determinants of Outsourcing 3PL in terms of Operational Performance
Operational Performance | Mean | Std. Deviation | Adjectival Rating | Interpretation | |
QUALITY OF SERVICE | |||||
The ability of 3PL online food delivery service providers to consistently deliver orders on time is a critical factor in my decision to outsource their services. | 4.15 | 0.813 | Agree | Satisfied | |
Efficient order processing and fulfillment by 3PL online food delivery service providers significantly contribute to the smooth operations of my establishment. | 4.05 | 0.605 | Agree | Satisfied | |
The reliability of 3PL online food delivery service providers in meeting delivery timeframes plays a crucial role in ensuring customer satisfaction and repeat business. | 4.40 | 0.598 | Strongly Agree | Very Satisfied | |
The consistent, on-time delivery of orders by 3PL online food delivery service providers is crucial to the operations of my business. | 4.30 | 0.733 | Strongly Agree | Very Satisfied | |
The efficient processing of orders by 3PL online food delivery service providers has a positive effect on the productivity of my business. | 4.20 | 0.616 | Strongly Agree | Very Satisfied | |
CONVENIENCE | |||||
The convenience offered by outsourcing 3PL online food delivery is a key factor for me as a local food establishment entrepreneur. | 4.35 | 0.745 | Strongly Agree | Very Satisfied | |
I firmly believe that outsourcing 3PL online food delivery allows me to provide my customers with a convenient and seamless food ordering experience. | 4.40 | 0.598 | Strongly Agree | Very Satisfied | |
Convenience is a top priority in my business, and I perceive outsourcing 3PL as an effective way to enhance convenience and satisfaction for my customers. | 4.10 | 0.553 | Agree | Satisfied | |
The convenience of outsourcing 3PL online food delivery enables my business to adapt more effectively to shifting consumer demands and market trends. | 4.05 | 0.759 | Agree | Satisfied | |
By outsourcing, my establishment gains access to data analytics and insights that enable us to better understand customer preferences and enhance our offerings. | 4.55 | 0.510 | Strongly Agree | Very Satisfied | |
FLEXIBILITY | |||||
The ability of 3PL online food delivery service providers to accommodate changes in order volumes and handle peak periods is an essential factor in my decision to outsource their services. | 4.60 | 0.503 | Strongly Agree | Very Satisfied | |
Outsourcing online food delivery allows my establishment to easily scale up or down the delivery services based on business needs. | 4.10 | 0.718 | Agree | Satisfied | |
Outsourcing online food delivery allows my establishment to easily customize and adjust delivery options based on specific customer requirements (e.g., dietary restrictions, and delivery instructions). | 4.30 | 0.571 | Strongly Agree | Very Satisfied | |
Outsourcing online food delivery services allows my establishment to easily adapt to seasonal or promotional events, offering flexibility in implementing special offers or discounts for delivery orders. | 4.45 | 0.605 | Strongly Agree | Very Satisfied | |
REPUTATION | |||||
The credibility and trustworthiness of 3PL online food delivery service providers, as reflected in their customer reviews and ratings, are essential factors in selecting them as outsourcing partners. | 4.40 | 0.598 | Strongly Agree | Very Satisfied | |
The reputation of 3PL online food delivery service providers in resolving customer complaints and addressing issues promptly is an important consideration for my food service establishment when outsourcing their services. | 4.35 | 0.745 | Strongly Agree | Very Satisfied | |
The reputation of 3PL online food delivery service providers in providing reliable and secure delivery services contributes to building trust with my food service establishment’s customers. | 4.30 | 0.571 | Strongly Agree | Very Satisfied | |
The 3PL online food delivery service provider’s track record in meeting delivery deadlines is a significant factor for my food service establishment when outsourcing their services. | 4.20 | 0.410 | Strongly Agree | Very Satisfied | |
The responsiveness of the 3PL food delivery service provider in addressing inquiries or requests is an important factor when outsourcing their services for my food service establishment. | 4.50 | 0.513 | Strongly Agree | Very Satisfied |
Table 4 outline the key determinants influencing local foodservice establishments’ decisions to outsource online food delivery services, categorized under operational performance. As shown in the table above, the majority of the respondents were generally very satisfied with outsourcing 3PL online food delivery services.
Regarding the indicator quality of service, respondents strongly agree that the ability of 3PL online food delivery service providers to meet delivery timeframes plays a crucial role in ensuring customer satisfaction and repeat business with a mean score of 4.40. consistently deliver orders on time, efficiently process orders, and resolve any delivery-related issues promptly is crucial for maintaining quality service leading to customer satisfaction and reputation of their establishments. The reliability and accuracy of 3PL order fulfillment significantly impact outsourcing decisions, highlighting the importance of seamless operations for customer satisfaction and business success. These findings indicated that leveraging 3PL expertise improve efficiency, reduces lead times, and minimizes errors.
Convenience is also a major factor driving the decision to outsource 3PL, with the highest mean score of 4.55. Respondents noted that outsourcing provides access to data analytics, helping business understand customer preferences and enhances product offerings. Moreover, outsourcing saves valuable time and resources, allowing foodservice entrepreneurs to focus on core operations and enhance customer satisfaction.
Flexibility is another critical aspect, where respondents strongly agree that the flexibility offered by 3PL in accommodating changes in order volumes even during peak season, with the highest mean score of 4.60, and allowing enterprises to easily adapt to seasonal or promotional events, offering flexibility in implementing special offers or discounts for delivery orders, as well as delivery locations and special requirements that contributes to the smooth functioning of their operations that enables them to adapt to shifting consumer demands and market trends effectively were the most significant indicators as to their decision to outsourced 3PL. This result is not suprising as mentioned in the previous pages, that outsourcing 3PL enables businesses to adapt to shifting consumer demands and market trends without entailing entrepreneurs extra cost or large investments.
Lastly, reputation plays a significant role in the decision-making process. Respondents strongly agree with a highest mean score of 4.50, that the responsiveness of the 3PL online food delivery service provider in addressing inquiries or requests is an important factor for entrepreneurs to outsource their services. Likewise, the credibility and trustworthiness of 3PL online food delivery service providers are also essential considerations. The track record of 3PL in resolving customer complaints and addressing issues promptly, has also a positive influence in considering outsourcing 3PL. This result underscored the significance of reputation as a pivotal criterion in the evaluation of potential 3PL providers.
Overall, the factors outlined in Table 5 underscore the multifaceted considerations involved in the decision to outsource online food delivery services among local foodservice establishments, with a strong emphasis on operational efficiency, convenience, flexibility, and reputation management.
Table 5. Descriptive Statistics Results for the Ranking of the financial and operational sub-factors of outsourcing 3PL among Local Food Service Establishments
Rank | Financial Performance sub-factors | Mean | Std. Deviation | Adjectival Rating | Interpretation |
1 | Sales Volume | 4.23 | 0.22734 | Strongly Agree | Very Satisfied |
2 | Sales Growth | 4.22 | 0.39429 | Strongly Agree | Very Satisfied |
3 | Operating Profit Margin | 4.17 | 0.49404 | Agree | Satisfied |
Operational Performance sub-factors | Mean | Std. Deviation | Adjectival Rating | Interpretation | |
1 | Flexibility | 4.36 | 0.28648 | Strongly Agree | Very Satisfied |
2 | Reputation | 4.35 | 0.25026 | Strongly Agree | Very Satisfied |
3 | Convenience | 4.29 | 0.36978 | Strongly Agree | Very Satisfied |
4 | Quallity Service | 4.22 | 0.30366 | Strongly Agree | Very Satisfied |
As shown in Table 5, the objective of the study was attained by determining the factor that amassed the highest rate using the 5-point Likert scale measurement. The ranking of financial and operational sub-factors of outsourcing 3PL among local foodservice establishments highlights a clear preference for aspects contributing to both financial success and operational efficiency. In terms of financial factors, sales volume emerges as the most significant consideration, with a mean rating of 4.23. Following closely behind is sales growth, which is also highly regarded, with a mean of 4.22. While slightly lower at 4.17, the operating profit margin still maintains a favorable ranking, signaling agreement among respondents regarding its relevance.
Flexibility emerged as the most significant factor being considered on the operational performance, garnering the highest mean rating of 4.36 followed closely by reputation with a mean score of 4.35. This underscores the paramount importance placed on streamlined and hassle-free processes within the food service industry. Convenience and quality service follows, receiving a mean rating of 4.29 and 4.22, respectively, indicating a strong endorsement from establishments for these attributes in their 3PL partners. These rankings suggest that local foodservice entrepreneurs prioritize financial gains and operational excellence when considering outsourcing to 3PL, emphasizing factors that contribute to flexibility of the operation and improving reputation.
Overall, as seen in the table above, the majority of the respondents were very satisfied with all the factors with flexibility garnered the highest rate among all sub-factors which signified that it is the most significant factor being considered by the management of the local foodservice establishments surveyed.
Table 6. Frequency and Percentage Distribution For The Estimated Increase in The Business Sales Growth and Business Operating Profit Margin After Outsoursing 3PL Online Food Delivery
Percentage | Sales Growth | Operating Profit Margin | ||
f | % | f | % | |
20% | 0 | 0 | 1 | 5.0 |
30% | 1 | 5.0 | 0 | 0 |
35% | 0 | 0 | 2 | 10.0 |
40% | 2 | 10.0 | 1 | 5.0 |
45% | 1 | 5.0 | 0 | 0 |
50% | 1 | 5.0 | 5 | 25.0 |
60% | 5 | 25.0 | 3 | 15.0 |
65% | 1 | 5.0 | 0 | 0 |
70% | 1 | 5.0 | 2 | 10.0 |
75% | 1 | 5.0 | 1 | 5.0 |
80% | 1 | 5.0 | 3 | 15.0 |
85% | 2 | 10.0 | 0 | 0 |
90% | 2 | 10.0 | 1 | 5.0 |
100% | 2 | 10.0 | 1 | 5.0 |
Total | 20 | 100% | 20 | 100% |
Table 6 presents data on the estimated increase in business sales growth and operating profit margin after choosing 3PL for online food delivery providers. The percentages indicate the distribution of responses among surveyed businesses.
In terms of business sales growth, the majority of respondents (25%) estimated an increase of 60% after outsourcing 3PL for online food delivery. Additionally, an equal 10% of respondents anticipated a 40%, 85%, 90% and 100% increase in sales growth. while 20% expected a more significant increase of 51-60%. The result, suggests a varied range of expectations among businesses regarding the impact of 3PL on sales growth.
Similarly, in terms of business operating profit margin, the distribution of responses is relatively consistent. 25% of respondents anticipated an increase of 50% in operating margin after choosing 3PL, while another 15% expected an increase of 60% and 80%. This indicates a diverse range of expectations regarding the impact of 3PL on operating profit margin.
Overall, the data suggests that businesses anticipate a positive impact on sales growth and operating margin after choosing 3PL for online food delivery, with most respondents expecting modest increases in these metrics. However, a notable proportion of respondents also anticipate more significant improvements, particularly in sales growth. This indicates a generally optimistic outlook among businesses regarding the potential benefits of leveraging 3PL for online food delivery services.
Table 7. Spearman’s correlation between sales growth, sales volume, operating profit margin and financial performance.
Variables | Spearman, r | Sig. value | Interpretation | Decision to Ho |
Sales Growth*Financial Performance | 0.703 | 0.001 | Significant | Reject |
Sales Volume*Financial Performance | 0.687 | 0.001 | Significant | Reject |
Operating Profit Margin*Financial Performace | 0.759 | 0.001 | Significant | Reject |
Note: µ = 0.05 Level of Significance
Table 7 shows the significant relationships of each sub-factors to the financial performance of foodservice establishments outsourcing 3PL services. The results indicates that all the three sub-factors are strong positive significant relationships between each variables. Specifically, operating profit margin garnered the highest correlation coefficient with r= 0.759; p=0.001<0.005 this suggest that it is the most vital determinant being considered by the business owners and key-decision makers interms of financial performance, followed by sales growth with an r=0.703; p=0.001<0.005, and then sales volume with a correlation cofficient r=0.687; p=0.001<0.005. Thus, the null hypothesis that there is no significant relationship among sales growth, sales volumes and operating profit margin in the financial performance of the business outsourcing 3PL is rejected. This result support the study of Fundera (2023) that using 3PL services increases restaurant’s sales volume by 10-20% as this attract a larger swath of the population allowing them to reach more customers who would not wanted to visit the physical store. Additionaly, See-Kwong et al. (2017) conducted a study on business’ owners behavioral intention to outsource 3PL it coincides that one driven factor is the increase in revenue as outsourcing 3PL reduces their cost but maximizing their profit. This result echoes the shared insights from the respondents during the administration of the survey intrument, they mentioned that due to the increase in demands, and the convenience in outsourcing of 3PL this streamlined their process, allowing them to reduce cost rather than having an inhouse logistics. Although there are commission fees it still contribute to higher profitability making the choice of outsourcing 3PL services a strategic choice to sustain a financial success.
Table 8. Spearman’s correlation between quality service, convenience, flexibility, reputation and operational performance.
Variables | Spearman, r | Sig. value | Interpretation | Decision to Ho |
Quality Service*Operational Performance | 0.678 | 0.001 | Significant | Reject |
Convenience*Operational Performance | 0.878 | 0.001 | Significant | Reject |
Flexibility*Operational Performance | 0.683 | 0.001 | Significant | Reject |
Reputation*Operational Performace | 0.547 | 0.013 | Not Significant | Accept |
Note: µ = 0.05 Level of Significance
In response to the hypothesis, Table 8 shows the analysis of the relationships between variables using Spearman’s correlation coefficient. The data reveals a very strong positive relationship for the convenience factor with a coefficient r=0.878; p=0.001<0.005. Thus, the null hypothesis is rejected, as the result underscore the paramount importance of streamlined and hassle-free processes facilitated by outsourcing 3PL. Following closely, flexibility exhibits a moderate positive relationship with r=0.683; p=0.001<0.005. This led the the rejection of the null hypothesis highlighting the importance of adpatibility in outsourced logistics operations. Quality service also presented a moderate positive relationship to operational performance with r=0.678; p= 0.001<0.005. Hence, rejecting the null hypothesis as this emphasize the pivotal role of excellence service in shaping the overall operational performance of the foodservice establishments utilizing 3PL. Lastly, reputation has the lowest correllation coefficient of r=0.547; p=0.013>0.005. Given this, the null hypothesis is accepted and that there is no significant relationship between the reputation to the operational performance of foodservice establishments partnered with 3PL.
The results appear to support the notion of prior scholars that outsourcing 3PL contributes to better resource allocation and overall productivity, reducing costs, ensuring timely delivery, and improving asset utilization confirming its strategic importance for achieving excellence in operational performance (Adesunkanmi et al. 2022). However, the result of the factor reputation contradicted the positive significant relationship found by Khan and Selamoglu (2024) and Braglia & Petroni (2000). The result suggest that the issues of delivery service gaps, disputes and handling of customer complaints, and the credibility and reliability of the third-party logistics providers is not enough to pull up the reputation of the business.
These findings elucited the the critical relationship between operational agility and the success of outsourcing arrangements in the foodservice sector. This underscores the strategic importance of effectively selecting and managing a strong positive relationship with the service providers can prevent miscommunications, unmet expectations, and inconsistent service delivery that could imensely affect the customer experience, and migh result to poor operational performance.
CONCLUSION
This study aimed to determined the key factor that influenced foodservice establishments in outsourcing 3PL services, such as GrabFood and FoodPanda. Results revealed that entrepreneurs decision were primarily driven by factors that positively impact both financial and operational performance. The key indicators in the financial factor were sales volume and sale growth as these substantially improved due to increased in visibility and client reached. Alongside these financial improvements were the improvements in the operational effieciency, with flexibility, reputation, and convenience emerged as the most influential operational factors. 3PL providers have been crucial in driving growth and competitiveness in a changing consumer market, thus, beneficial for foodservice businesses to effectively scale their operations. Moreover, the study emphasizes the importance of how outsourcing 3PL online food delivery services improved the financial performance and operational sustainability, making it a strategic decision for local foodservice establishments striving profitability and success in a competitive market.
Similar to prior studies, the results showed that outsourcing 3PL statistically positive significant relationships on the the financial and operational performannce of these local foodservice establishments, especially those in partnership with platforms like Foodpanda and GrabFood. The strong positive relationship of convenience to the operational performance confirms the significant influence on customer satisfaction and repeat business that directly contributing to the operating profit margin and sales growth. This critical insight, supported by statistical evidence, affrims the strategic necessity of prioritizing quality service in 3PL partnerships. It is a cornerstone for businessed that leverage outsourcing decisions to boosts their competitive edge and overall market performance.
The results of this study call for more research in exploring on the technical integration and process optimization to effectively mitigate risks and disruptions such as delays, spoilage, ineffeciences, and tracking challenges to address these issues and come up with a strategic management that can help protect the reputation of foodservice businesses and enhance customer satisfaction.
ACKNOWLEDGEMENT
I would like to extend my heartfelt appreciation to Miss Jonalie Bontuyan, Miss Sara Esther Amper, Miss Trixie Real, and Miss Jhasel Amorcillo for their invaluable assistance in collecting and organizing the raw data. Their efforts have been instrumental in the success of this study.
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