Coopetition in Restaurant Business

Traditionally, cooperation and competition have been seen as opposing and mutually exclusive activities that obviously led to innumerable lost business opportunities. In game theory parlance, these were “win–lose” scenarios for competitors. However, by the mid-1990s it became apparent that the traditional approach was becoming obsolete and that cooperation between competing firms could produce a “win–win” scenario. Such an ambivalence of competition and cooperation in the relations with all other enterprises has been called coopetition. The purpose of this study is to better understand the principles and mechanisms of the coopetitve strategy based on the example of the restaurant business. Theoretical, analytical and mathematical game model is developed taking into account the specifics of the industry and the players’ possible behavior. The result shows that the model confirms the players' commitment to cooperate on costs and compete in output. The coopetitive strategy leads to a better welfare of both players. However, companies can achieve a higher level of co-revenue if one of the players chooses a production cooperation option, while reaching agreements on the distribution of surplus among the players.