UberEats Business Model

UberEats Business Model: How Do They Make Money?

Elena Hudgens
By Elena Hudgens 10 Min Read

Uber Eats is a food delivery service owned by Uber. According to their site, Uber Eats connects its users with local restaurants and delivers the food you’ve ordered at your door. It has an app for iOS and Android that displays menus from nearby restaurants on-screen and provides other features like tracking your order’s progress in real-time throughout the delivery process. Today we decided to look at UberEats business model and share with you just how they’re running their business.

Uber Eats business model is an on-demand type model. It consists of end customers, delivery partners, and restaurant partners. Restaurants list their menus on the app so that anyone near them can see them and order something they want to eat from there; once they’ve placed their order, a driver for Uber picks up the food from the restaurant and brings it to them.

How Much Does UberEats Cost?

Uber Eats is a relatively new company, so they don’t have any monthly rates for their service. Instead, you need to pay the delivery fee when your food arrives. They calculate the delivery fee based on where you live and what kind of food you order. 

The prices vary depending on the restaurant that is delivering your food. Delivery fees are usually between $3-$8 per delivery. Uber Eats also has an app where customers can browse restaurants and see menus, read reviews, and rate their own experiences. You can even order ahead of time!

Why do people use Uber Eats?

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There are many reasons why people use Uber Eats, but one of the main reasons is that it’s a convenient way to get food delivered right to your door. 

Some other reasons why people use Uber Eats include:

  1. No more waiting in long lines for take-out
  2. You can order from almost anywhere.
  3. It takes the stress out of cooking

You can order from any restaurant that’s partnered with Uber Eats and have them delivered to you in 30 minutes or less. Plus, there’s no need to worry about going out in the rain or snow if you want Mexican food because it will be delivered right to your doorstep.

Ways UberEats Makes Money

Uber Eats business model combines three models: the multisite platform, aggregator, and on-demand. It has end customers, delivery partners who deliver food to them, and restaurant partners list their menus through the app. Customers can order food from elsewhere without leaving their house by checking out these menus online first!

1. Commission – Uber Eats is a platform that has earned 30% on orders. This is the main revenue stream since Uber Eats makes money from its restaurants’ commissions and services to customers who use its service.

2. Delivery Charges – Delivery fees are not the same for all. Pickup, delivery, and distance fare are combined in different combinations depending on location, mileage to be traveled, availability of drivers, etc. When ordering Uber Eats, the total cost will depend on individual factors, which takes 25% of the order with a minimum charge of $2, if cheaper than $12.

3. Promotional deals – Some restaurants and food chains, such as McDonald’s, offer exclusive promotions on the app to make more sales. These brands will pay special commissions and fees according to negotiated deals.

4. Surge Pricing – When Uber Eats is experiencing high demand, it applies its dynamic pricing algorithm. This “busy fee” is calculated based on how many orders are placed in the same area simultaneously and the availability of delivery partners.

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UberEats Buisness Model: The Complete Breakdown

The Uber Eats business model canvas includes three transactions: B2B- between Uber Eats and restaurants, the one between Uber Eats and its delivery guys, as well as B2C -between customers. 

Restaurants

The restaurant can set the prices of their dishes and pay a commission to Uber Eats for each order. Restaurants are poised to grow their customer base with Uber eats, excellent marketing and advertising tool for restaurants that don’t need to invest in an expensive delivery team or system.

The End Customers

Then the end customer is the user who can create an account on the Uber Eats platform and order food from a variety of local restaurants. They need to be online! You can find a wide range of restaurants with just one click. 

There are updated menus and prices, the estimated arrival time is available for each order, and you can even track your order on the app! Besides that, there’s less chance to make mistakes when ordering because users place their orders themselves instead of having someone else do it by phone. You also have more payment options, so you don’t need to carry cash or use any other form of payment except through your mobile device.

Delivery guys

The delivery Guys are independent professionals who pick up orders at restaurants and take them to customers. They receive information about deliveries based on their location and get paid for each service. 

Uber Eats offers a way to increase income, and couriers can choose where they will work at the time without having to go over complicated labor contracts with companies. In addition, delivery guys can work by car or motorcycle depending on their location, which gives many people an employment opportunity.

Other Details Of The UberEats Business Model

Uber Eats has a lot of partners- technology providers, such as GPS systems and payment systems. Some might argue that restaurants and the delivery guys are also partners, but in my opinion, they are customer segments. 

Uber Eats is a company that markets and manages the platform and other costs. The whole cost structure of Uber Eats includes:

  • Maintaining the platform.
  • Acquiring new customers and staff members.
  • Legal costs.
  • Credit card fees for research & development.

There are also customer support expenses to cover those who use their services.

Safety and Other Considerations

Uber Eats is a food delivery service gaining popularity in recent years. The Uber Eats business model focuses on its customers and employees and makes sure you have a great time with them. The benefits of this service are that it offers you the freedom to order anything your heart desires, whether it’s breakfast, lunch, or dinner. It also allows you to choose from restaurants near you without worrying about traffic because the driver takes care of that for you.

However, there are some risks associated with ordering through Uber Eats. For one thing, it’s not as common as calling an order in and picking up your food at the restaurant, so drivers may not know exactly where to go without directions. 

There have also been reports of drivers taking longer than 30 minutes to deliver food—sometimes even more than two hours. Another concern is that the restaurants don’t consider any allergies or dietary restrictions like vegetarianism or gluten-free diets. Customers should consider these things before ordering through Uber Eats. 

Hence, we can see that the Uber Eats business model is an on-demand business model that works according to trends.

Also Read: How to Start a Food Truck Business: Everything You Need to Know

Conclusion

Uber Eats isn’t just set up for success, it seems to be well-positioned in the food delivery space. Although it’s unlikely that Uber will become a monopoly in the food delivery space, as one of the world’s largest players and with relatively few regulatory issues, Eats is likely to drive significant value for Uber going forward. 

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Posted by Elena Hudgens
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Elena Hudgens is an entrepreneur with 10+ years of experience. She started her journey by building her own e-commerce website on Shopify and turned her $1000 savings to millions in just 2 years. Soon she started different ventures in which she failed and succeeded. And now, she's on a mission to help other entrepreneurs with her life and business lessons.