How does Uber Eats make money? (all you must know)
Uber Eats has experienced tremendous growth since its inception and has grown to millions of users.
To reach this level, the company needs to have some strong revenue streams. For anyone wondering how Uber Eats makes money, here’s everything you need to know!
How will Uber Eats make money in 2022?
Uber Eats primarily makes money by charging customers and restaurants for using the platform in 2022. Customers on Uber Eats make money for the company by charging and subscribing to premium services. Restaurants that partner with Uber Eats are required to take a cut of the revenue from the service. Uber Eats also makes money through advertising and partnerships.
Read on to learn more about these ways Uber Eats makes money, how much money it makes, and its business model!
1. Customer Fees
One of the most direct ways Uber Eats makes money is by charging customers various fees.
These charges are separate from what you pay for the actual food, and they include delivery and service charges.
Whenever you place an order on Uber Eats, no matter what discount or promo code you apply, or even if you don’t tip, you must pay for something other than the cost of the food.
For example, Uber Eats sometimes offers new customers their first five free deliveries, but they still pay a service fee.
2. Restaurant commission
Every sale Uber Eats makes through the platform takes a cut from the restaurant, depending on the restaurant’s plans.
Uber Eats offers the following three plans for restaurants using its delivery network:
- Lite – The restaurant pays a 15% commission, but there are few promotions.This is for restaurants targeting customers who already know them
- Plus – restaurants pay a 25% commission in exchange for modest promotions.This is for restaurants that target some new customers but already have a large existing customer base
- Premium – Restaurants pay 30% in exchange for priority placement in the app.The program is aimed at restaurants looking to attract a large number of new customers by increasing the platform’s visibility
If restaurants use their own delivery network, they still have to pay a 15% commission on sales.
Uber Eats still takes a 6% cut of sales if a customer places an order and chooses to pick it up rather than have it delivered.
This is one of the most important revenue generators for Uber Eats.
This is also why the prices on the platform are often higher than the physical location of the same restaurant.
3. Advertising
Uber Eats allows restaurants to advertise on its platform to increase its visibility.
This option differs from the promotion level discussed in the previous section, in that restaurants pay up front rather than having to give up their revenue share to Uber Eats.
Restaurants that choose this plan can choose to run one or more campaigns at the same time, and choose a budget.
Uber Eats determines who can see ads based on a variety of factors, including how much the restaurant spends compared to competitors.
If they want their event to be effective, this incentivizes restaurants to allocate more money to their event budget, which in turn generates more revenue for the company.
4. Premium Subscription
Uber Eats has a premium subscription service called Eats Pass that costs $9.99 a month and offers members special benefits.
One of the benefits is free shipping on orders over $15, which pushes customers to spend more on each order to be able to cross that threshold and place more orders.
Research shows that eliminating delivery and shipping fees makes customers more likely to spend more than usual, meaning companies make more money.
5. Corporate Partnerships
In addition to restaurants, Uber Eats has partnered with other companies on cross-promotions, many of which involve Uber Eats getting paid.
For example, Uber Eats previously announced a partnership with Hims & Hers to facilitate the delivery of its health and wellness products.
Other partnerships are not so simple, though. In another deal, Uber Eats partnered with Hertz to offer drivers rental cars at lower prices.
Where is the Uber tip?
All Uber Eats tips go to drivers, so the company can’t rely on them for revenue. For this reason, you can decide not to tip Uber Eats and still deliver.
What is the business model of Uber Eats?
Uber Eats’ business model involves the company acting as a middleman between restaurants and customers.
By providing a platform where restaurants can list their menu items and customers can place orders, Uber Eats can charge for both.
Even if neither restaurants nor customers use Uber Eats drivers to deliver meals, they still have to pay other fees for using the service.
How much does Uber Eats make?
Uber Eats has made the following amounts over the past few years:
- 2017 – $600 million
- 2018 – $1.5 billion
- 2019 – $1.9 billion
- 2020 – $4.8 billion
- 2021 – $8.3 billion
The data is based on news and financial reports filed with the Securities and Exchange Commission by its parent company, Uber.
Uber Eats’ revenue in 2021 was $8.3 billion, up from $4.8 billion in the previous year following the December 2020 acquisition of Postmates.
To learn more, you can also read our posts on whether Uber Eats accepts cash, Uber Eats orders never arrive, and whether Uber Eats is safe.
in conclusion
Uber Eats makes money primarily by charging fees and commissions to its customers and the restaurants it works with. Customers pay a mandatory service fee, and restaurants have to give up a certain share of revenue to the company.
Uber Eats also makes money from ads that restaurants can place on its platform, as well as a $9.99-a-month premium subscription.
