Why is Uber Eats so expensive? (10 reasons)
Uber Eats offers its customers many benefits, the most important of which is convenience. However, one thing many people don’t expect from Uber Eats is the low prices, especially compared to what you’ll be charged when you go to an actual restaurant.
If you’re wondering why this is, I’ve looked at the biggest reasons why Uber Eats are so expensive, and here are ten of the strongest!
Why is Uber so expensive to eat in 2022?
Many of the reasons Uber Eats is expensive has to do with the company’s need to make more money, including money spent on restaurants and drivers by 2022. Several other external factors affect the price of Uber Eats, especially those that have to do with national and state economies.
Read on to find out the main explanations for why Uber Eats has become so expensive, including the internal and external factors below!
1. Because of inflation
Around the world, average prices for everything from energy to consumer goods have risen due to inflation.
Specifically, in the US, inflation hit a 40-year high in March 2022, up 8.5% from a year earlier.
Still, even though Uber Eats doesn’t sell any products directly, inflation is an external direct factor that affects the company’s operations.
For example, in March 2022, Uber Eats recently introduced a surcharge aimed at addressing rising gasoline prices across the country.
People using Uber Eats can save themselves the hassle of leaving their home or office and enduring wait times at restaurants.
Instead, they could have their favorite restaurant send a driver directly to their location.
As a result, Uber Eats and other food delivery companies feel that their ability to provide the service is worth the extra charge.
That said, that’s why Uber Eats charges more for its service than it pays drivers and restaurants.
3. Because of your timing
Uber Eats uses dynamic pricing, which means that what you end up paying depends largely on how long you use the service.
For example, Uber Eats will raise prices in anticipation of increased activity due to a surge in pricing.
As such, one of the most popular times for Uber Eats prices to spike is during the lunch rush. Also, when takeout orders increase, prices spike during events like the Super Bowl.
Also, surge pricing doesn’t usually affect food prices, so unless you’re looking for changes in other fees, it’s easy to miss.
4. Because restaurants raise prices
Uber Eats gets a cut of restaurant revenue, so they need to raise prices on the platform to maintain favorable profit margins.
Also, restaurants that get more promotions on the platform have to pay bigger discounts, causing you to likely pay more for restaurants you see often.
That said, this is why Uber Eats prices are often higher than when you visit the physical location of the same restaurant.
5. Because of the cost of living in your area
If you live in a place where the cost of living is already high, the prices you see on Uber Eats will reflect that.
6. Because Uber Eats is chasing growth
Uber Eats is part of public company Uber, which means the company needs to show growth to investors and shareholders, and raising prices can help boost revenue.
7. Because Uber Eats doesn’t leave tips
Uber Eats gives 100% of tips to drivers, so the company cannot rely on these as a source of revenue and has to get funding from elsewhere.
8. Because Uber Eats can’t rely on delivery fees
Uber Eats gives restaurants the option to use its own delivery network and customers the option to pick up meals, both of which mean the company gets a smaller cut.
That being said, this makes delivery fees a less reliable source of revenue, so companies have to get funding from another source over which they have more control, such as service fees.
9. Because Uber Eats is taxed
Uber Eats must pay local and federal taxes wherever it does business, and those costs are reflected in the overall fee.
So, where tax rates are high, fees and prices are also high, and vice versa.
10. Because Uber Eats pays third-party fees
Uber Eats uses certain third parties to facilitate its services, including payment processors such as American Express and PayPal, and web servers such as Amazon Web Services.
Additionally, these companies either get a cut of every transaction or require recurring payments, which Uber Eats takes into account in its pricing model.
To learn more, you can also read our posts on why Uber Eats is so slow, what is Uber Eats Pro, and Uber Eats delayed deliveries.
in conclusion
One of the biggest reasons Uber Eats is expensive is that the company relies on fee revenue to maintain growth and drive operations.
Also, sometimes Uber Eats briefly raises fees as part of surge pricing when activity is expected to increase, such as at lunchtime.
Also, Uber Eats has become more expensive due to external factors such as inflation and rising cost of living.
That said, Uber Eats has introduced a surcharge to address rising gasoline prices as the country experiences new inflation highs.
