How Does Uber Eats Make Money?

Company: Uber Eats (a subsidiary of Uber Technologies Inc.)
CEO: Dara Khosrowshahi
Founders: Travis Kalanick and Garret Camp
Year founded: 2014
Headquarter: San Francisco, California, USA
Revenue (Quarterly – June 30, 2019): $595 Million

Competitors: DoorDash | Grubhub | Eat24 | | Deliveroo | Fooda | Postmates | Caviar | EatStreet | Zomato | Favor | Swiggy

Introduction to Uber Eats

Uber Eats is a subsidiary of Uber Technologies. It was initially introduced alongside with Uber’s original platform. Uber Eats eventually grew in size and extended its reach in terms of customers. The potential for Uber Eats began to flourish, and therefore the platform was eventually separated.  

Business leaders of Uber Technologies decided that Uber eats would be required to be operated on its own platform. The platform is designed specifically for individuals to order food from their favorite local restaurants and carry-outs. Uber Eats platform even provides delivery of carry-out for those restaurants and food places that do not offer delivery.

Uber Eats was originally launched in 2014. The platform offered its services across San Francisco, California. Uber Eats platform was originally founded by Travis Kalanick and Garret Camp. The idea was to provide a platform for channeling and offering one of the best food ordering platforms in the industry.

Today, Uber Eats has branched its business into other emerging markets and other business opportunities. Uber Eats operates in over 500 cities and has a network of more than 220,000+ restaurants.

According to the verge, Uber Eats has reached over 50% of the United States population in a time span of just under 5 years!

Uber Eats – Platform

With the help of their existing platforms and users, Uber Eats was able to get a positive upturn in terms of active customers and revenue.

Uber Eats platform is one of the major platforms that bring a substantial amount of revenue to the overall Uber business. The majority of the orders are processed via application through means of a smartphone. 

Although the platform was aimed at the USA regions, it has expanded its operations across international markets such as South America, Europe, Asia, etc.

Cross Promotion Tactics Backed by Uber’s petabyte of data

Since Uber Eats is a subsidiary company for Uber Technologies, Uber Eats cross-promotional ads were initiated specifically for the San Francisco area, with only a handful of local restaurant listings. Through cross-promotion, Uber was able to capture additional revenue through means of providing a new subsidiary company like the Uber Eats platform.

How Uber Eats Makes Money?

If you too wonder, how does UberEats make money? The following is a complete report of how Uber Eats makes money and its revenue model.

Uber Eats utilizes an aggregator model, in which a good balance of participating restaurants, drivers, and customers is key for the successful growth of the business.  

1. Restaurant Partners

Uber Eats charges a service fee from the restaurant partners, and it’s a percentage of the food order (subtotal).

Uber Eats charges about 30 % from the restaurant partners.

Uber Eats Restaurant partner's fees
Image source: Quora | Uber Eats restaurant partner’s fees

2. Delivery Partners

Uber Eats charges a service fee from the drivers for utilizing its platform.

And the service fee = [Delivery fees paid by customers] minus [amount earned by the driver]

It’s important to note that the delivery fee paid by the customer is less than what Uber Eats pay to the drivers.  Uber Eats drivers earn based on actual time and distance required for the food delivery.

Also, drivers make additional money with incentives and referrals, which is important to attract more drivers to its platform.

Thus, the overall payment to drivers is higher than what the customer pays for delivery. 

Driver Partner Fee Breakdown

Here is an example breakdown of UberEats driver’s fee based on the location, efficient route, and surge charges.

  • Pick up fee: $1.50 per trip
  • Drop off fee: $1.00 per drop off
  • Distance fee: $0.65 per mile
  • Time: $0.30 per minute based on expected wait time at a restaurant and travel time.
Uber Eats driver partner's fees
Image Source: Uber Eats app |Uber Eats driver partner’s fees

3. Customer Fee Structure

 When a customer places an order on Uber Eats app, there are three types of fees:

  • Service fees – it is 15% of the food order (subtotal).
  • Delivery fees – it varies depending on the restaurant, location, availability of the driver, etc.
  • Small order fees – orders less than $10 are subjected to small order fees of about $2.
Uber Eats customer fees breakdown
Uber Eats customer fees breakdown

Payment Methods Offered by Uber Eats

Since Uber Technologies is the parent company, all payments and transactions are processed under the Uber Technologies account. They are responsible for receiving all the payments from the following departments that are owned by the parent company;

  • Uber Eats
  • Restaurant partnership
  • Uber Freight
  • Uber For Business
  • Advanced Technologies Group
  • Uber Elevate

Method of Payments

  • Option 1: Credit / Debit card
  • Option 2: PayPal
  • Option 3: Venmo
  • Option 4: Connect Bank Account
  • Option 5: Uber Cash

Final Word

Uber Eats business revenue model has proven its worth and ability to grasp and gain the growth that it had gained over in just 5 years. Through the strategic initiatives and key partnerships with restaurant chains such as Starbucks, McDonald’s, etc., Uber Eats is successfully growing aggressively across the United States and the international market in terms of revenue and overall company image and value.

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S.K. Gupta

S.K. Gupta

A management consultant and entrepreneur. S.K. Gupta understands how to create and implement business strategies. He is passionate about analyzing and writing about businesses.

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