Is Uber Eats’ commission fee eating up your profit?
Uber Eats is one of the most widely used online delivery platforms that restaurants use. However, it is also known for its high commission fee, which keeps the food prices always high on the platform.
It is an undeniable fact that the rise of restaurant delivery platforms following the COVID-19 pandemic has brought about a major transformation in the restaurant industry. They have made online ordering and delivery super convenient for restaurants and customers. However, the commission charged by popular delivery platforms like Uber Eats often cuts down the profit levels for restaurant owners. Similarly, customers receive the biggest shock when they find the price difference of food in such platforms and restaurants.
In this article, you will learn about the pricing structure of Uber Eats, the Uber Eats commission fee, and why the food cost on the platform is always higher than in the restaurant. Is it due to Uber Eats’ commission fee, or something else?
Let us first understand how Uber Eats works.
How Uber Eats works?
Uber Eats works as a bridge between restaurants and customers. It connects both parties through an app or website. It is an online food marketplace where customers can browse the menus of various restaurants and choose their preferred ones to order. Similarly, restaurants also get an online platform to sell their food items. Uber Eats charges restaurants a certain amount of money on each order, which is known as the Uber Eats commission fee.
Once a restaurant receives an order, it prepares it for delivery. Now the restaurant can use its own delivery services or pay Uber Eats for it.
The drivers in Uber Eats are independent contractors and use their own vehicles to pick up food from the restaurant and drop it at the customer’s location. All payments are done online through the website or app.
Understanding the cost of delivery apps
The overall cost of selling food through a popular online delivery platform like Uber Eats often puts a burden on the restaurant owner due to the platform’s charges. When it comes to the question of why food prices are higher in Uber Eats than in restaurants, the first thing that comes to mind is the Uber Eats commission fee. However, there is more to it. Here is a brief explanation of the expenses that are added to this charge.
Commission fee
Online food delivery platforms like Uber Eats usually earn by taking a commission from restaurant owners on each order they receive through the platform. The commission rate usually revolves around 15 to 20% based on services and the platform. The Uber Eats commission fee also follows the standardized rate.
The standard commission fee for basic restaurant listing and online orders is 15%-20% and it goes up to 30% for premium facilities like marketing services, featured placements on site etc.
Delivery fee
Based on the partnership agreement between the restaurant and platforms, customers may need to bear the delivery cost. However, restaurants may also take the responsibility of this expense to reduce the commission burden.
Marketing expenses
A lot of restaurants sell their food items on delivery platforms, and those who want to stand out and attract maximum customers need to pay for promotions as well. The expenses usually range between $50 to $500 per month, based on visibility.
Processing fee
Apart from all the above-mentioned charges, some delivery platforms also impose a fee on additional services like offering customer support and credit card processing.
If you are in the restaurant business and planning to sell through third-party platforms online, you must be aware of the hidden cost of online delivery and plan your expenses accordingly.
How much does Uber Eats charge restaurants?
Uber Eats commission fee for restaurants typically lies between 15% to 30% of the order value. However, it usually depends on the plan a restaurant selects. Uber Eats pricing plan relies on various factors like visibility level, basic listing, marketing support, etc. Their pricing plan is described in detail in our upcoming segment.
Uber Eats marketplace plans
Uber Eats’ pricing structure contains multiple market plans that are driven by factors like visibility, support, and additional services. The food cost that restaurant owners set on such platforms completely depends on it, and it is much more than just the Uber Eats commission fee. Let us take a deep dive into their pricing plans.
1. Lite (Budget-friendly option)
This pricing plan is beneficial for established restaurants that are locally popular and just want their names to be visible in customer search results.
-
Lower delivery cost.
-
20% commission on online order deliveries.
-
10% commission on pick up services,
-
Minimum visibility on the app.
2. Plus (Mid-level fees and exposure)
The price is comparatively higher as it offers better visibility
-
25% commission on Delivery services.
-
10% for food pick-up services.
-
Suitable for restaurants looking to grow visibility online.
3. Premium (The top-most plan with maximum visibility)
This is the most expensive plan of Uber Eats that offers featured placements and promotions to restaurants.
-
Charges 30%commission for delivery.
-
10% on pickup.
-
Covers Uber’s one benefit.
-
Perfect for restaurants that want to accelerate growth.
However, this plan also increases the cost of your food, which means you need to keep your food high.
4. Self-Delivery (helps reduce the overall cost)
Restaurants that have their own in-house delivery team can opt for this pricing plan.
-
15% commission fee on orders, as delivery is not included.
-
10% on pickup services.
-
Visibility on homepage, search, and categories.
Though Uber Eats’ pricing model offers multiple options for restaurants, it still can be overwhelming for them due to the expenses involved with it. To reduce the cost without affecting your online visibility, you create your own online order and delivery system with FoodMato. It helps you run your restaurant business without commission or with less commission.
Why is the food cost higher in Uber Eats than in a restaurant?
As discussed above, multiple fees are imposed on restaurant owners, which ultimately reflect in the cost of the food on these platforms, including Uber Eats. When you have your own food delivery platform, you do not have to be completely dependent on Uber Eats. Moreover, you will have full control over your orders and food prices.
Now, let us discover the reasons for high food prices on Uber Eats.
-
High Commission: The commission percentage plays a significant role in increasing the price of a food item on Uber Eats. Even after that, the amount of profit the restaurant owners generate is not enough to run a team.
-
Platform recommended markup: Uber Eats suggests that restaurants increase the food prices by 10 to 15% to cover the commission expenses. However, that is not enough. Some restaurants need to keep the prices 20% higher than the normal range to cope with the delivery expenses.
-
Uber Eats pricing structure: Uber Eats relies on a dynamic pricing model, which means the prices may go up during peak hours, festive seasons, weekends, and on other special events. The saddest part is that during this period, you may offer your food at the same price, but customers will always see a higher total amount due to the fluctuating add-on fees.
Uber Eats Vs Foodmato: What you need to know
Frequently Asked Questions
How much does Uber Eats cost to deliver?
The delivery charges of Uber Eats usually depend on the order size. The standard delivery cost is 10% of the basket.
Is it cheaper to use DoorDash or Uber Eats?
DoorDash is comparatively cheaper than Uber Eats for similar offers. The price difference is calculated within $2 to $3. In fact, DoorDash charges 11% as service charges, which may go up to 15%.
Does Uber Eats charge a fee?
Yes. Uber Eats charges 15 to 30% commission per order based on the selected pricing plan.
Wrapping up
No matter how popular Uber Eats is, it is expensive, especially for the restaurants that run on a budget. That is why using a restaurant POS system like FoodMato is really beneficial and a money-saving step. With FoodMato, you can either be partially dependent on third-party platforms or completely remove them. The choice is yours.
To know more about Foodmato and regular updates, join us on our social media channels, like Facebook and Instagram.
