In a time when 3rd party food delivery is at an all-time high, you might be wondering if you’re missing out.
Uber Eats is an online platform for online food ordering and delivery that was founded in 2014. Within the Uber Eats app, users can view the menu, read reviews, order, and pay. Users can then have the food delivered to their doorstep.
Believe it or not, the first online food ordering service ever was called World Wide Waiter (now Waiter.com), founded in 1995. The most popular food delivery apps today however are Uber Eats, GrubHub, and Doordash. Out of these options, Uber Eats is the most widely available, open in 6 continents, and has the highest gross orders in most countries.
So, is Uber Eats good for restaurants? Though the brand is well-known, what really matters is how the restaurants are doing.
Pros of using Uber Eats:
- Great marketing strategy to get brand awareness among UberEats’ large customer base
- Good for if your restaurant doesn’t already have a delivery service, including delivery vehicles
- UberEats is well known so you get reputable brand association
Cons of using Uber Eats
- Uber Eats infamously takes a heavy 30% or more in commissions
- Revenue may increase but the profits turn out to be a lot smaller
- 43% of people claimed to have used the delivery app as a substitute for dining in the restaurant, which they would have otherwise visited in person
- Loss of guests who would have otherwise dined in, with plenty of upsell opportunities to maximize profits
- No direct contact with customers and fewer chances of building customer loyalty
- No control over customer experience
How does Uber Eats work?
- Customer opens app and orders from your restaurant
- Your restaurant accepts the order
- Customer tracks order progress on the Uber Eats app
- The restaurant fulfills the order and hands it off to the delivery partner
- The delivery partner then delivers the food to the customer
- The restaurant pays Uber Eats a commission for using their online ordering and delivery service
Uber Eats fees
Restaurants that partner with Uber Eats pay a marketplace fee of 15% to 30% depending on the plan. The plan varies depending on each restaurant’s needs but the fees cover operational costs such as payment processing, marketing, credit card services, and employee onboarding.
What if you decide to deliver on your own?
Restaurants that choose to use their own delivery service pay a 15% marketplace fee. If restaurants use Uber’s delivery service, the marketplace fee is 30%.
Do restaurants make money from Uber Eats?
So, do restaurants actually make money from Uber Eats? Restaurants actually lose money in the long run due to high commission costs that eat a large chunk of the profits.
Many well-known restaurant chains are shunning Uber Eats and Grubhub services. Jimmy Johns, Panera Bread, and Olive Garden are amongst these restaurants that refuse to use a 3rd party delivery company.
Along with profit losses, these restaurants refuse to work with third parties due to inconsistencies (i.e only some drivers have coolers) and longer delivery times. Uber Eats, Grubhub, Postmates, and DoorDash averaged 49 minutes to deliver an order according to studies by Boston Consulting Group. Long delivery times and having the food arrive cold has lead to many customer complaints, ruining customer experience. You can read about how this even negatively impacted fast-food behemoths like McDonald’s here.
Does Uber Eats help restaurants at all?
Despite the heavy costs for restaurants, Uber Eats can help get the restaurant’s name out there. Showing up on the Uber Eats platform can especially be a great way for new restaurants to quickly gain exposure to a large customer base.
As a long-term strategy, restaurants will lose a lot of money but whether this loss can be justfied, varies among restaurants. Traditional restaurants that are not tech savvy could quickly integrate an online and delivery system with Uber Eats. If you can reasonably afford your own delivery system (trucks, bikes, employee wages) you can reduce commissions you pay to Uber Eats but the math will look different for each restaurant.
At ChowEasy, we advocate acquiring dine-in customers because it’s more profitable for restaurants. With up-sell potential and the chance to connect with customers directly, dine-in offers something that delivery services can’t beat. Learn how the ChowEasy app can get you more dine-in customers.
