Uber Eats has experienced a significant amount of growth since it started and has grown to millions of users.
In order to have reached this level, the company needs to have some strong sources of revenue. For anyone wondering how Uber Eats makes money, here’s all you need to know!
How Does Uber Eats Make Money In 2023?
Uber Eats makes money primarily by charging customers and restaurants that use the platform in 2023. Customers on Uber Eats make money for the company through fees and subscriptions to the premium service. Restaurants that partner with Uber Eats all have to pay a cut of their income from the service. Uber Eats also makes money through advertising and partnerships.
Read on for a closer look into these avenues through which Uber Eats makes money as well as how much money it makes and its business model!
1. Fees on Customers
One of the most straightforward ways through which Uber Eats makes money is by charging various fees to customers.
These fees are separate from the money you pay for the actual food and they include delivery and service charges.
Any time you place an order on Uber Eats, you’ll have to pay something besides the money for the food no matter what discount or promo code you’ve applied, or even if you don’t tip.
For example, Uber Eats sometimes gives new customers their first five orders with free delivery but they still have to pay service charges.
2. Commissions From Restaurants
Uber Eats takes a cut from restaurants for every sale made via the platform and how large depends on what plan the restaurant was on.
Uber Eats has three of these plans for restaurants that use its delivery network:
- Lite – restaurants pay a 15% commission but receive little promotion. This is intended for restaurants targeting customers that already know them
- Plus – restaurants pay a 25% commission in exchange for a moderate amount of promotion. This is intended for restaurants targeting some new customers, but that already have a sizeable existing customer base
- Premium – restaurants pay a 30% fee in exchange for priority placement in the app. This plan is aimed at restaurants that want to get a lot of new customers by boosting their visibility on the platform
If restaurants use their own delivery network, they still need to pay a 15% commission on their sales.
If the customer places their order and opts to pick it up themselves instead of having it delivered, Uber Eats still takes a 6% cut of the sale.
This is one of the most significant sources of revenue for Uber Eats.
It’s also the reason why prices are often higher on the platform than they are in the physical locations of the same restaurants.
Uber Eats lets restaurants advertise on its platform in order to increase their visibility.
This option differs from the promotion levels discussed in the previous section because the restaurants pay upfront as opposed to having to give up a cut of their earnings to Uber Eats.
Restaurants that choose this program will have the option to run one or more campaigns at the same time with a budget of their choosing.
Uber Eats decides who gets to see the ads based on a combination of factors that includes how much the restaurant is spending compared to its competitors.
This then acts as an incentive for restaurants to allocate more to their campaign budgets if they want their campaign to be effective, translating into more revenue for the company.
4. Premium Subscriptions
Uber Eats has a premium subscription service known as Eats Pass that costs $9.99 a month and grants members access to special perks.
One of these perks is free delivery on orders above $15, which pushes customers to spend more per order to be able to cross this threshold and place more orders overall.
Studies have shown that doing away with delivery and shipping charges makes customers more likely to spend above what they usually would and this means the company makes more money.
5. Corporate Partnerships
Aside from restaurants, Uber Eats partners with other companies in cross-promotional efforts, 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 aren’t this straightforward, though. In a different deal, Uber Eats partnered with Hertz to provide rentals to drivers at lower rates.
Where Do Uber Eats Tips Go?
Uber Eats tips go in full to the drivers so the company cannot depend on them for revenue. For this reason, you can decide not to tip on Uber Eats and still get your food delivered.
What Is the Uber Eats Business Model?
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 is able to charge both.
Even if neither the restaurant nor the customer uses Uber Eats’ drivers for delivery, they still have to pay other charges for using the service.
How Much Money Does Uber Eats Make?
Uber Eats has made the following amounts within the past few years:
- 2017 – $600 million
- 2018 – $1.5 billion
- 2019 – $1.9 billion
- 2020 – $4.8 billion
- 2021 – $8.3 billion
This data is based on news items and financial reports filed with the SEC by Uber, its parent company.
Uber Eats’ revenue in 2021 was $8.3 billion, up from $4.8 billion the previous year following the December 2020 acquisition of Postmates.
Uber Eats makes money primarily by levying fees and commissions on its customers and the restaurants that partner with it. Customers pay mandatory service fees and restaurants have to give up a certain cut of their earnings to the company.
Uber Eats also earns money from advertisements that restaurants can run on its platform as well as a $9.99/month premium subscription.