When the taxi giant first launched in 2009 intending to be a vehicle ride-sharing app, delivery was nothing, but an afterthought and it wasn’t until 2014 that Uber made this expansion into the food delivery service with Uber Eats. So, what is it that makes Uber Eats rank higher than other apps like DoorDash, Postmates, and Caviar? Although Grubhub maintains the title of market leader Uber Eats has surpassed it in 15 major U.S. cities and is continually gaining more of the market share. Let’s take a look at the success behind the growth and success of the app.
What is Uber Eats?
Uber Eats is an online and mobile food delivery platform that allows users to order food from local restaurants and have it delivered right to their doorsteps. The app is a subsidiary division of the Taxi giant Uber, which is currently the world’s largest ride-sharing app.
Is Uber Eats on the Uber driver app?
Once you are ready for delivery you can access Uber’s driver app to see if there are any delivery requests near to your location. Although the restaurant will be expecting your arrival you can notify staff or your collection. Orders are verified before leaving the restaurant by matching the customer name and order number to the order in store.
How does Uber Eats work?
The app Uber Eats works to benefit three primary parties, namely the customer, the restaurant, and the driver.
How do customers benefit?
- Hundreds of restaurants available to browse and choose from
- Orders can be made directly from the restaurant’s menu
- Your order can always be tracked through the app.
Uber Eats allows its users the choice of local restaurant dining without the need to ever leave home. Since 2017 Uber Eats has partnered with over 46,000 restaurants allowing their users to order off restaurant’s full menus through their app. Users simply scroll through the website or app to search for a restaurant of their choice or view all the options available within their area. All a user has to do next is place his order, confirm his deal and then wait for the order to arrive, all while tracking the order in real-time so never being left in the dark with regards to arrival time.
How do restaurants benefit?
Increased number of orders. When an order is placed on Uber Eats, all the restaurants must do is prepare the meal for delivery and an Uber Eats driver will handle the rest. The restaurant makes a 70% profit from each sale with Uber Eats taking 30% commission on every order. Just like the customers’ restaurants can track the order during the delivery from the restaurant to its customer.
How do the driver’s benefit?
- Flexible working hours
- Use of own private vehicle
Because Uber Eats drivers are independent contractors who are paid hourly this offers a lot of flexibility. Drivers are given the freedom of choosing the own hours, both of which days to work and how many hours per shift, as well as being able to make the deliveries in their private vehicle, be it car, scooter, or even bike.
How does Uber Eats make its money?
Uber Eats generates revenue through one of the following methods:
- Restaurant partners make one-time payments and have a commission fee.
- Customers pay several fees including a small order, service, and delivery fee.
- The app comes with an optional monthly subscription fee
- Outside investors
Restaurants who partner with Uber Eats pay a one-time fee ranging from $350 – $500 and a 30% commission on any sales made through the app. Uber Eats through this process restaurants increase their sales through promotion to a higher number of potential customers while Uber Eats also claims more efficient delivery with an average delivery time of just 15 minutes.
When using the app customers pay Uber Eats several fees for use of their platform:
- Delivery fees
- Service fees
- Orders less than $10 pay a ″small order″ fee
- Driver tips
- Monthly subscriptions
Uber Eats usually charges a service fee of 15% of the total order, with small order fees being roughly $2, however delivery charges may vary depending on restaurant and location. Uber Eats allow customers the option of a ″Eats Pass″. This monthly subscription of just $9.99 allows subscribes with a 5% discount on all meals over $15 from all restaurants within their city as well as no added delivery fee.
Despite its success, due to its high cost of operations, Uber Eats is still not operating as a profitable company. The company’s growth is largely linked to outside investors attracted by the companies growing market share and promising growth in food delivery service.
Why is Uber Eats so successful?
The food delivery market is a staggering market at over $100 billion and Uber Eats claims it is now at a $6 billion booking run rate, having grown at over 200%.
Uber Executives are also excited by the fact that many Uber Eats customers do not use the car service. In the last year, four out of every ten customers who accessed Uber Eats were new to Uber. This gives Uber access to a growing number of customers who in the future might access the ride service.
However, a large part of Uber Eats success lies in the simple fact more people are ordering food instead of preparing a home-cooked meal. With a study showing 82% of participants ordering food at least once every two weeks and Americans spending roughly $70 000 on food delivery in their lifetime.
To ensure even further growth Uber Eats is planning to partner with McDonald’s and Starbucks to further persuade customers to use their app instead of competitors.
Not to mention Uber Eats can cross over into the Uber part of their business. Uber drivers who do not have fares can go to restaurants for Uber Eats orders, creating a self-sustaining loop. The efficiency of Uber drivers is maximised by eliminating any downtime in their schedule. As a result, delivery times get faster, drivers make more money and the business becomes more successful at providing customer satisfaction. Furthermore, the company has acquired companies like Jump and partnered with Getaround to eliminate any spaces in car availability by adding bikes and scooters to its delivery arsenal.
What truly sets Uber Eats above its competitors is the ability to hold restaurants accountable:
Orders can be tracked through the app at all times, if there is a delay or any kind customers will be able to tell if the restaurant or driver is at fault and contact the restaurant directly.
Uber Eats will issue customer credits and refunds without requiring the restaurant’s approval. Any orders that include a missing item or order that has been incorrectly processed will be refunded, meaning Uber Eats holds restaurants accountable to maintain its great customer service.
Despite growing at a rate that seems to dominate the market Uber Eats has yet to prove itself as a profitable company. It’s definitely a signal for other companies to think about food delivery app development in order to increase their shares on a particular market. Only time will tell if the market potential will be able to turn the Taxi giant success it’s to positive profit.