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How Does Uber Eats Make Money (Business and Revenue Model)

The Uber Eats business model

How Does Uber Eats Make Money?
Here’s what you should know:
  • What is Uber Eats, and how does Uber Eats work?
  • How does Uber Eats make money?
  • Eats Pass (Monthly Subscription)
  • Sponsored Listings
  • Uber Eats for Business (commission)
  • Fees (delivery fees, service fees, small order fees, and delivery adjustment fees)
  • Uber Gift Cards
  • American Express/Uber Eats Partnership
  • What is the Uber Eats business and revenue model?
  • Uber Eats’ profit and revenue
  • Uber Eats’ funding and valuation

How does Uber Eats make money? Here is a full, in-depth, breakdown of their five (5) revenue streams and the different products and services they offer, as well as the Uber Eats business model, their year-over-year revenue, and how Uber Eats works.

What is Uber Eats, and how does Uber Eats work?

Uber Eats, the subsidiary of the parent company Uber, is a food delivery service that was founded in 2014 after the company wanted to expand its ride-share business.

Amassing 26 percent of the market share in the U.S, Uber Eats has the second-largest food delivery service with more than 21 million active customers.

Some of Uber Eats’ competitors include DoorDashPostmates, Grubhub, Gopuff, Instacart, and other food delivery services.

Uber Eats App in Apple App Store | Uber Eats Business Model | How Does Uber Eats Make Money?
Source: Apple App Store | Uber Eats

How does Uber Eats make money?

With more than 21 million monthly active users and 500,000 restaurants on their platform across 1,000 U.S cities, how does Uber Eats make money?

Below is a breakdown of all the ways how they monetize their users and partnering resturants to generate over $2.51 billion USD in revenue per year. Including price breakdowns of each revenue stream, how much they charge for each service, and what business models they use.

Here are the 5 ways of how Uber Eats makes money (in 2021):

Uber Eats has a revenue model that makes money in five (5) ways.

#1. Eats Pass (Monthly Subscription)

Uber has their own monthly subscription option for customers called Eats Pass.

Eats Pass has multiple tiers. Customers can enjoy unlimited $0 delivery plus 5% off of every order over $15. Or, they can get that plus 10% – 15% off Uber rides for $24.99 per month.

Subscription costs:

  • $9.99/month for Uber Eats only
  • $24.99/month for Uber and Uber Eats
Eats Pass | How Does Uber Eats Make Money?
Source: Uber Eats

In August 2020, Uber introduced a new feature called Sponsored Listings. Allowing partnering restaurants to promote their store with in-app advertising.

How it works is: The merchant first (1) sets a weekly marketing budget, then (2) decides whether they want to manually or automatically control how much to bid per click.

Uber Eats sponsored listings use a pay-per-click (CPC) model. Meaning, the merchant is charged only when and every time a customer clicks on their ad.

Advertising cost:

  • Uber says the average ad spend is $50 per week per participating restaurant.
Uber Eats Sponsored Listings| Uber Eats Revenue Model
Source: Uber Eats

#3. Uber Eats for Business (commission)

Uber Eats has over 500,000 restaurants on its platform and handled over $25 billion worth of food deliveries in 2020.

How it works is, every time a transaction is complete on their marketplace, Uber Eats gets a percentage of the order subtotal, called a commission.

Commission:

  • Activation fee: $350 one-time set up fee
  • Marketplace fee: 15% – 30% commission*
Uber Eats for Business | Uber Eats Business Model
Source: Uber Eats

* Commission fees vary depending on if the partnering merchant uses their delivery staff or if they use the Uber Eats marketplace platform.

#4. Fees (delivery fees, service fees, small order fees, and delivery adjustment fees)

Uber Eats tacks a number of fees onto each eligible order including delivery fees, service fees, small order fees, and delivery adjustment fees.

Delivery Fees

Uber Eats started with a standard $4.99 delivery fee until changing it in 2018 to a sliding fee. Meaning, the price of the delivery fee will vary by location and time of day.

  • varies

Service Fees

A service fee gets added to every order, regardless if your a Eats Pass member or not.

  • 15% of order subtotal ($2 minimum)

Small Order Fees

Another fee Uber Eats adds on is a small order fee. Applied at checkout if your subtotal is less than $10 or $15.

  • $2 (for subtotals less than $10)
  • $3 (for subtotals less than $15)

Delivery Adjustment Fees

A delivery adjustment fee is added to the order only if it’s updated after completing the order.

  • varies

#5. Uber Gift Cards

Uber Eats sells gift cards that can be used within the Uber Eats app or Uber app.

Pricing:

  • Solo gift cards: $25, $50, $100, or $200
  • Bulk gift cards for busniess: minimum $500 or 25 cards
Uber Gift Cards
Source: Uber Eats

Note: Uber allows customers to use the gift card across the Uber platform. For both, food and ride-share.

American Express/Uber Eats Partnership

In 2019, American Express and Uber announced their partnership to roll out a Uber Reward Program to provide perks to select American Express cardholders.

Recently, they expanded that partnership in October 2020 to include Uber Eats, providing even more perks to American Express card members.

American Express Partnership
Source: Uber

Uber Eats perks include:

Platinum, Gold and Green Card Members get…

  • Free Uber Eats Pass Membership for up to 12 months

American Express Gold Card Members get…

  • $120 annually ($10/month) in Uber Cash which can be used on Uber Eats orders or Uber rides in the U.S.

Note: This strategic B2B2C partnership is to acquire new users for both companies. Offering $120/year of free Uber Eats food and a 12-month free trial to Uber Pass will attract many new AMEX card accounts. And these promotions to Amex cardholders will bring many new users to the Uber Eats platform.

What is the Uber Eats business and revenue model?

Uber Eats makes money through a few revenue models that they combine within their company, they are:

  • Software as a service (SaaS) business model
  • Commission based business model
  • Fee-for-service (FFS) business model
  • Advertising based business model
  • B2B2C (partnerships) business model
  • Marketplace business model

Uber Eats’ profit and revenue

In 2019, Uber Eats made 2.51 billion USD of its parent company’s $14.15 billion USD in revenue.

Note: Because Uber, the parent company of Uber Eats, is a publicly-traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the SEC. You can find all of Uber’s publicly released financial reports through their reports and presentations.

Uber Eats’ funding and valuation

Uber, the parent company of Uber Eats, has raised a total of $25.2 billion over 28 rounds, according to Uber’s crunchbase profile.