UberEatsBusiness Model:HowDoesUber EatsMakeMoney?
July10,2023 GiandeepSingh
TABLEOFCONTENT
QuickSummary:
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LearnallabouttheUberEatsbusinessmodelanditsrevenuegenerationstrategiesinthis insightfulblogpost ExplorehowUberEatsleveragesitson-demandfooddeliveryservice todriveprofitabilityandsuccessinthecompetitivemarket
Didyouknowthattheonlinefooddeliverymarketisexpectedtoreach$19216billionby2025 ataCAGRof11%,from$12691billionin2021?Fooddeliveryappshavemadeiteasyfor foodloverstosit,relaxandenjoytheirfavoritecuisinesintheircomfort
Withmultipleon-demandfooddeliveryappsenteringthemarket,UberEatshasacquiredits uniqueplaceandhasthesecond-largestfooddeliveryservice Everybusinesshasits strengthsandweaknesses;inordertounderstandUberEatsbusinessmodel,weneedto conductin-depthSWOTanalysis
KeyListing
UberEatsemploysacommission-basedrevenuemodel,chargingrestaurantsapercentage ofeachorderforusingtheirplatform
Theplatformutilizessurgepricingduringpeakdemandperiodstomaximizeprofits
UberEatsoffersvariousdeliveryoptions,includingpartneringwithdrivers,couriers,and evendrones,toensureefficientdelivery
Cross-promotionandpartnershipswithotherbrandsandservicesallowUberEatsto expanditscustomerbaseandincreaserevenuestreams
Constantinnovationandtheintroductionofnewfeatures,suchasUberEatsPassand virtualrestaurants,contributetotheplatform’ssustainedgrowthandprofitability
UberEatsSWOTAnalysis
ThissectionexplainshowUberEatsovercomesandworkswithitsstrengths,weaknesses, opportunities,andthreatsandstaysvalidinthemarket
Strengths
Financialsupport:UberEatsistheparentcompanyofUber,awell-establishedcompany whosecurrentrevenuereached$2904billion
Restaurantevaluation:Ontheotherhand,theappalsoallowsuserstounderstandwhich restaurantsaremorelikelytodeliverfoodwithoutincurringanyissues
Quickdelivery:UsersofUberEatscanenjoyfastdeliveryasthefoodgetsdeliveredin about30minuteswithoutanyhiddenfeecharge
Weaknesses
Limitedrestaurantselection:UberEats’suserscanonlyselecttoorderfromalimited numberoflocalrestaurants
Deliveryfaults:Asitdependsonhumanresourcesfordeliveries,UberEatsisatriskoffood notbeingdelivered,abaddeliveryman,orfoodbeingdeliveredlate,whichcanallleadto poorcustomerexperience
Operationaldifficulties:Asthefranchisesarelocatedindifferentcornersofthecity, managingoperationsbecomesabigchallenge
Opportunities
Coupons:UberEatscanalwayscreatepromotionalcouponsforitsuserstoincreaseits sales Thestrategycanbedonethroughpushnotificationsorviamail
Digitalization:Witheverythinggettingdigital,UberEatshasanexcellentopportunityto grow Peoplenowprefergettingfooddeliveredtotheirlocationratherthangoingout
Threats
Reputationrisk:ThereisnodoubtthatUberEatsisalwaysatachanceofabad reputation,whichcouldbeduetobaddeliverymenorplentyofpoorrestaurantreviews
Localcompetitors:Regionalfoodorderinganddeliveryservicescanbegoodcompetition forUberEatswithitslessinvestmentandbolderpromotionandmarketingcampaigns
UberEatsMarketShare
Sinceitslaunch,UberEatshasbeenoneofthemostpopularfoodappsamongusers
IthasbeenasolidcompetitiontoDoorDash,initshomemarket Thoughinthefirsttwo quartersof2020,itsawadownfallinitsrevenue,itnowstandsat$27,70million Further, after2019,itsurpasseditsmajorUScompetitorslikeGrubhub,DoorDash,andPostmate
UberEatsquarterlyrevenue2018-2022
TheimagebelowpresentsinformationabouttherevenuegeneratedbyUberEatsevery quarterfromtheyear2018to2022
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UberEatsmarketsharevs.UScompetitors
ThegraphshowcasesUberEatsvs itsUScompetitors,whereittookoverallofthemafterthe year2019andhasbeenonthetopsincethen
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UberEatsBusinessModel
UberEatsisoneofthemostusedfooddeliveryappslaunchedbyUberin2014 Itprovidesa marketplaceforusersandlocalrestaurantstoconnectwheretherestaurantownerscansell throughanapp,andcustomerscangetfooddeliveredtotheirdoorstep
AvailableoniOSandAndroid,itletstherestaurantsdisplaymenusovertheappthatusers canaccessandeasilyplacetheirorders Theprocessremovestheburdenofwaitinginlinesor evenmovingouttoenjoythefood
UberEatsincludesthreetransactions:
UberEatsanditsdeliveryguys
B2C-betweenUberEatsandcustomers
UberEatsandrestaurants
AlltherestaurantsthatpartnerwithUberEatsgetbetterreachduetotheirvirtualpresence Theycanposttheirmenuandfoodphotosandprovideofferstotheircustomers Restaurants donothavetoinvestinbuildingexpensiveappsastheycanreachawideraudiencethrough UberEats
UberEatsanddeliveryguys
Thedeliveryguysareindependentprofessionalswhoseresponsibilitiesincludepickingup ordersfromthefoodoutletsanddeliveringthemtotheircustomers Theygetinformedabout theorderthroughtheappandarepaideachtimetheydeliveranorder
UberEatsandendcustomers
Theendcustomeristhepersonwhohasorderedthefoodthroughtheapp Bycreatingan account,theygetaccesstoallthelocalrestaurantsregisteredonUberEats Oncetheorder hasbeenplaced,theuserscantrackitontheappandgetanestimatedtimefordelivery
UberEatsValueProposition
ThereasonbehindthemassivegrowthofUberEatsisitsUniqueSellingPropositionforwhich itisknownworldwide Let’sdiscusstheseUSPsonebyone
Fastfooddelivery:UberEatspromisesdeliverieswithin30minutesforallthecities Hence, thecustomersdonothavetowaitlongandcanquicklyenjoytheirfavoritefood Nolimittoorder:Don’twantthewholemeal?Noproblem UberEatsdoesnotfollowthe conceptofminimumorders Ausercanorderasnackwhichwillincludeastandarddelivery fee
Worldwidepresence:ThoughthereareseveralcompetitorsofUberEats,bothUberand UberEatshavealreadyenteredtheglobalmarket,makingitoneofthemostreliablesolutions UtilizingUber’sresourcesatitsbest:Uberalreadyhascarsanddrivers,andwithitsUber Eats,itcanmakethebestuseofit
Existingcustomerbase:Uberalreadyhasmillionsofactiveusersonitsapp Itisoneofthe mostbeneficialassetsofitsparentcompany-UberEats
State-of-the-artalgorithms:Ordermanagement,allocation,anddispatcharethethree criticalcomponentsoftheonlinemealdeliverysystemthatareneatlyorganizedbythe algorithmcreatedbyUber
HowDoesTheUberEatsAppMakeMoney?
With81millionactiveusersacross6,000cities,howdoesUberEatsmakemoney?UberEats’ businessmodelcombinesamulti-sidedplatform,aggregator,andon-demand Themodel includescustomers,deliverypartners,andrestaurantpartners
Thetop-classfooddeliveryapp-UberEatshasfourdifferentrevenuestreams,theseare:
Commissiononeveryorder
AsexplainedbyUber,itchargesa30%commissiononordersdeliveredbyUberdrivers,16% whenordersaredeliveredbyrestaurantstaff,and6%forpick-upoptions Itistheprimary sourceofincomeforUberEatsasthefoodoutlethastopaysomeamountforeveryorderthey receivethroughtheapp
Deliverycharges
UberEatsalsochargestheendusersforthefooddeliveredthroughtheirplatform The deliveryfeeisnotfixed Theamountiscalculatedconsideringmultiplefactorslikelocation, distancetobetraveled,driveravailability,andsoon
Let’stakeanexampletounderstandbetterhowtheUberEatsappearnsfromdelivery charges
Thecustomerpaidatotalof$1571whichisabreakdownof$758+$499(deliveryfee)+ $2(smallorderfee)+$114(servicefee),includingtax($063)
Therestaurantreceived$5306foritsshareofthedish,whichis70%ofthetotalpaidby thecustomer
TheUberEatsdriverearned$1120forthedelivery,whichincludeda$550feepervisitto therestaurant,$350perdropoff,and$220perkilometer
Ubertook17%ofthedriver’sfee,whichwas$19
AftersubtractingtheUberfee,thedriver’stotalearningswere$93+anyadditionaltip
ThetotalretainedbyUberwas$1571–$53–$93=$111
Promotions
WhenbrandswishtopromotethemselvesontheUberEatsplatform,theyhavetopayspecial commissionsandfeesasperthedeal Itallowsthebrandstogetbetterexposureastheycan quicklygrabtheaudience’sattention,andUberEatsreceivesawaytoearnmoney
Surgepricing
SurgepricingisanothercontributingfactortoUberEats’srevenue Asurgeorbusyfeeis calculatedbasedonthenumberofordersinagivenareaandtheavailabilityofdrivers Dependinguponthedemand,thefeecanbeaslessas113xorashighas3xthedeliveryfee
UberEatsCostStructure
Forabusinesstogrowwell,itisequallyimportanttosaveitscostwhereverpossiblesothat theoperationsarecarriedoutsmoothlywithoutmuchexpense ThestrategyofUberEatsis worthnoticing
Sharedmarketingexpenses:Duetocross-promotionontheUberApp,wheremostofits customerscomefrom,UberEatsnowincursrelativelylowermarketingandadvertisingcosts Asharednetworkofdriversandriders:ThedriversandridersofUberremovetheburden ofsettingupadeliverynetworkfromscratch
Savinglogisticscost:Awell-defineduniteconomicshelpssignificantlyreducelogistics costsbyallowingdeliveryofseveralfoodordersalongthesamerouteinasingledeliveryrun
HowToGetAnAppLikeUberEats?
TocreateanapplikeUberEats,itiscrucialtoconductresearchoncompetitors,target audiences,andindustrytrends Itincludes:
Analyzingyourcompetitors’services
Understandingyourtargetcustomers
Identifyingkeyfeaturestoincludeinyourapp
Stayinguptodatewiththelatestdevelopmentsintheonlinefoodindustry
TodiscoverthedetailedprocessofcreatinganapplikeUberEats,visittheblog
Byansweringsuchquestionsindetail,youcangainasolidunderstandingofthemarketand createacompetitiveandsuccessfulfooddeliveryapp Oncesuchinformationisgathered,you mustselectthefeaturesyouwanttoincludeinyourfooddeliveryapp
Next,youhavetocreateagooddatabaseofrestaurantsandonboardthemtoyourplatform YoucanbeginwithaMinimumViableProduct
Oncethemodelhasbeencreated,youcanoptforserviceslikeanin-houseteamandclone appdevelopmentservices Whenyoubuildanin-houseteamtodevelopappslikeUberEats,it cantakeyoubetween4-6months Moreover,youwillhavetospendoncreatingand maintainingtheteam
Ontheotherhand,withcloneappdevelopmentservices,youcancreateanapplikeUber Eatswithindays Itwillsaveyouplentyoftimeandhelpyoufromtheheadacheofstartingan appfromscratch
Thefoodtechsectorisabsolutelyunstoppableinthecomingyearsduetoitscurrent popularity Thecompetitioninthefooddeliverybusinesscanbechallengingduetothemark
thatUberEatshasalreadycreated Ithascontributedhugelytoitsparentcompanywith variousmilestonesthatithasachieved Thepopularityhasledtomultipleentrepreneurs wantingtoenterthemarketwiththeUberEatscloneapp Thereasonissimple;thecloneapp isefficientandcost-effective
IfyouarelookingforthebestUberEatscloneappdevelopmentservices,visitthepage
FrequentlyAskedQuestion:
HowmuchwillitcostmetogettheUberEatscloneapp?
Theapprox costforUberEatscloneappis$15,000-$60,000 But,inmostofthecases,It dependsonthespecificrequirementsofabusiness Thepricecanriseifyouwanttoaddor customizefeatures Toknowtheexactprice,youcanvisitourpageandgetintouchwithan expert
WhyisUberEatsunique?
UberEatshasbecomepopularbecauseonecanorderanytimeandgetfooddeliveredwithin 30minutes Itisconvenientforallusersandanaffordablewaytogetfoodtothedoorstep
WhatarethemainfeaturesofUberEats?
Someofitsmainfeaturesincludedealsandpromotions,schedulingorders,userinterface, real-timedeliverytracking,multiplepaymentoptions,andsearchfilterstohelpusersquickly findspecificfoodandrestaurants
WhatisthevaluationofUberEats?
Asof2021,UberEatsgenerated$83billioninrevenue
HowmuchdoesacustomerspendonaverageonUberEats?
AsperSliceIntelligence,theaverageannualspendperconsumeronUberEatsis$22037
THEAUTHOR
GiandeepSingh
Iamawriterandmarketingspecialistwholovestoexplorenewdigital strategiestoboostbusinessgrowthonline
