We understand that it is a difficult time for restaurateurs, with rising costs and the mounting pressure to mark-up your menu prices while also ensuring you are affordable enough for your valued customers and the larger community.
To help demystify pricing strategies on online food delivery, we want to help restaurant owners better understand how they can set themselves up to grow profitably with Uber Eats.
“Marking up prices is the only way I can increase my profit”
When we assessed 240+ restaurants on Uber Eats that submitted menus between January 2023 and October 2023, we saw that, on average, restaurants that aligned their menu prices to in-store pricing saw ~2x orders compared to those who applied some level of mark-up on their prices during that same period.
Order volume is the key contributor to the revenue a restaurant generates through Uber Eats. While you may make more money per order by increasing your prices, this does not guarantee that your total revenue will increase and you may actually be hurting customer growth and retention.
Additionally, according to a recent Ipsos survey1, consumers are increasingly becoming more cost-conscious:
- More than 9 in 10 Australians are adopting deal-seeking behaviours and reviewing their spending choices when it comes to shopping measures to manage rising prices.
- 40% of respondents indicated that they are looking for deals and coupons; and
- 38% indicated that they are comparing prices and price matching.
1 Money Matters: Prospering through Inflation by Ipsos
“I can’t be profitable because of Uber Eats and their fees”
Profit is generally defined as what is left after your costs have been deducted from your revenue. For restaurant businesses with brick and mortar premises, these costs usually include goods, services, electricity, rent, insurance and staffing.
When you add on Uber Eats, what you spend on fixed costs – like rent and general overheads – stay the same.
Since delivery doesn’t impact fixed costs, Uber Eats orders can help you to unlock additional profit for your restaurant. This is a new revenue stream that your restaurant didn’t necessarily have access to before joining Uber Eats.
While you would understand your own restaurant’s costs best, the additional revenue Uber Eats can help generate is one of the reasons why so many restaurants like yours have chosen to join and continue to operate on Uber Eats.
“Why is the Uber Eats fee so high? What am I paying for?”
Just like how there would be costs involved if you were to employ your own delivery driver, we also need to pay the delivery people that deliver using Uber Eats, on top of many other costs that go into sustainably maintaining a safe and reliable service.
The Uber Eats fees help to cover the costs of:
- Signing up and enabling reliable and consistent earnings opportunities for delivery partners;
- Maintaining safety on our platform (including insurance costs);
- Marketing, advertising and promotions to get more customers on Uber Eats, subsequently increasing the number of people that may find and order from your restaurant;
- Driving awareness and demand for your restaurant through an Uber Eats listing;
- A dedicated customer service team, as well as much of the costs of refunds and appeasements; and
- Technology services including credit card transaction costs, payment processing, order management, building and maintaining multiple applications, and dispatching technology.
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