In a world of apps that do everything, restaurants have to choose carefully when deciding which third-party services to offer customers. One buzzworthy restaurant service, Uber Eats, has gotten plenty of media attention over the past year for its popularity among customers — and also for its less-than-ideal treatment of the restaurants it partners with.
Several years ago, the widely known rideshare app banked on name recognition to jump into the growing third-party food delivery industry. Competing with names like Postmates, Doordash and Grubhub, Uber Eats makes money by using its drivers to deliver food from restaurants that don’t traditionally offer a delivery option.
For restaurants looking to expand services and reach new markets, signing on with Uber Eats or one of its competitors could be a smart option. However, the app comes with some drawbacks.
Keep reading to get a feel for what you’d be getting into by signing on with Uber Eats.
Uber Eats, like all of its competitors, offers restaurants the chance to find new customers, increase brand awareness and offer convenient delivery, all without having to do more marketing or hire a delivery staff. On its website, Uber Eats touts that has “seen restaurants increase sales, lower marketing costs, and hire new employees to capitalize on Uber Eats demand.”
It’s no secret that Uber is a big name in the digital game. When Uber does anything, people pay attention, which is part of the reason why Uber Eats consistently has more monthly active users than every other food delivery service. And that trend is on track to solidly continue. If you want to get your name on a delivery site that people immediately recognize, Uber Eats is the way to go.
Because of its size and access to drivers, Uber Eats also has some of the lower delivery times compared to its competitors, which is something to think about if you are worried about food quality. Faster service means warmer food and happier customers — especially in a world when people realistically don’t want to wait for more than 15 minutes for their food to arrive after it leaves your store.
On a basic level, using any third-party food delivery service forces you to give up some control over your brand. Whatever experience a customer has with Uber Eats, it also has with your restaurant. If food shows up damaged or cold because of a driver oversight, the customer may see a reason to blame you. If you want Uber Eats or any service to deliver food on your behalf, you have to be willing to roll with the punches.
Another major downside is what Uber charges you just to participate. If you want to sign on board, you have to be willing to cough up 30% of the food’s listed price before Uber will take it anywhere. We know that profit margins for restaurants can vary widely. Many fast food restaurants, such as McDonald’s, have profit margins of only about 22% (on average). Fine dining restaurants often come in even lower, around 6.1%. If you aren’t careful, you could actually end up taking a big hit by signing onto Uber Eats.
It’s worth noting that Uber does not allow restaurants to raise prices to make up for some of what Uber wants, so if you’re signing on you should be prepared to eat all of those costs. Other competitors, like Doordash and Postmates, have slightly lower costs, ranging from 12-24% of the total order.
Each customer who uses Uber Eats also pays a delivery fee and is expected to tip his or her driver, so the total amount going to the app and its drivers is high, compared to what you are likely making off the order.
How to Decide
If you’re thinking about signing up for Uber Eats, check your profit margins and make sure you’re good to go if you end up taking a hit on a couple of orders. Brand awareness and increased sales may very well be enough to make up for it. No matter what, if your main goal is marketing, Uber Eats is sure to get your name out there.
Graves Foods is one of the leading food distributors in the midwest, serving Missouri, Oklahoma, Kansas, Arkansas, Iowa, and Illinois. Contact us to start planning new menus or to order food for your restaurant’s kitchen today.