Demand for third-party food delivery services is booming, and delivery sales are estimated to rise by 20% over the next ten years.
In this critical time in the foodservice industry, local restaurants must consider the possibility of becoming an Uber Eats merchant and how that could impact their future business.
You can’t ignore digital ordering statistics that say 31% of US customers use third-party food service delivery at least twice weekly.
Customers are used to having their needs met in real time from their own phones.
With Uber technologies, riders and eaters can use their mobile phones to find a driver to transport them anywhere quickly or a delivery person to drop off restaurant dishes at their front door.
The Uber Eats app is appealing to customers, but what does it mean for merchants?
Read on to discover how Uber Eats works for independent restaurants, the pros and cons, and whether it’s worth it to sign up.
Table Of Contents
- Overview: How Does Uber Eats Work for Restaurants?
- Why do Restaurants use Uber Eats?
- Notable Features of the Uber Eats Merchant Program
- Pros and Cons of Uber Eats for Restaurants
- Uber Eats Merchant Fees
- Is Uber Eats Worth it for Restaurants?
- How to Sign up for Uber Eats as a Restaurant
- Why do Restaurants Hate Uber Eats?
- Wrapping Up
Overview: How Does Uber Eats Work for Restaurants?
The way Uber Eats works is simple: customers can find independent restaurants through the Uber Eats website or the iOS or Android apps with a simple internet connection.
People can use the “Search” feature to find a specific restaurant or type of cuisine.
They can also filter and sort results by price, fess, or dietary restrictions to meet their unique needs.
In addition, small business owners can reach new customers in real-time and offer special promotions.
Your restaurant is responsible for accepting and preparing the customer’s order.
Then, an Uber delivery driver will pick up the order on behalf of merchants and complete the delivery.
Uber Eats also offers options for delivery using your staff while still utilizing their app to process payment.
When you sign up for Uber Eats, you’ll choose a pricing plan: Lite, Plus, or Premium.
Uber Eats charges a marketplace fee ranging from 6% to 30% for each order placed through their platform.
Uber Eats can be used for traditional delivery restaurants like pizza places, restaurants that have never offered delivery before, and even ghost kitchen restaurants
Did you Know?
Food preparation facilities set up for food delivery or carryout only are called Ghost Kitchens. These types of kitchens reduce costs for restaurant owners in the form of reduced overhead expenses.
Why do Restaurants use Uber Eats?
Restaurants partner with Uber Eats primarily to expand their business and reach more customers.
As a partner, restaurants can take advantage of Uber Eats name recognition and dedicated marketing campaigns.
For example, with location and cuisine searches, your restaurant’s name can pop up for customers who have never heard of you before.
In the 2021 State of the Restaurant Industry report, the National Restaurant Association found that adult consumers are 77% more likely to stay home watching TV and videos than they were before the coronavirus pandemic.
Of course, eating out in restaurants has been a popular pastime for years, but now consumers are more likely to opt for “Netflix and chill” versus a night on the town than they were a few years ago.
People still enjoy local restaurants but have discovered the additional benefits of food delivery.
Consumers have fully embraced the convenience of eating in: less time in transit, no wait for seating, and no need to dress up.
According to Uber Eats, three primary reasons restaurants should consider becoming a partner include:
- More orders
- Delivering food quickly
- Partnering for success
Notable Features of the Uber Eats Merchant Program
People are intimately connected to their mobile devices, so having an app is a huge win for any business.
However, developing and troubleshooting your own app comes with a high financial cost and requires technical expertise.
Key features of the Uber Eats app beneficial for the customer experience include:
- Scheduling Uber Eats delivery ASAP or preordering and “Schedule for later”
- Using search to filter by cuisine, price, etc.
- Placing a group order (share the link and have the order delivered to the same location)
- Push notifications, reminding customers of deals and options
- Additional benefits include the proven track record of Uber technologies.
Uber’s commitment to merchants is to remove the burden of technical maintenance and allow independent US restaurants to rely on the Uber support team.
Uber Eats is continually focused on marketing and brainstorming new services.
Recently, Uber Eats announced a direct Instagram integration and Merchant stories feature, allowing restaurants to showcase content for a local campaign in their Instagram feeds.
Another announcement in February 2021 from Uber technologies was the Eat Local campaign.
Uber’s local support effort includes reduced delivery fees, a micro-grant program, waived and reduced fees for restaurants, and matching consumer contributions made using the Restaurant Contribution feature.
New restaurants may be featured on the front page under the “New Restaurants” feature for two weeks after using Uber’s platform.
After that, merchants can choose to pay for sponsored listings using the Uber Ads Manager to ensure their restaurant is showing up in customer searches.
They also provide a suite of marketing tools for owner-operators.
Pros and Cons of Uber Eats for Restaurants
Pros of Uber Eats Merchant Program
With delivery available in over 6,000 cities, it’s easy to see how Uber Eats can expand your online ordering service and reach new customers.
While there is some controversy around using third-party delivery services, there are many benefits to Uber Eats, which include the ability to:
- Increase visibility
- Market your business to interested customers
- Boost sales
- Stay competitive with other local restaurants
- Offset reduced dine-in profits resulting from the recent pandemic
- Forgo the expense and logistics of maintaining a personal delivery fleet
- Utilize your own delivery drivers, if you prefer
- Integrate with most point-of-sale (POS) systems
- Provide customers with a powerful app with full tech support
Cons of Uber Eats Merchant Program
The benefits of Uber Eats sound tremendous, but there is a glaring drawback: high fees that can potentially wipe out a restaurant’s profit margin.
Here are a few drawbacks to consider before diving into the platform:
- Less control over the customer’s final product (cold food, spilled, late, etc.)
- Potential poor interactions with delivery drivers that could project onto your restaurant
- Loss of profit margin due to delivery fees, which can be as high as 30% per order
- Lack of access to customer information for future marketing because it’s stored with the Uber Eats platform
Uber Eats Merchant Fees
What Fees Do Uber Eats Merchants Pay?
Merchant fees vary depending on the method of delivery.
Each order has a 30% fee on the pre-tax order value with an Uber Eats delivery person.
If your restaurant’s staff delivers, you’ll pay a 15% fee on the pre-tax value.
Finally, if the customer chooses to pick up their order, there’s a 6% marketplace fee.
Why Are Uber Eats Merchant Fees So High?
Uber Eats covers a few costs with their partnership.
These include covering credit card transaction fees, promotions to reach new users, maintaining delivery employee fleet with all the Human Resources requirements.
However, the issue of high fees has been a concern for both merchants and consumers.
In addition, rising demand for food delivery has undoubtedly played a role in driving up prices, and some cities have capped delivery service commissions.
Is Uber Eats Worth it for Restaurants?
From viral social media posts to news articles, there’s been a lot of chatter about whether Uber Eats is a good option for restaurants in the long run.
Here is the primary question to determine whether becoming an Uber Eats merchant is worth it for you: Are your profit margins greater than 30%?
With service using Uber Eats drivers, you’ll be paying out 30%.
Therefore, independent restaurant owners must carefully calculate their numbers.
Consider not only the increased volume of sales but whether you’re actually making a profit.
Even if your profit margin is over 30% (or 15% if using your own drivers), is it enough to be worth the commitment?
Don’t forget about the importance of the entire restaurant experience.
Would customers choose to come to your restaurant in person if an on-demand food delivery app wasn’t available?
The benefits to eating in-house include potential upsell from your wait staff, alcohol and beverage sales, and meal add-ons like appetizers and desserts.
How to Sign up for Uber Eats as a Restaurant
If you’ve decided to take the plunge and sign up to be an Uber Eats merchant, there are just three basic steps to get started at ubereats.com.
To sign up as an Uber Eats restaurant, complete the following steps.
- Register and fill out the information about your restaurant.
- Upload your restaurant menu.
- Activate the Restaurant Dashboard and go live to start accepting orders.
Depending on your location and the number of sites you have, your Uber Eats partner registration can be processed in as little as a few days.
When you register, you’ll also select your payment plan and decide whether to use your own delivery staff or Uber Eats drivers.
As a side note, you also need to ensure you have your internal processes in place before you go live, or the first few days could be a disaster for your staff and the Uber Eats delivery drivers.
Be sure to update your SOPs (Standard Operating Procedures), coordinate logistics for staging orders, and communicate clearly with your staff on the upcoming changes.
Why do Restaurants Hate Uber Eats?
Food delivery services put many restaurant owners in a challenging position.
Many merchants are fed up with the high charges imposed by third-party food delivery services but feel stuck.
In addition, because food delivery services have multiplied over the past few years, many merchants feel compelled to utilize them or risk losing customers.
Brand affiliation has significant effects on business, but this can go both ways.
While you benefit from positive brand affinity and customer satisfaction associated with Uber, it just takes one scandal or sensational news piece to sway public opinion and potentially decrease your sales and personal credibility.
Some owner-operators have opted to get creative.
Merchants can consider setting up their own independent restaurant websites providing delivery capabilities and pickup orders.
Local delivery services that are lesser-known and location-specific are also popping up throughout the country.
Advertising dine-in specials, seasonal promotions, and perks could also encourage customers to return to eating on site.
Uber Eats has many benefits for merchants and customers.
A powerful and easy-to-use app and online platform and an established fleet of drivers may be the key for restaurants to expand their customer base and increase profits.
If you’re interested in other platforms, check out competitors: