Having food delivered to you anytime, anywhere is oh-so-convenient, but it can be costly as delivery services tack on vague fees.
Though Uber Eats established itself as a convenient alternative to picking up your own takeout, the service fees can make you think twice about ordering.
There are different types of Uber Eats fees, but the most common is the service fee.
What in the world do they mean by service fee, and why is it necessary?
Understanding the Uber Eats service fee may make the added cost a little more palatable, and that’s where we can help.
Read on to learn everything you need to know about the Uber Eats Service Fee before you place another order!
What is the Uber Eats Service Fee?
The Uber Eats service fee is a consumer fee that appears on the price breakdown at checkout in the app.
This new structure replaces the former booking fee attached to Uber Eats orders.
Uber notes that the service fee only applies to orders delivered by Uber Eats drivers from local restaurants.
According to the company, the Uber service fee goes toward costs like credit card fees and support.
How Many Different Fee Types Does Uber Eats Use?
When you place an order with Uber Eats, you may see several different fee types.
Let’s clear up the confusion a little by breaking down the other types and what to expect with each one.
Delivery fees cover the cost of delivering your food and depend on several factors, including the restaurant or merchant, your location, and driver availability.
A small order fee of two dollars applies to purchases that fall below a certain threshold.
The threshold is typically ten dollars, but that may vary by location.
Delivery adjustment fees only apply if you update the order after placing it.
For example, changing the delivery address.
In California, you can expect to pay an additional Driver Benefit fee that funds benefits for delivery drivers.
This fund intends to cover healthcare, additional insurance coverage, minimum earnings, and more.
How Much does an Uber Eats Service Fee Cost?
Part of the confusion surrounding the service fee involves the variability.
It seems strange to pay one rate for lunch on Tuesday and a different service fee for dinner on Thursday.
How does that work?
Unlike other consumer fees, the service fee depends on your order’s subtotal; it amounts to a percentage of your bill.
However, Uber notes that service fees have minimums and maximums depending on the location.
Note that if the restaurant you order from uses its own delivery drivers or couriers, you should not pay a service fee.
Make sure that you double-check the fee summary in “Your Cart” before confirming the order.
Where do Uber Eats Service Fees Go?
It’s not too much to ask where your money goes, is it?
Unfortunately, some users feel that Uber has been less than transparent about how the company uses those service fees.
In one place, Uber notes that the combined fees offset delivery costs to keep couriers on the road.
Elsewhere, the company indicates that the service helps maintain the platform.
Other than Uber Eats tips, it doesn’t seem like the drivers see the service fees or any other fees.
The exception would be the California Drivers Benefit fee as noted above.
Why Does Uber Eats Charge a Service Fee?
Uber Eats offers a convenient way to score a delicious meal from your favorite restaurant.
Naturally, the company can’t offer the service for free.
Enter the fee structure intended to offset the cost of doing business.
Why Do Service Fees Exist?
No business can survive without revenue, so Uber Eats enacted fees to provide delivery services.
Though it’s a third-party, Uber Eats provides a valuable service for many by eliminating the need to go to restaurants yourself.
What Uber Eats Fees Cover
Consider the potential costs related to picking up, handling, and delivering food.
Aside from the drivers, there is upkeep on the platform, support staff, and standard business needs.
Don’t forget about marketing, like those Uber promotions that offer $0 delivery.
While Uber Eats offers a service that helps many people like you, it’s still a business that needs to make money.
Surprisingly, the Uber Eats service actually costs Uber millions.
Why would Uber take such a loss?
Meal delivery may not be a moneymaker, but it builds the brand name and attracts millions of new customers in Uber’s bid to be an international driving force.
What Would Happen If Uber Eats Didn’t Charge Fees?
It’s unlikely that Uber could sustain the Uber Eats services without fees.
Given that they enacted fees long after other couriers and food delivery services, it’s a testament to the underlying necessity for some added revenue to offset operating costs.
How to Avoid Uber Eats Service Fees
While unpleasant for consumers, it seems that service fees are here to stay.
That doesn’t mean you don’t have options for saving money on Uber Eats.
Skip the small order fee by adding an extra item or two to your order.
For example, a side dish, dipping sauce, or drink could bump your subtotal and eliminate that extra fee.
You could also invest in the Uber Eats Pass subscription service.
If you use Uber Eats often enough, it may be worth the $9.99 per month to get unlimited free delivery plus 5% off.
It doesn’t eliminate the service fee, but you pay no delivery fee, and you can combine the Eats Pass with other promotions.
Changes to the Service Fee Over Time
We already mentioned that Uber Eats didn’t always have a complicated fee system, but that’s not the whole story.
In truth, the Uber Eats fee structure remains a fluid system with a history of frequent changes and fluctuations.
The Evolution of Uber Eats Fees
Uber initially launched food delivery services in Los Angeles under the name UberFresh with limited restaurant options and only lunch service.
This approach translated to cheap pricing and delivery fees, making it one of the cheapest delivery apps on the market.
But.. the system didn’t work.
The Uber Eats team evolved over the next few years and attempted a flat-fee approach to delivery transactions.
Of course, the fee only covered a set delivery radius to limit complaints related to untimely deliveries.
When Uber Eats first enters a new market, users may see temporary local fees start low to boost new customers.
You may even see several promotions at the beginning that eventually dry up.
The Implications of the COVID-19 Pandemic
The COVID-19 pandemic crippled the restaurant industry as it effectively ended indoor dining.
Many restaurants couldn’t stay afloat, and the rest relied on takeout to survive, and delivery services like Uber Eats.
Demand for food delivery services skyrocketed and allowed the food delivery services to charge as they saw fit.
While some argument could be made that drivers were at greater risk than ever before, it does not appear that they saw the benefits of new fee structures.
Like many food delivery apps, Uber Eats takes a cut from restaurants as a commission.
Not only did Uber Eats charge service and delivery fees to customers, but the service also took cuts from the restaurants that were struggling to manage rising food prices and stay afloat.
With no other options, customers and restaurants essentially had no choice but to comply with the high service fees.
The Pushback Against Commission and Customer Fees
It’s not to say that these third-party delivery services didn’t receive pushback.
California’s Proposition 22 served as a massive win for drivers across the state and led to the California Driver Benefit fee.
More recently, a handful of New York City diners filed a lawsuit against Grubhub and DoorDash over the high commission fees.
Customers, restaurants, and local governments aim to initiate pricing regulations, caps for customer fees, and capped fees for restaurants.
Frequently Asked Questions
Do you still have burning questions about the Uber Eats service fees?
We thought you might, so we added in a few of the ones we hear most often.
Why is the Uber Eats Service Fee so high?
The Uber Eats fees may not be the highest when compared to DoorDash cost, Postmates, and GrubHub.
Depending on where you live, where you order from, and how much you purchase, the fees vary.
While you may balk at a delivery fee of $3.99 and a service fee of $2.39, it saves you a trip to the restaurant.
It’s also a fraction of the high commissions the restaurant pays to access a reliable delivery marketplace.
Is an Uber Eats Service Fee a tip?
No. The Uber Eats service fee and delivery charges don’t include the tip.
Tipping is optional, but it’s the only part of the fees that your delivery driver sees.
Final Thoughts on the Uber Eats Service Fee
The Uber Eats fees you pay for this high-quality service may seem like an extravagance to many.
That said, you have a choice between having your lunch conveniently delivered to your office versus hopping in the car and driving to pick it up.
When you’re in a hurry, the small additional fee may be worth the time it saves you.
On the other hand, a walk to the Subway down the street costs nothing and gets you fresh air.
How much is your time worth?