Food delivery has become an everyday occurrence at present, and Uber Eats is one of the most popular platforms in this space, which operates on an international scale.
With Uber Eats, customers can browse through a range of restaurants, place orders, and have food delivered to their doorsteps.
The process may feel simple to the user, but there’s a lot more happening behind the scenes—from delivery partner assignments to partnerships with restaurants and transactions between them.
In this blog, we’ll dive into the workflow, business and revenue model of Uber Eats.
How Uber Eats Works
Uber Eats operates through a three-way system that connects customers, restaurants, and delivery partners. Here’s how it works:
- Order Placement: A customer selects a restaurant and places an order through the app.
- Restaurant Notification: The restaurant is immediately notified to begin preparing the order.
- Delivery Partner Assignment: The app automatically assigns a delivery partner to pick up the food from the restaurant and deliver it to the customer’s chosen location.
The customer pays for the food, a delivery fee, and a service charge. Uber Eats earns a commission from the restaurant for each order.
A portion of the delivery fee is paid to the delivery partner, while Uber Eats keeps a commission based on factors like distance and number of deliveries.
Uber Eats Business Model Canvas
We’ve covered the basic workflow, let’s dive into the business model canvas to better understand how the platform operates.
Key Partners
Uber Eats relies on a network of strategic partners to operate efficiently and deliver its core value propositions:
- Local Restaurants: Partnering with local restaurants allows Uber Eats to offer customers a broader selection of cuisines.
- Delivery Partners: Independent contractors handle the deliveries. They are crucial because, without them, Uber Eats could only offer takeout, which would limit its operations significantly.
- Technology and Payment Providers: Uber Eats relies on payment processors to handle payments securely between customers, restaurants, and drivers. These partners ensure that transactions are quick and safe.
- Investors: The investors provide the funds needed to grow the business, improve its technology, and cover day-to-day operations. This financial support helps Uber Eats expand and stay competitive.
Key Resources
Key resources are essential assets that enable a company to operate effectively and deliver value to its customers.
For Uber Eats, the two key resources are:
- Technology Systems
- Partners
The Uber Eats app and website connects the eaters, restaurants, and delivery partners and enable smooth order processing and secure payments and payouts.
The key partners of Uber Eats (restaurants, delivery partners, and others) are the other important resource because they make the whole system work efficiently and help them serve its customers base.
Key Activities
There are three key activities performed by the Uber Eats:
- Platform management
- Building partnerships
- Customer acquisition & retention
Uber Eats' primary focus is on managing and maintaining its technological platform, which is an essential resource for the company and is updated frequently to meet customer needs.
Maintaining strong relationships with delivery and restaurant partners is another crucial task for Uber Eats.
The company also prioritizes acquiring new users and retaining existing ones. To support this, Uber Eats invests in providing good customer support and employs various marketing strategies.
Customer Segments
It is quite obvious that the customer segment of Uber Eats is made up of these three entities:
1. Eaters
These are individuals who may not want to cook or go out to eat, whether they’re craving a specific cuisine or simply looking for convenience.
They benefit from the ease of ordering food through the app.
2. Local Restaurants
These neighbourhood restaurants aim to expand their customer base by offering delivery services.
They benefit from the orders generated through the platform without needing to hire their own delivery staff.
3. Delivery Providers
These are self-employed individuals who seek to enhance their income by making deliveries part-time or full-time.
They enjoy the flexibility of working on their own terms and are compensated for each delivery completed.
Value Proposition
For each of its customer segments, the platform provides a distinct value proposition, which is as follows:
1. Eaters
The main value proposition that users get is convenience. A great deal of restaurants are accessible to the eaters who registers with Uber Eats.
Through the app, the eaters can track the status and location of their food. They can also choose from different payment options.
2. Partner Restaurants
Restaurants gain several benefits by partnering with Uber Eats: Here are a few:
- They reach more customers through the platform.
- Simplify the delivery process and reduce the associated costs
- Access to data on customer preferences, order patterns, and performance metrics helps them make informed decisions.
- Benefit from Uber Eats’ promotional campaigns and featured placements.
- Newer businesses quickly establish a customer base.
3. Delivery Partners
Uber Eats provides delivery partners the flexibility to work in their own schedules.
In certain locations, the platform also offers delivery partners the option to choose their preferred mode of transportation for deliveries. It can be a car, motorcycle, or bicycle.
Channels
The Uber Eats website, together with its iOS and Android apps, are regarded as the platform's most effective channels. They enable customers to connect and benefit from the service.
Word of Mouth has helped the platform toattract new users without any direct advertising costs.
Monetary incentives like discounts and credits for future orders also encourage their existing customers to make repeat orders and increase platform engagement.
Revenue Streams
The revenue that Uber Eats generates comes from a variety of sources. The following are a few of them:
1. Commission on Orders
Commissions from restaurants is the primary source of revenue for Uber Eats.
This fee usually ranges from 15% to 30% of the order total, and it can vary depending on restaurants agreements.
2. Delivery and Service Fee
Users contribute to Uber Eats' revenue by paying a service fee with every order they place.
Uber Eats also takes a percentage of the delivery fee that users pay for the delivery service, while the remaining amount is passed on to the delivery partners.
3. Advertising and Promotions
Uber Eats offers advertising and promotional services as an opportunity to highlight their restaurants within the platform.
Restaurants increase their visibility on the site by paying for these extra features. This increases Uber Eats' revenue as well.
4. Subscription Services
Uber Eats provides subscription services similar to Eats Pass in certain markets.
Both users and restaurants can pay a monthly subscription fee in exchange for perks like free shipping or targeted promotions for a lower service fee.
This revenue from subscriptions is an extra source of income for the platform.
Cost Structure
The primary focus of Uber Eats' cost structure is platform maintenance, which is crucial for generating revenue.
Moreover, it includes expenses related to marketing and customer acquisition.
Additionally, the cost structure covers:
- Payments to full-time employees
- Payments to independent delivery partners
- Customer support
- Research and development
- Other expenses (such as credit card fees and legal costs)
Summing up,
Now that we have reached the end of the blog, we hope you have a good idea of how the Uber Eats operates, but this isnt all there is to know about them.
The platform always tries to be innovative through technology and partnerships and continues to enhance the services for its customers. A recent example is its partnership with Cartken to introduce AI-powered food delivery trolleys.
With such exciting innovations, we can’t help but wonder what Uber Eats will come up with next!