Why You Should Be Friends with Uber Eats

How to Sell Through Uber Eats Profitably

The one thing worse than doing business with Uber Eats . . . is not doing business with Uber Eats.

The most common thing my clients talk to me about is margin; and the next most common thing is food delivery, which in most markets is Uber Eats. Normally it’s with disdain at the commission they charge and a resulting reluctance to partner with them.

The fact is; Uber Eats is what they call an industry disruptor; they’ve changed the game and they’re here to stay. And while the industry bemoans them; I’m going to show you exactly why Uber Eats should become your new BFF . . . stay with me on this one!

Before we start; I just want to make it clear that I have no relationship with Uber Eats. I’m not on their payroll and don’t receive any funding from them. My views are completely impartial and founded entirely on having previously been one of their restaurant partners and having had success helping my clients partner with them.

Customers Love It

Consumers, some of whom are your regular customers, love Uber Eats! And maybe as a customer yourself, while you hate to admit it, you do too.

It gives customers access to thousands of dining options; serves you up great suggestions, and exposes you to restaurants you may have never previously considered.

At the click of a button the food is ordered and delivered to your door. Talk about convenience; and all the while a little map shows you exactly where your meal is when it’s on its way to you.

And therein lies the first major reason why you should be on Uber Eats. It exposes your business to literally thousands of customers at the exact moment they’re wanting to purchase. If you’re not being served up as an option; they’re buying from someone else . . .and may even become one of that restaurant’s new regulars.

Delivery Ain’t Cheap

As anyone who has tried to operate their own delivery service will attest; it’s not that easy.

The costs involved in having delivery drivers on-hand, vehicle costs, as well as the complexities of employing staff and having them drive your customers’ meals all over town is enough to make your head hurt. Don’t forget the cost of marketing either.

Add to this; how many delivery drivers do you need? On your razor-thin profit margin you can’t afford to have too many of them sitting around, but conversely, if you don’t have enough, you’re going to create a negative customer experience. –Remember; customers expect their meal to be delivered in about 25 minutes.

Don’t forget; you’re also going to need some sort of simple and effective ordering and payment platform. -In reality, one that’s comparable to what your customers are used to with Uber Eats.

Oh, and what’s going to happen when the delivery turns up cold or damaged. -You’ll have to take a hit on that one. Uber Eats by contrast will refund an unhappy customer at no cost to the restaurant.

It’s time to change our mindset. –Delivery, no matter how you do it, is expensive. If it’s a service you want to offer, you have to compare the commission Uber Eats charges against the true cost, and hassle, of doing it yourself; and I dare say you won’t be able to do it as cheap, and as well, to such a wide audience as Uber Eats can.

You Are Not Cannibalising Your Dine-in Market

A concern shared by many restaurant owners is that Uber Eats will cannibalise their dine-in market. They fear that dine-in customers, for which the restaurant retains its full margin, will now order through Uber Eats, costing the restaurant a large commission.

While one or two customers may do this, my experience has been that there is very little cannibalisation when implementing Uber Eats. And any cannibalisation is more than offset by new customers.

This is mainly because Uber Eats is in the business of selling convenience, whereas you are in the business of selling an experience. Sure, both of you are selling the same food; but for your business, the food is just one part of the whole dining experience that customers crave when they visit.

This is why business people trying to impress clients don’t order Uber Eats. Similarly, it’s why groups of friends will usually head out to a restaurant instead of sitting at home with Uber Eats.

Think about that busy parent at home with the kids on a cold wet Tuesday night who orders Uber Eats for dinner. They’re unlikely to be heading into your restaurant for a dine-in experience on that occasion.

Uber Feels Your Pain

It’s hard to make a dollar in hospo right? –Uber feels your pain there!

They turn over a lot of money but did you know they make a massive loss’ and are set to do so for at least the next five years? American investment firm Cowan estimates that Uber Eats are in fact loosing US$3.36 per delivery.

This might seem hard to believe but imagine their overheads. Thousands of staff around the world, delivery driver payments, an eye-watering spend on technology and marketing, plus all the boring stuff like rent, tax and insurance.

They’re not silly though, they’re playing the long game in the anticipation that they’ll finally achieve profitability through economies of scale and the possibility of driverless delivery.

You Can’t Afford The Commission?

I’ve got some great news for you here! Virtually every food business can afford to partner with Uber Eats; in fact I would argue that most can’t afford not to partner with them.

Not only that, but they can do so profitably.

The problem is, and I see this all the time, restaurant owners are thinking about it the wrong way. I understand where they’re coming from, as I used to think the same way myself. How can you afford to pay a 30% commission when you’re making around 10% or less yourself?

Think about it this way; you’re already paying for your staffing and fixed costs, so really you’re only additional cost involved in supplying an Uber Eats order is the food costs. So if your food costs are 30% and Uber Eats are charging 35%, there’s a 35% gross margin sitting there for you.

IN SUMMARY . . .

Uber Eats has unquestionably changed the hospitality landscape, and whether we like it or not they’re here to stay.

As restaurant owners you can cry foul; you can complain about the ‘outrageous’ fees and the damage they’re inflicting on this industry.

Or, you can get onboard and harness an incredibly powerful sales and marketing tool which can put your business in front of new customers when they’re looking to purchase.

You don’t have to develop the software, manage the delivery drivers, worry about delivery vehicles or refund unhappy customers.

Better still you can do all this profitably. Imagine if you were able to generate even $1,000 gross profit each week; that’s over $50,000 a year. -It’s do-able!