Third-party delivery services emerged as a much-needed solution for restaurant operators. These services have made it easier for brands to offer delivery to consumers that are starting to expect this convenience.
But as more operators use these services, the more the fees increase and these fees cut into profits. Uber Eats, for example, takes a 30 percent cut, plus the platform also collects a $4.99+ delivery fee from the customer.
But operators aren't the only ones investing in these delivery apps. Now that Uber Eats has established a loyal customer base, the company is rolling out a new fee structure.
Instead of just a booking fee, this fee will be divided into two fees a service fee and delivery fee. The delivery fee will vary based on the restaurant and the service fee will be 15 percent of the order. On orders of $10 or less, there will now be a small order fee.
"Since Uber Eats doesn’t keep a comparison of its old booking fees up on the app, customers are understandably confused about whether prices have gone up or not," writes "The Verge."
However, it's definitely a move by Uber to increase profits.
“We’ve seen a number of changes to the fee structure on Uber Eats over the past year which tells me they’re experimenting and trying to figure out the best way to get profitable on this service," said Harry Campbell, a former Uber driver and author of "The Rideshare Guy" blog.
Uber Eats is expected to IPO in April, so it's not surprising that the company is looking to maximize profits. The food delivery service is the largest growing sector in Uber's portfolio.
Want to learn more about these new fees and the impact they will have on the restaurant industry? Host Paul Barron is breaking them down in the latest episode of The Barron Report above.