Some restaurants will soon have to pay more for delivery orders on Uber Eats.
On Wednesday, the third-party delivery provider will raise rates in two of its three pricing tiers by 5%. The change will apply to “certain small and mid-size restaurants based on their existing pricing plans,” the company said.
The per-order delivery fee for restaurants in the Lite tier will rise to 20%, from 15% previously. The Plus tier fee will remain at 25%, but restaurants will be charged an additional 5% for orders from Uber One members. The price of the Premium tier will stay the same at 30%.
For restaurants that negotiated a custom fee, that will go up 3%, not to exceed 30%. Also, the fee for pickup orders is rising to 7%, from 6%, across the board.
As before, higher tiers come with more benefits for restaurants. In Lite, restaurants get the bare minimum of exposure on the Uber Eats app: They will show up only if a customer searches their name. Plus and Premium come with higher visibility, access to Uber One members and other perks.
Fees help Uber Eats cover the costs of operating its marketplace, including courier wages, marketing and discounts, payment processing and insurance. The company said this is the first time it has changed its rates in about 10 years. It introduced tiered pricing in 2021.
The new rates “help ensure we can continue supporting restaurants, couriers, and customers” as costs rise, the company said.
It’s also raising the bar for restaurants who want access to those valuable Uber One members, who make up 60% to 70% of Uber Eats bookings, depending on the market. Members pay $9.99 a month and get free delivery on qualified orders and 10% off eligible Uber rides.
For restaurants in the Plus tier, the additional 5% toll on Uber One orders means they will effectively be paying a Premium rate on many orders.
“To help continue to support members and keep them even more engaged with Uber Eats—ordering more, and more often, from merchants—the marketplace fee for orders from these highly-valued customers is increasing,” the company said.
Uber Eats is coming off another year of strong growth across both the top and bottom lines. In the fourth quarter, delivery sales on its app rose 26% year over year, to $25.4 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA), increased 40%, to just over $1 billion.
Its take rate, or the percentage it receives from each order in fees, increased slightly, from 18.7% to 19.2%.
Restaurants have complained for years about the high cost of third-party delivery, so a rate increase will come as unwelcome news to many.
Stella Dennig, co-owner of Daytrip Counter in Oakland, said she wasn’t aware of the impending price change until Friday. Her restaurant does enough delivery that it was able to negotiate a custom rate with Uber Eats and is in the middle of working out a new contract.
“Most independent restaurants aren't able to secure custom rates. But in either position, a 3% increase is a killer,” she said in an email. At Daytrip Counter, that would amount to about $30,000 annually and could represent 100% of profits depending on the year.
“This truly feels like extortion,” Dennig said. “They know businesses need delivery to survive, and raising rates like this, on short notice and so significantly, is brutal. Most of us can't do anything about it.”
“We are having a very hard time seeing any benefit to restaurants,” added Jodi Bernhard, CEO of Figure 8, a company that advises restaurants on their off-premise businesses. “[Uber’s] claim is that it’s their investment in their own platform, which provides a benefit to restaurants. … In our opinion, that’s the cost of doing business for them.”
Part of Bernhard’s job is to help restaurants negotiate better rates from their third-party delivery providers. Ahead of the fee hike, she said Uber Eats has been playing hardball in those discussions as well.
“Things that especially a larger brand could use as leverage to lower commission rates in the past are no longer on the table,” she said, such as agreeing to spend more on marketing in exchange for a lower per-order fee.
She’s advising restaurants to use this as an opportunity to reassess how they’re spending their digital marketing dollars.
Uber’s rate increase also has implications for the competitive third-party delivery business. Its rivals DoorDash and Grubhub have thus far left their delivery fees for restaurants unchanged. All three apps offer a similar tiered pricing structure with fees ranging from 15% to 30%.
DoorDash had not responded to a question about whether it plans to raise its commission rates. Grubhub declined to comment.
CORRECTION: A previous version of this story said fees in Uber Eats' Plus tier rose 5%. That increase applied only to orders from Uber One members. The story has been updated.
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