The on-demand wave began with Uber as a taxi app and gradually transcended all across the world. Entrepreneurs were fascinated with the on-demand business model, began to implement them in various businesses worldwide. Uber has itself experimented with the on-demand model in its food delivery startup – UberEats. UberEats has gained a massive reputation when it comes to food delivery apps. But did you know how much it costs to manage an app like UberEats?
Managing expenses is a skill that successful entrepreneurs gain mastery over. One cannot strike the chord between revenue and expenditure unless one decides the income-generating streams and expenses associated with the platform. Are you an entrepreneur aiming to launch an UberEats clone but worried about your profits and losses? If so, this blog discusses the economic side of an app like UberEats comprehensively.
UberEats – A quick summary
UberEats is a third-party food delivery service aggregator that links potential customers with multiple restaurants via an online medium. The platform takes care of the delivery with its in-house delivery team. The stakeholders involved in the platform include,
- Delivery workers
- Restaurant owners
Now, customers get to choose from a variety of restaurants and place orders in a jiffy. The concerned restaurants receive the orders, process, and prepare the food for delivery. Meanwhile, the platform assigns delivery executives to pick-up the orders from the respective restaurants. The admin supervises the entire activity surrounding the app, right from order placement to dispatch. Customers enjoy their food from their desired eateries from the comfort of their homes.
Revenue Streams of UberEats
UberEats manages to generate consistent income via plentiful ways, making the food delivery platform highly remunerative. Some of the popular income-generating streams via an UberEats clone include,
- Commissions from restaurants: Restaurants can boost their sales by featuring and taking orders via the online platform. Hence, restaurants pay a commission for every order to the platform owner.
- Delivery charges: Customers needn’t spend their time and energy to reach restaurants. To avail doorstep deliveries, customers give up delivery charges during checkout.
- Subscription plans: Customers can enjoy enticing benefits like instant deliveries, lucrative offers & discounts from premium restaurants, etc., by paying subscription charges. UberEats levies these charges either monthly or annually.
- In-app adverts: Besides the typical ways, advertisements can be a great monetization strategy. By displaying third-party ad banners or food items related to a particular restaurant, the platform owner can generate advertisement charges.
Expenses involved in an App like UberEats
When looking at the platform’s expenses side, the expenditure can be categorized into three main groups. They include,
- Maintenance costs: Also known as the operational costs, these are the costs involved in maintaining the delivery chain and website operations. Supporting the delivery chain involves characteristics like the delivery executive’s salary, fuel for the vehicle, etc. In a more superficial tone, website operations involve R & D costs of new website elements and server & hosting costs in general.
- Promotional costs: Marketing is one key area where food delivery apps focus and spend extensively. Reaching out to the target audience is the only way to sustain a market where there’s neck-to-neck competition. Costs involved in TV commercials, social media advertising campaigns, email campaigns, etc., all come under promotional costs.
- Overhead costs: Overheads are unaccounted expenses that incur during the business. For example, providing refunds to unsatisfied customers, spending on legal formalities, etc., all account for overhead costs.
The Average Monthly Pay Of Delivery Drivers
Delivery executives, working full-time in UberEats, generate income for each delivery based on three different elements – pick-up fee, drop-off fee, and fee per mileage. The average monthly pay of delivery drivers working with UberEats and operating in different regions include,
- New Jersey – $42463
- New York – $50544
- Pennsylvania – $41964
- Toronto, Canada – $46238
Understand the Unit Economics of Food Delivery
To better understand the revenue and expenses of a platform like UberEats, let’s take a quick dive into it’s unit economics.
- Let’s assume the Average Order Value (AOV) from UberEats to be $40.
- Now, a customer pays $40 to avail doorstep deliveries from a restaurant.
- Considering approximately 15% commission, restaurants receive $33 while the platform receives $7.
- Let’s assume the driver cost for picking up and dropping off the food orders to be $3.
- The marketing costs involved in attracting a unit customer lies anywhere around $1.75.
- Roughly speaking, the R&D and other overhead costs amount to $2.
- Approximating with the profit/loss concept, UberEats gains $0.25 on every order.
As order values increase drastically, the overhead expenses get reduced, paving the way for enhanced profits.
The food delivery market is witnessing a tremendous increase in customer base with due credits to the COVID-19 pandemic. Managing the food delivery business becomes a piece of cake if you can crack the fundamentals without any hassle. Steer your unit economics towards the profit graph with a robust UberEats clone that enables instant, convenient, and hassle-free food delivery!