Amazon And Uber Charging Steep Fees To Restaurants To Use Food Delivery Platforms
Amazon and Uber are entering the food delivery game in a big way with their Prime Now and UberEats platforms. Both companies are hoping to make their services profitable by charging steep percentages to restaurants using their delivery services.
The charges to the restaurants will be a whopping 30 percent of the total food bill for those using the UberEats Platform, and 27.5 percent for those signing up with Amazon Prime Now. That's a significantly higher rate than charged by other web delivery services currently operating, like Grubhub and Seamless, which charge eateries between 12 and 24 percent to use their platforms.
UberEats, which has been testing its program in Toronto, also currently charges customers an additional $5 delivery fee, while Amazon, which is testing in Chicago, is not charging customers an additional delivery fee. Uber delivery is curbside as well, which means customers have to meet the driver outside as opposed to getting their meal delivered directly to their door.
Uber has already instituted a limited UberEats lunch delivery program in U.S. cities such as New York, Los Angeles, Austin, Atlanta, San Francisco and Seattle. Deliveries are made between the hours of 11 AM and 2 PM only, and each day features a limited "menu" of various pre-selected lunch items priced between $8 and $12 and promised for delivery in 10 minutes or less. Each day features a rotation of menu items from different restaurants, so that UberEats partner restaurants are not working with the company every day but only on those days when their item is featured on the menu. In March, when the full UberEats delivery service rolls out, the lunch program will be renamed Uber Instant.
Whether the high percentages that Amazon and Uber are charging restaurants will preclude some eateries from signing up for their services remains to be seen. Besides Grubhub and Seamless, other web food delivery services on the horizon aim to charge significantly less than any of their current rivals. One up and comer, Munch Ado, is currently raising capital to compete by offering restaurants a much bigger slice of the pie. The company plans on charging eateries just 8.5 perccent of the food bill, less than a third of the cost of using Amazon and Uber's new services.