Uber Eats and Postmates Announce New Tiered-Pricing Structure

Restaurant operators who partner with Uber Eats or Postmates (the former acquired the latter in an all-stock deal late last year) can now choose from one of three commission structures, ranging from 15% to 30%, with higher-priced tiers offering exclusive benefits designed to promote visibility on the apps.

The new pricing model, which was announced this week, will replace the previous single "marketplace fee" that Uber Eats used to charge all partner restaurants. 

"In late 2020 ... we began testing new ways to offer even more choice and control over the fees they pay and the services they use when working with us,” said Sarfraz Maredia, VP of U.S. & Canada for Uber Delivery, in a statement. “Designed with input from thousands of restaurants across the U.S., we’re excited to make these new pricing options available nationally." 

These kinds of pricing structures could be a response to the backlash third-party delivery companies have seen over high commission fees, which typically average at 30%, especially over the past year as delivery became a substantial lifeline for restaurants struggling through the pandemic. 

That backlash isn’t just talk; several cities, including New York and San Francisco, have instated permanent 15% commission caps, while many other cities have enacted temporary fee caps during the pandemic. Uber Eats, along with GrubHub and DoorDash, is suing New York City in an attempt to repeal the cap in that city.

Uber Eats is the last major third-party delivery aggregator to roll out this tiered pricing option for restaurants — DoorDash launched its three-tiered commission fee structure in April, while Grubhub also offers tiered commission plans.

Notably, Uber Eats has also adjusted its merchant contracts to allow operators to list different menu prices on the Uber Eats app and in the restaurant. This could be in response to the recently proposed AB 286 bill in California that aims to require food delivery companies to provide greater transparency into fees and commissions, as well as let operators set their own menu prices on the platforms.

On Monday, Nation’s Restaurant News outlined the new tiered commission pricing model:

• Lite: 15% commission fees. Restaurants will appear in direct search results but pricing model does not come with ad spend or benefits from Uber Eats pass members. Restaurant will not appear on Uber’s homepage. Uber says this option is best for merchants looking to save the most on fees. The rest of the fees will be passed on to the customer.
• Plus: 25% commission fees. Restaurants will appear in direct search results, will show up on Uber’s homepage and Uber Eats pass members will receive benefits from ordering from them. Extra ad spend not included. The rest of the fees will be passed on to the customer. Uber says this option is best suited for operators that want to balance cost optimization with marketing options.
• Premium: 30% commission fees. Restaurants will appear in direct search results, show up on Uber’s homepage and Uber Eats pass members will receive benefits from ordering from them. Uber will match extra ad spend up to $100. Minimal delivery fee passed on to customers. Uber says this option is best suited for restaurants in digital growth mode.

Now that all of the major third-party delivery providers offer tiered pricing, the increased flexibility could help owners scale their delivery operations depending on their budget and reliance on the off-premise revenue stream. 

However, while the new tiered model offers more transparency into the brands’ commission structure, it is unlikely to quell complaints that Uber Eats and Postmates pressure restaurant operators into unfair commission structures by controlling how easily customers can find their restaurants on the apps.

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