As of yesterday, Uber Eats’ standard $4.99 delivery fee is no more. In its place is a pricing tool that calculates an order’s delivery fee based on the distance between customer and restaurant.
CNET reports that Uber Eats has been analyzing what deters some people from ordering via the third-party delivery service. “What became obvious was that we needed to change something about our core fee feature,” Uber Eats product manager Ben Dreier told CNET.
And a big part of that fee is having to pay $4.99 regardless of whether you ordered a cup of soup or eight burritos. Plus, it’s hard to justify paying nearly $5 for food delivery if it takes less than 10 minutes to walk to the restaurant. But then again, I’m a fairly active person who works from home, so I don’t have any excuses. Others have legitimate reasons to order nearby delivery. A close friend of mine used to tend bar in Brooklyn and almost every night would get tacos delivered from across the street because he couldn’t leave the bar premises for dinner. Working parents, or parents with multiple kids, are other use cases that come to mind.
Perhaps most importantly, there are individuals for whom food delivery isn’t a luxury or even a “nice to have.” For those with disabilities affecting their mobility, or those with chronic illness, walking 5 to 10 minutes to pick up dinner is a physically taxing event at best, and more often than not impossible.
It’s estimated that ordering close by will range from $2 to $3; longer distances will fall in the $6 to $8 range. The changes will also allow Uber Eats customers to set a “max booking fee,” which lets users set the limit on what they’d spend on delivery. The app then filters out any restaurant whose delivery fee wouldn’t fall within that range.
This new system is now in place all U.S. cities where Uber Eats operates.
Grubhub already offers a sliding scale delivery fee, only they leave that number up to the restaurants themselves. Restaurants also decide whether to set a minimum amount a customer must spend in order to have the food delivered. By contrast, Uber Eats has always allowed customers to order as much or as little as they like, which won’t change with the new pricing system.
While this fee structure will most likely incentivize customers to order more delivery from places close to home, the higher fees for longer distances could also be a business boost for Uber Eats, particularly in rural and suburban areas, where there are at least a few miles between houses and restaurants. Uber’s already stated it plans to IPO next year, and this potentially large new revenue stream is likely part of that plan. That is, unless people balk at the high cost of getting McNuggets delivered to their suburban door.
Elsewhere in Uberworld, yesterday — the same day Uber Eats announced its new price structure — the New York City Council voted to cap ride-sharing services. That means cracking down on the number of vehicles that ride-share services can have on the road. The Council approved halting new licenses for ride-sharing services for one year, so the city can “study the booming industry.” If the new regulations prove popular, other cities could adopt similar measures.
Uber Eats “drivers,” however, don’t necessarily need a car to make deliveries. Uber even claims that “most deliveries are door-to-door.” In other words, people are walking (or biking or whatever) to the restaurant to pick up the order, then walking to the customer’s door.
Even in places where walking is out of the question, there are food delivery options for Uber Eats that don’t necessarily need cars. Earlier this year, Uber acquired electric-bike startup Jump. You can’t take a bike on the freeway, but there are plenty of markets in smaller cities and up-and-coming urban areas where a speedy electric bike could easily increase food deliveries. Solutions like that may be what protects Uber Eats from the shakeout that will happen because of these new ride-sharing regulations, and make the efforts to adjust the pricing model worthwhile.