UberEats Pricing Strategy in San

Francisco Jose E. Rodriguez

UberEats delivers the best of your city right when you want it. Our curated menus feature dishes from the local spots you love. And the ones you’ve always wanted to try. It’s same cashless payment as an Uber ride. So just tap the

app, meet your driver outside, and enjoy

What is the goal? Goal Access competitors pricing model &

determine selling price to maximize market share

Start with Penetration Model

Tasks Research target market’s frequency and wiliness to order delivery at

different prices & determine break even points.

Tools Internet Research, Excel, Tableau

Research Method1st Hand Research • Survey Monkey• Industry Inside Friends2nd Hand Research• San Francisco Census• Statista.com• Tech Crunch• Sprig • SpoonRocket • Farm Hill

Solution ProcessPenetration --> Cost +

Customer Needs

Customer Demographics

Break Even

Customer Benefits Offering:

Penetration

Expertise Cost +

Market Price

Lunch: $12.5 Dinner:

14.5

Tech I

nflue

nces

Macro Env.

Influences

Competitive influences

Enter with a price of $8 for lunch, which is 48.8% lower than current delivery

Brake even in 1 yr

Dominate presence in San Francisco with 16, 000 active users with 100K UBER app down loads

UBER menu is extensive

CanUber Eats enter the Food Delivery Market at a delivery price comparable to its competitors to obtain favorable market share in order to later introduce a slight higher price to gain more profit

Market Share

• 5% Of Market Share

Price Point Average –

• $ 20% under competition

Break Even

• Break even in year one

Problem Statement

Criteria of success?

Industry growth: .35%/month

Market AnalysisGrowthDirect

Competitor

Growth: 30%/mo

Market Analysis- Market Comparison

Market Analysis Range price

  Sprig Spoon-Rocket Eat24 Cavier

UberEats

Breakfast N/A $8.95 $14.50 $14.25 $13.24

Lunch $13.5 $13.25 $17.25 $15.50 $14.50

Dinner $14.5 $13.75 $19.00 $17.25 $16.25

Target SegmentSan Francisco

Market Age:

18-65Working

professionals &

families

Current 35% using delivery service apps

Lunch &

Dinner

Survey Results:How often do you

order?

Daily

4-6 times per week

2-3 times per week

One a week

Every Other week

Once a month

Less than once a month

Never

0% 5% 10% 15% 20% 25% 30%

2%

8%

24%

26%

16%

11%

10%

2%

Share of respondant ©statista 2015

Survey Results: How often would you

order?Lunch Price Orders per week

$6.00 4.36 $7.00 4.36 $8.00 4.21 $9.00 4.21

$10.00 3.29 $11.00 3.07 $12.00 2.71 $13.00 2.43 $14.00 2.00 $15.00 1.50 $16.00 1.43

Dinner Price Orders per week $8.00 4.93 $9.00 4.79

$10.00 4.57 $11.00 3.86 $12.00 3.64 $13.00 3.14 $14.00 2.50 $15.00 1.79 $16.00 1.29 $17.00 0.93 $18.00 0.36

Top Down & Bottom Up

SF Market

• Population 18-65

• 617,188

Segment:Age

• Meals ordered/day

• 362,597

Market Size

• Average Meal $14

• $1.85B

• Average meal $15.47

• $1.21B

• Meals ordered/day

• 358,628

• Total Population• 797,976

Zip Code Zone:

1+2+3

Zone Segment

:

Market Size

Average:

$1.52BJust

Delivery:

$148M

Market Size: by ZonesZo

ne 1

Zone

2Zo

ne 3

Delivery %NeighborhoodPopulation

Penetration Price Point Model Z1

• 52.1 % demand food delivery • Price Launch

• Lunch $8• Dinner $10.45

Comprised of• North beach, financial district,

Nob Hill, Russian Hill, Mission, Van Ness, Soma• Zone population of ~ 300K

ZONE 1

Penetration Price Point Model Z2

• 29.6 % demand food delivery • Price Launch

• Lunch $8.43• Dinner $13.10

Comprised of• Marina, Persidio, Richmond,

Sunset, Sea Cliff • Zone population of ~ 306K

Zone 2

Penetration Price Point Model z3

ZONE 3Comprised of • Glen Park, MiraLoma Park,

Pacific Heights, Lake shore, Stone Town

• Zone population ~200K• • 18.3 % Demand Food Delivery• Price Launch

• Lunch $9• Dinner $14.47

Pricing Model Demo

©statista 2015

• Fixed cost Based on Delivery Franchise Model with UberEats driver paid as

employeesnot as individual contractors

• Variable costs Based on UberEats and competitors pricing. Inside knowledge of Food pricing and food costs

• Selling Price Based on competition pricing & maximizing market share (orders

per week)

Recommended for Lunch Price

Recommended for Dinner Price

Insights

Keeping delivery

constraints in mind

Different cost/prices for

different zones

Different pricing model

for launch and long term

Recommended Price Based on Models

2. Price Recommendation:• Zone 1: Lunch $ 8.00; Dinner $10.45• Zone 2: Lunch $ 8.43; Dinner $ 13.10• Zone 3: Lunch $ 9; Dinner $14.47

4. Value to Customer:• Lunch $ 8-$9 > $ 11.84• Dinner $ 110-14 > $ 14.50

1. Competitive Landscape:• Lunch: $12.5 • Dinner: 14.5

3. Survey Data: $6-$16 (Mean $11)

Recommended Price Based on Models

We recommend having food delivery as low as $8 and as high as $14.47

1. Price low to capture maximum market share

2. Higher engagement of the San Francisco food delivery Market

3. Driver increase to execute larger delivery loads

4. Put food delivery into the hands of San Francisco residents

Who wants to order UberEats?

©statista 2015

Appendix

Zone Break Even: Lunch & Dinner

0 2 4 6 8 10 12 14 $-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00

Increase Dinner Price at this time

Months

Zone 2 • Current Dinner $13.10

• Dinner Break-even 4 Months

Suggested time to introduce Cost/Mark up Price Model

Our pricing model: Lunch & Dinner

0 2 4 6 8 10 12 14 $-

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

$700,000.00 Increase Lunch Price at this time

Increase Dinner Price at this time

Zone 3 • Lunch Break-even in 8.5

Months • Dinner Break-even 2.5

Months

Suggested time to introduce Cost/Mark up Price Model

Months

Solution Process Penetration Acknowledge Operations requirements

Penetration Intraprocess Automation & control

Cost +Valuation control & Business Structure

Break into Food Delivery market of 1.52 billions meals per year- Many mouths to feed!

Optimize existing UBER drivers to mitigate new drivers and lag time

Aggregate restaurants in each zone to finalize routes for price efficient routes

Set food delivery price as penetration method

Specify upcoming price difference in each zone at different times Zone 1, 2, 3

Increase UBER EATS drivers in each target zone from 7 drivers to10

Obtain the San Francisco food Delivery Market with existing penetration price.

Launch Marked/Cost Plus Pricing to increase profits after break –even is successfully executed

Excel Model