uber eats launch & pricing strategy
TRANSCRIPT
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