Starting next year, food benefit recipients will be able to use their SNAP dollars to pay for groceries using the Uber Eats app. If you rely on food benefits, ordering groceries online could be a game-changer -- particularly if you face mobility challenges, have limited time, and don't have many grocery stores near you.
The Uber Eats announcement follows similar moves from other delivery services such as Instacart, Amazon, and Walmart, who already accept EBT payments. The delivery companies trumpet the importance of bringing affordable fresh food to areas with limited grocery shopping options -- so called "food deserts." That said, with over 41 million monthly SNAP recipients, there's also a solid business benefit to tapping this market.
The Uber Eats app gives users a choice of many different grocery stores. That broad access can help households save money and eat healthier. But it's important to factor in any delivery fees and markups. Make sure you do a price comparison to understand whether Uber Eats or any other grocery delivery service represents good value for you. This is even more the case if you have limited money in your bank account.
How grocery delivery is changing food deserts
According to the USDA, almost 19 million Americans live in low-income areas that are between one and 10 miles away from a supermarket. Many of those people rely on SNAP benefits to keep food on the table. A few years ago, the USDA launched a pilot program to open online grocery shopping to SNAP participants. Throw in the pandemic-related surge in everything online, and you have the ingredients for real change.
The good news is that Brookings researchers found that around 90% of people living in food deserts can access at least one delivery service. However, it also says there are still a number of people in food deserts who fall outside of the delivery zones. The research also points out that limited broadband adoption can be a barrier to ordering food online.
If you live in a food desert, you know firsthand how difficult it can be to access healthy food like fruit and vegetables. And you'll feel the impact of the higher prices on your wallet. It's a double whammy -- you're living in an area where people don't earn as much, and yet you'll have to pay more for food than people who live in higher-earning areas.
One study from the University of North Florida found that average food costs for people in food deserts were 36% higher than outside them. If we apply this to the USDA's estimate that the average four-person family might spend $225 on a thrifty shopping basket, it's pretty scary. A 36% markup could push weekly food costs to over $300.
Does Uber Eats make sense financially?
SNAP benefits are calculated by taking the maximum amount for your household size and then making deductions based on earnings and other factors. Right now, the maximum monthly benefit a family of four can receive is $939, though this will increase on Oct. 1. According to the CBPP, the average monthly SNAP benefit for a family of four is $684 for the 2023 fiscal year. That works out at less than $2 per person per meal.
The trouble is that an Uber Eats delivery can cost from $0.49 to $7.99, according to the Krazy Coupon Lady. The exact cost depends on how far the delivery person will need to travel. We don't know a lot of details about the Uber Eats SNAP plan, but we do know there are strict rules about what you can and can't buy with an EBT card. You're extremely unlikely to be able to use your SNAP benefits to pay for the delivery fees.
If you wind up paying almost $8 for an Uber Eats delivery, that could be more than a single family member's daily food budget. So, before you sign up for any grocery delivery service, sit down and look at the numbers.
In addition to the delivery fees, look to see whether there's any kind of markup on the items you normally buy. Some grocery delivery services add a little on to the cost of every item. Check the prices in the app against the prices you currently pay. If you want a really accurate figure, use your most recent receipt to compare prices on all the items on your regular shopping list.
Here at The Ascent, we write a lot about ways to save money on your groceries, but many of them involve tips like shopping around, using a rewards credit card, or buying in bulk. Those are hard to do if you use an EBT card or there's only one grocery store nearby that charges more.
Online delivery services could give you access to better deals and offer other ways to save money. As such, it may well be worth paying any delivery fees and even a markup, but only after you've run the numbers.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Emma Newbery has positions in Amazon.com. The Motley Fool has positions in and recommends Amazon.com, Uber Technologies, and Walmart. The Motley Fool has a disclosure policy.