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Amazon partners with Grubhub to offer meal delivery privileges to Prime customers

Latest / July 6, 2022 / DRPhillF / 0

The deal, announced Wednesday, will give Amazon (AMZN)Paying subscribers have the option to sign up for a free one-year Grubhub+ membership (usually $9.99 per month) and get unlimited free deliveries on order from restaurants included in the service.
At the same time, Amazon could become a stakeholder in Grubhub’s business. Amazon has the option to acquire a 2% stake in Grubhub (grub)with the potential to earn up to 15% if certain business performance conditions are met, according to an announcement from Netherlands-based Grubhub’s parent company, Just Eat Takeaway.com.
For Amazon, the link has the potential to extend the appeal of its Prime service, which now costs $139 per year. It also helps boost meal delivery efforts. Amazon announced in 2019 that it was shutting down a short-lived restaurant delivery service in the United States that was serving food to Prime members.

“Amazon has been trying to build its own food market for years with little success,” Ralph Schackart, an analyst with William Blair, wrote in a research note on Wednesday. “Today’s announcement looks like a potential partnership approach to establishing itself once again in space.”

Schackart also said Amazon may “look forward to acquiring Grubhub’s operations”.

In its statement on Wednesday, Just Eat Takeaway.com said it “continues to actively explore the partial or complete sale of Grubhub.” Shares of Just Eat Takeway.com, which trades in Amsterdam, rose about 13% on Wednesday.

Amazon’s latest foray into the food delivery sector comes as the industry faces new headwinds and an even tougher fundraising environment. Demand for food delivery services has fallen sharply due to its connection to the pandemic Business restrictions are eased and many consumers are resuming eating out. Labor shortages and an ever-evolving regulatory landscape have also impacted the sector hard in recent months.

Amazon’s moves could lead to more upheaval in the sector. DoorDash stock is down about 8% Wednesday morning on the news, and is down about 50% since the start of the year. Likewise, shares of Uber, the operator of UberEats, fell about 50% in 2022, and fell more than 4% on Wednesday morning.

DoorDash still dominates the US Meal delivery, with 59% of the market compared to Uber Eats at 24% and Grubhubs at 13%, according to data published last month by Bloomberg’s Second Measure.

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DRPhillF

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