Restaurant Industry Insights

Amazon’s Continued Partnership with Grubhub

Amazon has integrated Grubhub directly into its app, marking a significant expansion in their partnership. This move is more than just a convenience for customers; it holds substantial implications for restaurants.

Starting today, customers can access Grubhub via Amazon.com. They will order within Amazon, but the process will mirror the Grubhub app experience. For restaurants, orders will appear like any other Grubhub order and will continue to be fulfilled by Grubhub couriers.

Amazon’s involvement with Grubhub goes beyond a simple collaboration. Initially owning a 4% stake, Amazon now has options to increase its stake by 3% immediately and an additional 1% yearly up to 18%. This strategic investment is crucial for Grubhub, which has fallen to a distant third behind DoorDash and Uber Eats in the U.S. restaurant delivery race.

These two companies’ relationships have developed over time, with critical milestones indicating deeper integration and collaboration. In 2022, Amazon Prime members received a complimentary year of Grubhub+ membership, likely tied to Amazon’s initial stake in Grubhub. This trial gauged customer interest and the potential for further partnership. Positive results led Amazon to increase its stake, signaling a long-term commitment to the online food delivery market.

For Amazon, integrating Grubhub and offering free delivery to Prime members enhances customer loyalty. This perk could also attract new Prime memberships, leveraging Grubhub’s network to extend Amazon’s delivery reach and capture a larger share of the online food market.

Grubhub has been actively enhancing its services to stay competitive. Late last year, it revamped Grubhub+ to offer more value for $10 a month. Grubhub has also lowered its service fees in 14 major markets, improved its speed and accuracy with an average delivery time of 32 minutes, and increased its selection to over 375,000 businesses nationwide.

For restaurants, this development presents both challenges and opportunities. While food delivery services can be costly, the influx of millions of potential customers from Amazon’s platform is significant. Restaurants can utilize targeted promotions and discounts to attract new customers from this expanded pool, potentially growing their customer base.

The Amazon-Grubhub partnership is a strategic move with far-reaching implications for the food delivery industry and restaurants. Embracing this new channel could give restaurants a competitive edge and access to a broader audience.

 

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