Amazon takes major step into US restaurant delivery with new Grubhub investment and partnership – TechCrunch

Amazon: tried but then eventually walked away from building its own costly Grubhub and DoorDash competitor in the US. still in 2019. Now, three years later, it’s taking a different approach to address space by adding another sweetener to encourage more signups to its Prime subscription service. Today, e-commerce giant and Just Eat Takeaway, owned by Grubhub in the US, announced a partnership in which Amazon will offer Prime members in the country a free one-year membership to Grubhub+.

Grubhub+ when it launched in 2020 was described as “Amazon Prime for Food Delivery”. like other loyalty programs operated by other delivery services, it is a subscription service where members receive free shipping on orders and possible other bonuses. It is normally charged at $9.99 per month.

The commercial terms of the deal appear to give Amazon a stake in JET. Specifically, it will include a provision to renew the deal annually (just like a Prime subscription) and that “the Amazon affiliate will receive warrants (at a minimum exercise price) in excess of 2% of Grubhub’s fully diluted common equity.” It also states that “Amazon will also receive warrants (exercised at a formula-based price) for an additional 13% of Grubhub’s fully diluted common equity, the issuance of which is subject to the satisfaction of certain performance conditions, primarily delivered under a commercial contract.” the number of new consumers”. Those numbers are subject to change, but as of Dec. 31, JET said tGrubhub’s gross assets were 6,521 million euros ($6.7 billion, down from the $7.3 billion it paid in 2020), and a pre-tax loss of 403 million euros for the 12 months ending in the period.

Just Eat Takeaway, the massive food delivery conglomerate that includes the two international brands plus Grubhub in the US, among other interests, has been under some pressure of late in its US business, where it competes with Uber Eats against and the like. Doordash and many other outfits with their highly competitive and often low margin space. In a trading update from April (its most recent figures), it noted that Q1 orders in North America totaled 89.6 millionA 5% decline from the same period a year ago (when panic buying lifted many delivery boats). Paper revenues appeared to be up 3%, but were also down 5% in constant currency.

Meanwhile, the company is reevaluating its ownership of Grubhub. It hot competition Having bought the operation back in 2020 for $7.3 billion, but until May of this year it was weighing options for business. It confirmed today that this is the case. “The company, together with its advisors, continues to actively explore the sale of Grubhub in whole or in part,” the statement said.

JET (as its acronym) said the deal is expected to expand Grubhub+ membership, though it did not disclose current membership numbers; and that it will have a “neutral impact” on Grubhub’s 2022 earnings and cash flow, with an incremental impact starting in 2023.

This is not the first time when the two companies dance together. About a year ago, Amazon started offering Grubhub+ subscriptions for free for one year to Amazon Prime Student members. It’s unclear how well that partnership went, though today’s news seems to be an extension of it, so chances are it’s generally positive.

However, sometimes these dances are not very harmonious. Where in the UK? Amazon is out Following its original restaurant service, as it did in the US, it has also gone back into restaurant delivery with a similar partnership, but this time with JET rival Deliveroo, offering a free year of Deliveroo Plus to its Prime members in the country. Deliveroo Plus is, you guessed it, Deliveroo’s take on the membership subscription/free delivery model.

Amazon is part owner of Deliveroo. Given JET’s bigger picture of the state of its business in the US, and the fact that Amazon clearly still sees plenty of opportunity to build more chains for its delivery and subscription beast, it’s interesting to wonder how and where these three companies will continue to operate. compete where they will cooperate and possibly where they can exchange assets.

Today’s deal certainly seems to point to at least a few more connections in that regard.

“I’m incredibly excited to announce this partnership with Amazon, which will help Grubhub continue to fulfill our long-standing mission to connect more diners with local restaurants,” said Grubhub CEO Adam DeWitt. “Amazon has redefined convenience with Prime, and we’re confident this offering will introduce many new diners to the value of Grubhub+, while bringing more business to our restaurant partners and drivers.”

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