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Amazon to shut down its restaurant delivery service

The online retailer opts to end Amazon Restaurants as the third-party delivery business continues to consolidate.
Photograph: Shutterstock

Amazon is ending its restaurant delivery service, Amazon Restaurants, the company confirmed Tuesday, as the business of getting restaurant food to consumers’ homes continues to consolidate and evolve.

The Seattle-based retailer said in a statement that the service will be discontinued in the U.S. on June 24.

“A small fraction of Amazon employees are affected by this decision, and many of those affected have already found new roles at Amazon,” the company said. It is also ending its Daily Dish program, which delivered lunch to workplaces.

To be sure, this is hardly a surprise. Amazon Restaurants stopped delivering in the U.K. last year.

But this doesn’t mean Amazon is getting out of the delivery game: It is pushing more delivery at Whole Foods, for instance. And earlier this year, it took a stake in U.K. delivery service Deliveroo.

Amazon’s decision to end Amazon Restaurants removes what at one point held the promise of being a major player in the third-party restaurant delivery race. The retailer launched the service in 2015 and later expanded it to numerous markets, delivering to members of its Prime loyalty program.

Still, the move furthers the delivery business’s consolidation, as a small handful of large, national players have come to dominate the market.

Delivery providers have already started merging with one another: Newly public delivery company Waitr bought Bite Squad late last year, for instance.

Data from Restaurant Business sister company Technomic has found that two companies, DoorDash and Uber Eats, have accounted for much of the growth in the service over the past year, forming something of a “big three” in the business along with Grubhub.

Consolidation in the delivery business has major implications for restaurants, giving more power to a handful of delivery players that are generating their own customer bases. That could give these companies more leverage in negotiations over rates or over restaurant chains’ ability to charge higher prices on delivery orders.

As it is, restaurant companies are increasingly faced with the reality that delivery customers prefer their own services. “The aggregators tend to have sticky customers,” David Gibbs, president of Taco Bell, KFC, and Pizza Hut owner Yum Brands, told analysts last month.

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