Amazon is halting restaurant delivery service in the U.K.

Is this the start of the shakeout?
Photograph: Shutterstock

Updated to include Amazon's input. 

Amazon is halting its delivery of restaurant meals in the United Kingdom, stoking speculation that a long-awaited shakeout of  third-party delivery services may have begun. 

No change has been revealed for the e-retailer’s U.S. meal delivery service, which is available on a market-by-market basis to members of Amazon’s Prime subscription program. "This announcement is solely related to Amazon Restaurants UK," Amazon said in a statement, using the formal name for its  service. "Amazon Restaurants in the U.S. currently covers 20 major metro areas and over 190 cities, and continues to grow and expand, with the launch of our weekday office lunch delivery options, Daily Dish, in Austin, Texas, on November 13."

Daily Dish is a new program in which customers are emailed six lunch options on weekday mornings. Patrons can choose their meal at that time and have it delivered midday, with an alert sent via text.

Amazon's broader-based restaurant delivery program on this side of the Atlantic mirrors the service Amazon has offered in the U.K. for two years. The British market was the second location where the company tried restaurant delivery, after a pilot program in the Pacific Northwest and selected U.S. cities. 

Local media speculated that Amazon decided to halt U.K. restaurant delivery, starting in London, because of blistering competition. The phase-out is expected to be completed by Dec. 3.

Amazon Restaurants UK is a distant challenger to Deliveroo, a 15-year-old force in the British off-premise market. Amazon also competes with the British operations of Uber Eats, the meal delivery spinoff of the popular ride-hailing service. Reports surfaced in October that Uber is looking to buy Deliveroo to become the dominant service in Britain. 

The U.K. market is viewed as being ahead of the U.S. in adopting restaurant delivery, but the level of competition among third-party services in Amazon’s home nation is already at a fierce level. The U.S. third-party market is dominated by Grubhub, with a 52% market share, followed by Uber Eats, with 18%, and DoorDash, at 12%, according to Technomic research. It pegs Amazon’s share at less than 5%. 

The total revenues of third-party restaurant delivery hit $5 billion during the first half of 2018, a 55% leap over the prior year’s tally, Technomic has revealed. 

Many U.S. restaurant chains have contracted with a number of the big services for delivery service, along with what are estimated to be dozens of local meal haulers. The apparent inefficiencies have prompted routine speculation that the services will consolidate through mergers, acquisitions and shutdowns.   

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