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Amazon strikes deal with Grubhub which means Prime members get free deliveries
https://www.whatjobs.com/news/business-news/prime-members-now-get-food-delivery-perks-after-amazon-struck-deal-with-grubhub
By Nithya Bose in Business News, posted July 7, 2022
Amazon has reached an agreement with Grubhub that lets its Prime members in the US drop paying delivery charges on orders from specific restaurants.
The financial crisis in the food-delivery sector is opening up new avenues for the e-commerce giant.
Just Eat Takeaway.com, the Dutch firm that owns Grubhub, has issued a statement on the agreement.
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The deal allows Amazon to acquire more than a two percent share in Grubhub for an unspecified but insignificant fee.
The company may also purchase an additional 13 percent share in the firm at an unnamed "formula-based price" that is contingent on Grubhub meeting specific performance criteria, such as acquiring new customers.
The food ordering form will lose 403 million euros, or around $410 million, in 2021.
It stated that the deal would boost company profitability and cash flow beginning next year.
Unless one party decides to withdraw, the arrangement with Amazon automatically renews each year.
Just Eat is looking into options to sell Grubhub about two years after paying $7.3 billion to purchase it, highlighting the shifting attitudes regarding food-delivery services.
As pandemic limitations were loosened and demand for restaurant delivery decreased, the industry's prospects were severely harmed.
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Labor shortages and more government regulation have resulted in additional expenditures.
In a recent research study, analysts at Berenberg Bank projected that a sale of Grubhub would bring less than $1 billion.
Just Eat, Europe's largest food-delivery service, said it will continue to investigate a partial or full sale of Grubhub in response to investor pressure to strengthen its business.
Grubhub holds around 13 percent of the US meal delivery industry, compared to over 60 percent for DoorDash and 24 percent for Uber Eats, and it has fewer revenues per client than its main competitors.
Even after a large surge on Amazon news, Just Eat's stock remains down more than 60 percent this year.
Amazon also has a stake in Deliveroo, a struggling British food-delivery firm whose stock has dropped by half this year.
Another European food-delivery company, Delivery Hero, has had its stock price plunged by more than 60%. Uber and DoorDash shares are down nearly 50 percent this year.
Source: The New York Times
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