April 16, 2024

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Amazon takes on Grubhub as it struggles with food delivery

Amazon takes on Grubhub as it struggles with food delivery

The financial turmoil in the food delivery industry presents new opportunities for Amazon.

The e-commerce giant struck a deal on Wednesday with Grubhub Amazon Prime subscribers in the US are allowed to waive delivery fees on orders from certain restaurants, according to statement By Just Eat Takeaway.com, the Dutch company that owns Grubhub.

The statement said the deal gives Amazon the option to purchase more than 2 percent of Grubhub’s stock at an undisclosed but undisclosed price. Amazon can also buy an additional 13 percent stake in the company at an unspecified “formula-based” price, which depends on Grubhub achieving certain performance goals such as adding new customers.

In 2021, Grubhub lost 403 million euros, or about 410 million dollars. She said the Amazon deal will add to its earnings and cash flow starting next year. The agreement with Amazon renews automatically each year, unless one of the parties decides to opt out.

Highlighting shifting views toward the food delivery business, Just Eat explores ways to unload Grubhub after nearly two years on the go. $7.3 billion to get it. The industry’s prospects have been hit hard as pandemic restrictions have been lifted and the demand for restaurant delivery has diminished. Labor shortage and increase government regulation Added new costs. In a recent research report, analysts at Berenberg Bank estimated that Grubhub would make less than $1 billion in the sale.

Just Eat, Europe’s largest food delivery platform, said it will continue to explore the partial or full sale of Grubhub amid pressure from investors to improve its business. Grubhub controls about 13 percent of the meal delivery market in the United States, versus about 60 percent for DoorDash and 24 percent for Uber Eats, and Grubhub records fewer sales per customer than its main competitors, according to Bloomberg Scale II. Just Eat stock is down more than 60 percent this year, even after a big jump in Amazon news on Wednesday.

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Amazon also has a stake in Deliveroo, a struggling British food delivery service whose share is down nearly 50 per cent this year. Delivery Hero, another European food delivery company, saw its share price drop more than 60 percent. Shares of Uber and DoorDash are down nearly 50 percent this year.