Amazon (NASDAQ: AMZN) is getting out of the restaurant food delivery business. Amazon Restaurants, which delivered food on demand to Prime members, will officially close on June 24. A company spokeswoman said that only a small number of employees would be affected by the decision. It’s statement said, “Many of the small number of employees affected by this decision have already found new roles at Amazon, and others will be provided personalized support to find a new role within, or outside of, the company.”
Amazon Restaurants struggled to gain a foothold in the ever more competitive restaurant delivery market. The service was started four years ago as an alternative to popular apps like Grubhub, Doordash, and UberEats. The Amazon Restaurants service eventually expanded to nearly 200 cities in the United States. Still, research firm Edison Trends says that UberEats, Grubhub and DoorDash together control nearly 80 percent of the restaurant delivery business.
The online restaurant delivery market is growing quickly. Many smartphone users are happy to pay a small fee to order takeout with a few taps on a screen. The delivery companies also take sizable commissions, sometimes as high as 40 percent, on every order that restaurants fill through their service. Investors have poured hundreds of millions of dollars into these companies in recent years.
The writing appeared on the wall for Amazon Restaurants back in November. That’s when Amazon shuttered the service in London, the only non-U.S. location where it operated. Optimistic when the service opened in Britain in 2016, the company soon faced the reality of stiff competition from UberEats and British food delivery company Deliveroo.
In its announcement, Amazon said that the closure of the restaurant delivery division would help the company focus on its grocery delivery business. Prime members can get groceries delivered from Whole Foods, the supermarket chain Amazon bought for $13.7 billion in 2017. The company also delivery groceries through its AmazonFresh service, which costs an additional $14.99 per month for Prime members.