Prime members just got free food delivery, but Amazon could get 18% of Grubhub

Amazon now offers restaurant food delivery under a new Grubhub collaboration, wedged in with the site’s half-billion or so other products. And as yet another perk to Prime-paying customers, they’ll also pay zero for deliveries through a free Grubhub+ membership.

The move embeds Grubhub’s platform (an Amazon.com- and Amazon Shopping-friendly version of it, anyway) directly into the website and app, to create an ordering experience that Amazon vows is “identical” to using regular old Grubhub itself—minus, of course, the ability to reorder body soap and purchase a camping tent at the same time. This marks the first time Amazon has allowed app users to have any sort of third-party ordering access, and technically speaking, they don’t even need a Prime account. (Prime offers an opportunity to enjoy “pizza and Paw Patrol” or “falafel and Fallout.”) Grubhub will complete these orders, Amazon says, and its couriers will handle them like any other delivery.

Both companies got busy on Thursday plugging the clear benefit to consumers. “Grubhub+ is now free with Prime, and customers can place takeout orders directly on Amazon,” Amazon said, while GrubHub wrote: “Customers can now order Grubhub directly from Amazon.com.”

What is going mostly unmentioned, though, are the perks for Amazon. According to a third, less-read press release by JustEatTakeaway.com, the Dutch business that controls Grubhub, Earth’s biggest e-commerce site and owner of Whole Foods, streaming-platform Twitch, Ring doorbells, and almost (till antitrust regulators said no) Roomba robot vacuums, emerged with an ability to control up to 18% of the restaurant delivery platform by 2029.

The companies formed their proto-partnership in 2022, when Prime members may recall one free year of Grubhub+ suddenly materializing in their accounts. That deal also granted Grubhub equity to Amazon. It owned a 4% stake before this week’s deal. The new five-year agreement increased Amazon’s ownership stake to 7% today, with the possibility of reaching as much as 18% if Amazon can deliver a certain number of Grubhub orders through the collaboration within the agreement’s time span, according to Grubhub.

Asked whether increasing its stake potentially by four- to fivefold suggests more than a partnership is afoot here, Amazon simply told Fast Company, “The focus on our relationship with Grubhub is to bring Prime members a new ongoing offer.”

Regardless, nearly a fifth of Grubhub represents a healthy chunk of U.S. restaurant deliveries, even if Grubhub lags behind rivals like DoorDash and UberEats. (Whole Foods captures only about 2% of the U.S. grocery market, yet is still highly profitable, and the brand’s reach has expanded under Amazon.)

Grubhub CEO Howard Migdal boasted today in an interview with trade magazine Restaurant Business that their partnership ranks as “the most successful third-party benefit” that Prime accountholders have ever been offered. It’s unclear how he was measuring that exactly, but Amazon says that Prime members who make at least one Grubhub+ order per month will, by its seemingly generous math, save “an average of $300 per year in delivery fees and promotions.” (At one per month, that would equate to $25 worth of savings for each order.)

Midgal told Restaurant Business that the partnership’s greatest flaw is not enough Amazon users know it exists, that “awareness of the partnership versus the rest of the Amazon Prime universe is incredibly low.” The result is today’s new arrangement in which Grubhub has been permanently glommed onto Amazon.com and the Amazon app.

That also likely explains why Amazon created a way for all customers, Prime-paying or not, to link their Amazon and Grubhub accounts. Users are reassured that Grubhub can’t access anything except their basic contact info (name, email address). It seems Amazon gets “some information” related to users’ specific meal-ordering habits from this arrangement—although, no worries, the company says: The tech giant vigorously protects customer data and won’t use it for anything that customers haven’t consented to. Amazon notes, meanwhile, that free Grubhub+ memberships will remain active on “an ongoing basis,” so that setup will just continue auto-renewing for Prime members “every year thereafter as long as they remain with Prime.”

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