In a deal that will allow Prime members to sign up for a free, one-year Grubhub+ membership, Amazon took a stake in food delivery service company Grubhub on July 6, the companies announced.
Members will be able to access unlimited $0 delivery fees from “hundreds of thousands of restaurants on Grubhub throughout the year,” according to the announcement.
“I am incredibly excited to announce this collaboration with Amazon that will help Grubhub continue to deliver on our long-standing mission to connect more diners with local restaurants,” Adam DeWitt, CEO of Grubhub, said in the announcement. “Amazon has redefined convenience with Prime and we’re confident this offering will expose many new diners to the value of Grubhub+ while driving more business to our restaurant partners and drivers.”
What Free One-Year Grubhub+ Subscription Entails
For Prime members, it’s a monthly membership offering unlimited $0 delivery fees on orders of $12+ (before tax, tip, and other applicable fees) at eligible restaurants, and access to exclusive member perks — like free food and order discounts — and donation matching, according to Amazon’s website.
If you’re not a Prime member, the membership will cost you $9.99 a month. However, if you want to become an Amazon Prime member, the rates are $14.99 per month and $139 per year, while Amazon Prime Student membership is $7.49 per month and $69 per year, according to Amazon.
As for existing Grubhub+ members, Amazon said that they are eligible for the offer, “with the exception of Grubhub Campus, Corporate, and certain existing partnership members.”
The free one-year Grubhub+ membership will begin at the start of your next billing cycle.
What Happens After One Year
Amazon explained that after your free one-year Grubhub+ membership ends, Grubhub will charge the payment method associated with your Grubhub account on a monthly basis at the then-current rate (presently $9.99/month). You can also cancel any time by contacting Grubhub customer support or visiting the “Grubhub+ membership” section.
In terms of what the deal means for investors, CFRA Research noted that shares of both rivals DASH and UBER were under pressure following the announcement.
“We believe the announcement has notable implications for the competitive landscape of the food delivery space, as the transaction essentially creates a more relevant #3 player after years of market share loss by Grubhub,” Angelo Zino, CFRA Research senior industry analyst, wrote in a note sent to GOBankingRates.
Zino added that Grubhub will have the ability to take advantage of Amazon’s large Prime base, which should drive upside to volume at a time when pandemic tailwinds are waning.
“We think DASH will be much more impacted given its U.S. dominant revenue exposure and share gain benefits in recent years. UBER’s diversification both by business segment (e.g., ridesharing, food delivery, freight) and geographic presence (nearly half overseas) makes it less susceptible. We also think it is plausible that Grubhub could be viewed more attractively to interested bidders given Just Eat Takeaway’s [Grubhub’s parent company] efforts to sell the business,” he added.
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