Amazon will give its US Prime members free access to the Grubhub meal delivery service for a year under a deal announced Wednesday.
Normally $9.99 per month, Grubhub Plus membership allows customers to order from thousands of restaurants with no delivery charges on most orders. Amazon Prime membership costs $139 per year.
Prime members must sign up for the Grubhub service. After one year, they will be charged normal Grubhub fees unless they deactivate the program.
The deal is part of a partnership between Amazon and Just Eat Takeaway, the Amsterdam-based delivery company that bought Grubhub in 2020 for $7.3 billion. Amazon has an initial option to take a 2% stake in Grubhub, which could rise to 15% if certain performance conditions are met.
The deal could give Grubhub a much-needed boost. The Chicago-based company was the US market share leader in January 2019, when it controlled 31% of food delivery sales, according to market research firm YipitData. But rivals DoorDash and Uber Eats chipped away at that advantage by offering discounted service and expanding rapidly into the suburbs. In May, Grubhub controlled 11% of sales, while DoorDash had 57% and Uber Eats 31%.
Grubhub has been hit by fee caps that dozens of cities put in place to help restaurants during the pandemic. He also faces lawsuits in Chicago and Massachusetts, where officials have accused the company of deceptive practices, including advertising restaurant delivery services without his consent.
Grubhub has denied the charges. But they have been a headache for Just Eat Takeaway, which announced in April that it was considering a partial or full sale of Grubhub. Just Eat Takeaway said Wednesday that it is continuing to explore that sale.
Just Eat Takeaway said the deal will have a neutral impact on Grubhub’s earnings in 2022, but will be reflected in its results from next year. The partnership will automatically renew each year unless terminated by Amazon or Grubhub.
In a statement, Grubhub CEO Adam DeWitt said he’s confident the offering will expose many new diners to Grubhub’s delivery. Grubhub said his research shows that more than half of American adults consider takeout or delivery “essential,” but only 38% say they use third-party delivery companies.
Amazon said in a statement that the deal makes Amazon Prime membership even more valuable. Amazon has more than 200 million Prime members worldwide; most are based in the US.
Shares of Just Eat Takeaway rose 15% on the Amsterdam stock exchange after the news. DoorDash shares fell 7% on the New York Stock Exchange.