Amazon surprised quite a few people yesterday by announcing they are shutting down their restaurant delivery service in the US later this month. Similar to the shutdown in London last November and subsequent investment in Deliveroo, many believe Amazon will invest in one of the other food delivery providers in their next round.
With recently public competition like Uber, heavily funded private companies like Postmates and DoorDash and niche players like Square’s Caviar, there is no shortage of competition. Just ask the largest incumbent Grubhub who owns Seamless:
Although it is projected by William Blair that restaurant deliveries will only account 11% of total restaurant by 2022, the space is growing RAPIDLY and all that growth is coming from the delivery providers:
So with Amazon out of the race, what happens next? I would assume either Postmates or DoorDash is acquired by Uber to bolster their Uber Eats offering. In my opinion, Grubhub just doesn’t have the confidence of their shareholder base, the cash or ability to add a secondary offering of stock to buy either. I believe Square truly isn’t interested in this business and has positioned Caviar as the higher end offering. Jack Dorsey wakes up each morning to be a payments and social media guy, not the delivery king. Regardless, this is a scale game and you have some hungry competitors who are likely looking to consolidate the market into more of a duopoly to gain further leverage: