Amazon Prime subscribers will receive a free food-delivery perk after the e-commerce giant took a stake in Grubhub as part of a deal announced Wednesday.
Amazon revealed the promotion as a headline deal for its annual “Prime Day” sales event. Prime members who sign up for Grubhub+ through an Amazon portal receive unlimited free delivery on orders above $12 as well as discounts and other perks.
Grubhub’s subscription service normally costs $9.99 per month.
Shares of rival food delivery services plunged on news of the partnership. DoorDash’s stock fell more than 7% in premarket trading, while Uber shares declined about 3.5%.
Grubhub+ service is available in more than 4,000 cities and provides access to meal ordering from hundreds of thousands of US restaurants, according to Amazon. Existing Grubhub+ subscribers can also redeem the offer for a free year.
The deal represents a lifeline for Grubhubs’ Netherlands-based owner Just Eat Takeaway, shares of which have plunged about 70% so far this year. As recently as last week, Just Eat Takeaway said it was “actively exploring” a potential sale or strategic partnership for GrubHub.
“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,” GrubHub CEO Adam DeWitt said in a statement.
Just Eat Takeaway said its partnership with Amazon was “expected to expand membership to Grubhub+, while having a neutral impact on Grubhub’s 2022 earnings and cash flow, and be earnings and cash flow accretive for Grubhub from 2023 onwards.”
Under the agreement’s terms, Amazon will receive a 2% stake in Grubhub – with an additional 13% stake obtainable if the deal hits key performance targets, including driving an unspecified number of new customers to the platform.