Amazon Restaurants Shutters, Pulling an Opportunity From Mobile Payments Market

June 12, 2019         By: Steven Anderson

In a puzzling departure from the norm, we now have one less opportunity for food delivery, and the loss comes from the company who should have made it ultimately possible thanks to its line of delivery drones. It’s Amazon itself that’s pulling out, and starting June 24, your ability to pay for food via mobile payments and have it brought to you under Amazon’s purview will be no more.

Amazon Restaurants got its start back in 2015, and showed up in 20 different US cities, and London abroad. The app allowed for Prime members to have food delivered, but it became clear it couldn’t hold its ground. The London operation shut down back in November of last year, and now, the rest of the operation is poised to fall. Additionally, Daily Dish—a lunch delivery service targeting workers—will shut down as of June 14 as well.

The good news, however, is that this really isn’t a sign of market weakness. One of the biggest competitors in the field, Uber Eats, is currently available in about 500 cities. It also accounted for revenue of $1.46 billion just last year, and there’s not much sign that’s slowing. In fact, last week, Uber noted it was adding Uber Eats directly to the main Uber app, bringing it front and center and likely to improve traffic still further. Meanwhile, Grubhub saw $324 million in revenue in its first quarter alone.

So why would Amazon ditch such an obviously thriving market? The ongoing tussle at the FAA may have something to do with that; with Amazon’s delivery drone system still stymied—as of June 10 Amazon only had FAA approval for trials—its big edge in the field is out. Sure, if Amazon could get food loaded into delivery drones, bringing the best of big city cuisine to the smallest of hamlets, it might be a different story. But for now, most food delivery is car-based, and Uber Eats and Grubhub—not to mention other firms like Doordash—seem to have the market pretty much sewn up.

If the FAA can get off the fence, maybe Amazon can get back in the fray with its drone systems, but for now, the food delivery market is likely a bit too overpopulated for Amazon’s taste.