Amazon Makes Big Move Into Restaurant Delivery Industry

Amazon’s announcement in June that it was purchasing Whole Foods Market at $13.7 billion was just the beginning of its push to dominate the food industry.

Reports in July showed that Amazon was rolling out its own cook-at-home meal kits, and the latest announcement shows its focus on the delivery of restaurant food taking it even deeper into the U.S. food industry.

On Friday, the Internet giant said it had entered into a partnership with Olo, a restaurant food delivery service that has 40,000 restaurants across the U.S. that uses its services.

Olo, which counts Shake Shack, Chipotle and Applebee’s as its customers, says it sees the partnership as a way for Amazon to gain scale.

Olo CEO and founder Noah Glass said a huge race is on in relation to companies launching delivery services in the marketplace and deals such as this one between Olo and Amazon give access to a wide swath of today’s restaurant market that includes top brands in the industry.

Olo is the power behind hundreds of the first-party digital programs for ordering. Their most recent service offering Rails, is an extension of the same control of ordering to the third-party consumer destinations such as Amazon Restaurants.

One of Olo’s investors is Danny Meyer the founder of Shake Shack. The service provides the tech platform to accept orders directly to point of sale systems of restaurants helping Amazon take control of its efforts to reach customers locally.

Glass said that the partnership will not only simplify the process for a restaurants as the orders come in, but will allow the management of orders for the restaurant, especially at peak hours of the day and night.

According to Olo’s founder, 62% of all food transactions in the restaurant industry are consumed outside restaurants, which leave a huge opportunity for companies such as Amazon that use their delivery logistics strength to their advantage.

The market for restaurant delivery orders in the U.S. is expected to increase in 2022 to $76 billion from its current $43 billion, said one online research firm.

Companies already have capitalized on the growth. GrubHub the food delivery business is up over 40% since the start of 2017, but off over 6% just on Friday following the announcement of the partnership between Olo and Amazon.

More big names are looking into investing in the food delivery word. Even huge chains, such as McDonald’s, which announced it entered into a partnership with Uber EATS earlier in the year, have joined in.

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