Amazon Looks To Expand Meals On Wheels

by Raymond Pucci 0

Alexa, I’ll have a Shack burger, hold the sauce, and fries—have it delivered in one hour. This type of restaurant meal request could become commonplace as Amazon Restaurants partners with mobile app developer, Olo. As the following article reports, the two companies are looking to capitalize on the growing on-demand restaurant delivery market.

Amazon.com Inc. may soon bring Shake Shack burgers and Chipotle burritos to your door as it pushes deeper into the growing market for restaurant delivery. The e-commerce titan has been working to crack the code on food delivery for at least a decade. Now that Amazon has a major toehold in the grocery industry following its $13.7 billion acquisition of Whole Foods Market, it’s trying to muscle into the restaurant business. Amazon has teamed up with a company called Olo, which provides digital order and pay technology to 200 restaurant brands with about 40,000 U.S. locations, potentially giving Amazon access to a slew of delivery orders. Buca di Beppo, which runs about 90 Italian eateries, is the only Olo customer so far to publicly say it will use Amazon Restaurants.

The $1.5 trillion U.S. food market is split roughly between groceries and restaurants. Food deliveries appeal to Amazon because of the frequency of orders, putting it in constant contact with shoppers and helping it collect valuable data about their preferences even if they don’t make much, if any, money on individual transactions.

Amazon began a one-hour restaurant delivery service in Seattle in 2015 and has been expanding it to other cities around the country. The service appeals largely to mom-and-pop shops that can benefit from exposure to Amazon customers and its delivery expertise, but it hasn’t attracted many chains.

The deal with Amazon gives Olo customers the option to start offering delivery, an increasingly important service as the restaurant industry grapples with slowing growth

Partnering with Olo will help Amazon give its customers access to more restaurants and “create a seamless ordering experience that will make it easier for restaurants to make delicious food fast,” the Seattle-based company said in a statement.

Food has been a central theme for Amazon this year. The retail behemoth is looking to become a force in the two main places where U.S. consumers get their food—at grocery stores and restaurants. Amazon has moved in with its Whole Foods acquisition, as well as its AmazonFresh Pickup, an on-demand grocery ordering service for Prime Members. Then add in its Amazon Go concept C-store that features mobile self-checkout. And to round this out, Amazon’s latest venture is to partner with Olo that has thousands of restaurant locations that use its mobile order and pay app. The food business is all about volume, supply chain efficiency, and customer experience, which all feed into Amazon strengths. Time will tell and determine how well Amazon manages this or whether they end up with too much on their plate.

Overview by Raymond Pucci, Associate Director, Research Service at Mercator Advisory Group

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