Shares of GrubHub (GRUB) jumped in morning trading following a report that Amazon (AMZN) is shutting down its restaurant delivery service in the U.S.
AMAZON TO SHUT DOWN RESTAURANTS SERVICE IN THE U.S.: Amazon is shuttering its restaurant delivery service Amazon Restaurants in the U.S., as well as Daily Dish, a workplace lunch delivery service that launched in 2016, GeekWire's Taylor Soper reported. Amazon plans to discontinue the service on June 24 and that the small number of employees who made up the division have found new roles within the company or will be provided assistance with finding new positions, a spokesperson said in a statement provided to the publication. Daily Dish will be shut down on June 14, the spokesperson also said.
Amazon started offering restaurant delivery for Amazon Prime members in certain areas in 2015 and started a similar business in the U.K. in 2016, but the project failed to show significant growth. In January 2018, Amazon cut an undisclosed number of Amazon Restaurants jobs, though a spokesman confirmed at the time that the company had no intention of retreating from the food delivery market.
Amazon closed its U.K. service late last year, and as of May, provided service to more than 20 cities in the U.S., according to its website. The company's U.K. service "needed to be more than a logistics company trying to be a food company," an an industry observer told The Evening Standard newspaper.
WHAT'S NOTABLE: Amazon's move to close Amazon Restaurants in the U.S. comes less than a month after Amazon led a $575M funding round for Deliveroo. Deliveroo, a British online food company, competes against Uber's (UBER) Uber Eats division, as well as smaller companies like Just Eat, Delivery Hero and Takeaway.com. At the time, Doug Gurr, Amazon's U.K. Country manager, said "We're impressed with Deliveroo's approach, and their dedication to providing customers with an ever increasing selection of great restaurants along with convenient delivery options."
Sky News reported last month that Amazon's investment in Deliveroo followed two unsuccessful approaches to buy Deliveroo outright.
PRICE ACTION: In morning trading, shares of GrubHub are up 6.3% to $68.87.