Amazon's restaurant delivery service shutters after Grubhub, Uber Eats and others dominate industry

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Amazon is saying goodbye to its restaurant delivery service in the U.S. by the end of this month after it failed to beat out competitors such as Door Dash, Grubhub and Uber Eats.

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Amazon Restaurants will discontinue in the U.S. on June 24 and a “small fraction” of employees will be affected, a company spokesperson said in a statement to FOX Business.

Amazon Restaurants will be shutting down by the end of this month. (Amazon.com)

“A small fraction of Amazon employees are affected by this decision, and many of those affected have already found new roles at Amazon,” the spokesperson said. “Employees will be offered personalized support to find a new role within, or outside of, the company.”

On Tuesday, Grubhub shares were up 5 percent following Amazon’s announcement.

TickerSecurityLastChange%Chg
AMZNAMAZON.COM INC.1,915.32+6.53+0.34%
GRUBGRUBHUB INC71.24-0.33-0.46%

Jeff Bezos’ company launched the service in 2015 for Prime members who lived in certain zip codes in Seattle. Prime customers could order food delivered straight to their door through the Amazon Restaurants website or through the Prime Now shopping app. The e-commerce giant soon expanded to include several other U.S. cities, including Manhattan where users can order food from more than 350 restaurants.

Amazon Restaurants still failed to overpower competitors dominating the market. Uber launched its food delivery service in 2014 that they renamed UberEATS the next year.

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Together, UberEATS, Grubhub and Door Dash account for 80 percent of the restaurant delivery sector in the U.S., Edison Trends reported. Amazon Restaurants was a small player in the U.S., taking just about 2 percent of the market, according to Jeremy Scott, a food and restaurant analyst at Mizuho.

Amazon also began a similar restaurant delivery service in the United Kingdom in 2016 that also shut down last year. The company is still in the restaurant-delivery business due to its investment in the British company Deliveroo, which announced in May it raised $575 million in a funding round, The Wall Street Journal reported.

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"The shuttering of the platform doesn't necessarily mean that Amazon won't eventually invest in the space," Scott said.

The Associated Press contributed to this report.