Amazon moves into food delivery with Grubhub

Article Excerpt

Amazon is now moving further into food-related services through its Prime membership program. The online commerce giant has provided grocery benefits to Prime members under its Whole Foods Market division as a way to make its annual subscription program more valuable—and it’s now adding food delivery. AMAZON.COM INC., $110.40, is a buy. The company (Nasdaq symbol AMZN; TSINetwork Rating: Average) (www.amazon.com; Shares o/s: 10.2 billion; Market cap: $1.1 trillion; No divds.) has now agreed to add Grubhub to its suite of Prime services in the U.S. Under the deal, Amazon gets an initial option to take a 2% stake in U.S.-based Grubhub, and U.S. Prime members can have their delivery fees waived from some restaurants. Amazon could bump up its total stake to 15% of Grubhub based on performance terms, which are focused on adding more food orders and customers. Amazon will offer Prime members a yearlong subscription to Grubhub’s membership program, which includes free delivery from a network of restaurants. After the first year, Grubhub…