Amazon Prime subscribers can now get a free year of GrubHub+

Yahoo Finance food reporter Brooke DiPalma details Amazon's inclusion of GrubHub+ to Prime member exclusive services after the Whole Foods parent company invested a 2 percent stake into the food delivery platform.

Video transcript

- Welcome back. Amazon expanding further into the food business, this time focusing on delivery. Brooke DiPalma is here with the details. Brooke.

BROOKE DIPALMA: That's right, Jared. Amazon Prime members are now eligible to receive one free year of Grubhub+. Now, through this monthly subscription service, members can get access to unlimited free delivery on orders of $12 or more from restaurants on Grubhub+'s network. Now, after this free year ends, though, members will once again have to pay that current rate of $9.99 a month. As you can see here, Just Eat Takeaway and Amazon getting bit of a pop here, even in the later hours of trading.

Now, for already paying Grubhub+ subscribers, they can gain access to that free year membership. But if at any point subscribers cancel their Prime, they will in fact lose this freebie. Now, along with this announcement, Amazon known for its fast, free delivery service. And the owner of Whole Foods will acquire 2% stake in Grubhub. Now, with the potential of that stake, it can increase to as high as 15% based upon a few performance factors, Jared, like the amount of new customers added.

Now, in a release, CEO of Grubhub noted that he is confident that this offering will expose many new diners to the value of Grubhub+ while also driving more business to our restaurant partners and drivers. Now, earlier today, we spoke to Steven Fox, a Fox Advisors founder and CEO. And he shared the potential that this could have for Amazon and Grubhub in terms of competition in the space.

STEVEN FOX: You can make a case for synergies between Amazon, especially since they already own Whole Foods and that grocery business, and owning a restaurant delivery business as well. But it's important to keep in mind that what DoorDash, especially DoorDash, and Uber has done as well, is create value for merchants in a big way. And that's including small merchants, where sometimes Amazon sort of bulldozes those types of companies.

BROOKE DIPALMA: Now, right now, Grubhub has more than 300,000 restaurants in more than 4,000 US cities in all 50 states across the nation. But Fox believes that Grubhub can benefit from Amazon's help with services around analytics, web services, and white label delivery here to expand beyond its current offering. One of those include a partnership with the northeastern convenience store chain 7-Eleven.

And right now, there's still a lot of opportunity here in the online food delivery space. This year alone in 2022, it's expected to reach nearly $344 billion. And according to Steven Fox, the penetration of the total category is still relatively small. Now, as you can note here as well, Uber and DoorDash heavily impacted by this announcement. As you can see here, down nearly 4%, Uber. And then shares of DoorDash down nearly 7%. So it'll be truly interesting to see what Amazon-- once again, owner of Whole Foods, a big opportunity here ahead, and to see what they do with it over the next few years.

- Yeah. And important to note for New York City residents, Grubhub owns Seamless. So free Seamless if you got that Amazon Prime membership. Thank you for that, Yahoo Finance's Brooke DiPalma.