If you’re an Amazon Prime member in any one of these markets (and
it’s highly likely you are since Consumer Intelligence Research Partners
estimated over 63 million Prime members in 2016), then 1-hour food delivery service
is available to you with no delivery fee.
Furthermore, Amazon Prime Restaurants boasts only the best,
quality local restaurants on its platform and claims to be assisting small
businesses that have never entered home delivery services to finally enter the online
delivery market. I was surprised myself when I finally opened Amazon Prime
Restaurant on my couch last night and found Aita Trattoria on the list of restaurants
delivering to my address. Aita’s is a local Italian restaurant in Clinton Hill,
Brooklyn widely known for fresh, seasonal ingredients – which makes it quite
the neighborhood dinner destination. I’ve lived in Brooklyn for almost four
years now and have never been able to get a table without waiting 40 minutes so
to find out that I can simply just click a button to order their delicious
bucatini and wait in the comforts of my home was simply astounding. Furthermore,
once an order has been placed, a nifty little feature on Amazon Restaurants
allows you to track your delivery on a real time map so you’re not waiting
cluelessly on your couch.
This discovery, while exciting, also led to me to worry
around what this latest proliferation of Amazon’s services might do to the foot
traffic in commercial corridors, and consequently the dining industry. Especially
restaurants in neighborhood commercial corridors that mainly rely on local
residents to eat out on weekends and weekday nights. After all, many of today’s
commercial districts continue to be anchored by food and drinking places. Amazon,
without even accounting for Amazon Restaurants and its sales, has already led
to some decline in overall foot traffic. In fact, foot traffic fell by 32
percent among users of the Amazon App according to research firm Sense360, who
also claim it’s been two full years since restaurants could report a decent
traffic month.
Sure, restaurants still make up 15 percent of all retail
sales and the expenditure data shows that U.S. consumers are spending more on
dining in restaurants than on buying groceries but how much of these sales are actually
made in person at the restaurant versus made online on the couch via Grubhub or
Ubereats or Amazon Restaurants? Also, if the National Restaurant Association
surveys are right and 8 in 10 consumers are dining out due to perceptions of
convenience from not having to cook or clean up, then ordering more food online
to be delivered within an hour to our doorstep would certainly fit the
convenience criteria – especially if friends and family already live nearby and
if the weather is bad outside. (I was certainly not going out to dinner last
Saturday while the summer storms were in full swing.)
The proliferation of online delivery services for restaurants
also means that the industry’s profit margins are getting smaller and smaller.
As it is, real estate, labor and taxes already make up some of the largest
share of operating a restaurant. Now, businesses will also have to worry about
being charged by Amazon to deliver their food to stay-at-home customers. As
Amazon has pledged not to mark up the cost of menu items, it is instead
shifting the burden to restaurants in the form of an undisclosed percent charge
of each order. Of course we already knew this – Grubhub, Postmates and Seamless
all charge restaurants roughly 12-24 percent of checks to use their delivery
services, however, Amazon is reportedly taking 27.5 percent of checks from
partnered restaurants.
So while Amazon aims to keep the gap between diners’ cost of
buying groceries and ‘restaurant dining’ minimal, small restaurants and eateries will
bear the brunt of the costs with smaller profit margins and fewer people walking
into their establishments and their neighbors’.
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