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Daily news and analysis about the food tech revolution

food delivery

California Wants to Stop Restaurant Delivery Apps From Holding Customer Data Hostage

A bill introduced this week in California would require third-party food delivery platforms to share customer information with restaurants, according to The Sacramento Bee.

Assembly Bill 2149, also known as the “Fair Food Delivery Act,” would authorize DoorDash, Grubhub, and other delivery services to share a customer’s information with the restaurants from which they order. That includes the customer’s name, email address, phone number, and delivery address. Restaurants could request this information from delivery services once per calendar year.

While applicable to both restaurants that have contracts with delivery services and those that don’t, the bill in part at least seems aimed at the latter. There’s a growing outrage brewing over delivery services offering food from restaurants that haven’t a) given their consent and b) signed a contract with one of these services. The practice has already sparked legislative action in Rhode Island, where a proposed bill would make it illegal. If that bill gets signed into law, other states could follow with similar legislation. 

In California, Assemblywoman Lorena Gonzalez, who introduced Assembly Bill 2149 this week, cited in a press release the need to “level the playing field” for smaller, independent restaurants “being taken advantage of” by Big Tech. 

California Restaurant Association CEO and President Joe Condie echoed Gonzalez’ statements: “Technology giants aggressively entering the foodservice space—whether deliberately or not—are eroding the customer’s relationship with the restaurant,” he said in the press release.

Assembly Bill 2149 comes on the heels of the much-publicized Assembly Bill 5, which reclassifies gig workers as employees and requires companies to provide health insurance, paid time off, and other benefits they wouldn’t normally be on the hook for with contracted workers. The bill passed into law late last year, and has (surprise, surprise) gotten pushback from tech companies. Uber and Postmates filed a lawsuit in December claiming AB5 was “unconstitutional.” That bid was rejected this week. 

Delivery services and other gig economy companies will in all likelihood speak out against Assembly Bill 2149, too. But with delivery orders expected to drive the majority of restaurant sales over the next several years, and with reports predicting 70 percent of those orders will come from third-party services, measures that protect restaurants and workers and keep Big Tech in check is more important than ever.

That includes restaurants’ relationships with their customers, which is what Assembly Bill 2149 aims to protect.

“Restaurants shouldn’t fear losing their customers when they don’t agree to the conditions of some multi-million dollar food delivery app,” Gonzalez said. “This bill will put the power back in the hands of small business owners in California.”  

California Labor Law Remains for Now as Judge Denies Uber and Postmates’ Injunction

A California labor law that reclassifies gig workers as employees rather than contractors will remain in place for now, as a federal judge yesterday rejected a request from Uber and Postmates to prevent the law from taking effect.

Gig economy companies are vociferously against California’s AB 5 law, and on Dec. 31 of last year, Uber and Postmates filed their complaint, which my colleague, Jenn Marston reported on at the time saying:

The complaint, filed Monday in a U.S. District Court, argues that AB 5 violates multiple clauses in the U.S. and California constitutions, including equal protection. The suit points to the “laundry list” of occupations exempted from AB 5, which includes travel agents, grant writers, construction workers, and salespeople, and argues that AB 5 is designed to stifle gig-economy companies and their workers.

According to The New York Times, Judge Dolly M. Gee agreed that Uber and Postmates could face harm from the law, but the public interest in having living wages and regulating employment were more in the public interest. Judge Gee did not rule on the merits of the case.

At stake is the underpinning of gig economy model, which uses less-expensive contractors and not full-time employees for jobs like doing the actual delivery of food. The question over the viability of this model will become increasingly important as delivery from third-party services is expected to make up 70 percent of all food delivery by 2022.

Companies like Uber, Postmates and DoorDash are all under increased pressure from investors to become profitable. Laws like California’s AB 5 certainly complicate that path to profitability.

Yesterday’s decision does not mean the fight over AB 5 is over. Postmates and Uber both said they are considering an appeal of the judge’s decision. In addition to this court case, DoorDash, Uber, and Lyft have pledged $90 million to get a 2020 ballot measure passed that would counteract AB 5.

Burger King, Tim Hortons Aim for Faster Drive Thrus and More Personalized Tech in 2020

Restaurant Brands International (RBI), parent company of Burger King, Tim Horton’s, and Popeye’s, is doubling down on its efforts to modernize its brands and in doing so keep pace with competitors in the world of quick-service restaurants. On its earnings call this week, RBI’s CEO José Cil highlighted several milestones as well as goals for the future around making the drive-thru line faster, stores more digital-friendly, and individual customer orders more personalized. 

Tim Horton’s, a chain largely based in Canada and with a scattering of U.S. locations, is currently testing new digital menu boards in drive-thrus, using technology to gather information like weather, time of day, location, and more, and use it to better tailor offerings to each individual customer. If that sounds like a familiar story, it is. McDonald’s more or less started this wave of AI-powered drive-thru efforts last year when it acquired Dynamic Yield in 2019. Others, including KFC and Dunkin’, are also testing their own iterations of the drive-thru of the future.

Beyond the fact that personalized menu boards are supposed to improve order accuracy and offer more relevant upsell items to each customer, they are also practically speaking, a little easier for the restaurant to manage. Speaking on this week’s call, Cil pointed out that the company’s current menu boards cost “millions of dollars each year” to print and update, and that they are time-consuming to change out, as the task has to be done manually by staff members multiple times per day. “Switching to digital menu boards in the drive-through will free up time for team members to focus on serving guests while ensuring that the proper information is always on display,” he said.

Tim Horton’s already has these menu boards in “several hundred stores” and the company will install them “across most drive-thru locations over the next 12 to 18 months.” As well, the company is revamping its loyalty program for digital orders, moving it into its second phase where rewards and offers will be more tailored to the individual customer. Cil noted that this second phase will “drive digital registration and a lot of powerful tools like sales intelligence and one-to-one marketing that we’ll use to develop stronger relationships with our guests and drive incremental sales over time.”

Getting more intelligence behind its digital platforms to improve personalization is a goal for RBI across all its brands as the company strives to compete with the McDonald’s and Starbucks of the world. At Burger King, this will be in the form of the brand’s Burger King of Tomorrow Restaurants, the chain’s newly redesigned store format that emphasizes things like digital ordering via self-service kiosks and double drive-thru lanes. Cil said on the call that the company opened more than 800 of these stores in 2019.

Burger King of Tomorrow joins a long list of restaurants revamping their store formats to be more tech-centric and better able to fulfill delivery and takeout orders, which will account for the lion’s share of restaurant sales in the coming years. To that end, Burger King also offers delivery at 4,200 of its stores and works with multiple third-party services (DoorDash, Postmates, etc.) to fulfill orders.

As mentioned earlier, a large part of this technology push is to keep up with other QSRs running billion-dollar-plus digital businesses, namely Chipotle and McDonald’s, which are making AI and more customized menus a major part of their strategies. If 2019 was the year off-premises ordering became table stakes, 2020 will (probably) be the year personalization takes that title. RBI’s latest moves and future plans underscore how much the company wants its brands to be ahead, or at least with, the pack when that happens.

Speaking of personalization, you can hear my conversation about how it will change the restaurant business at Customize, the Spoon’s food personalization summit, in just two weeks.


Burger King, McDonald’s Join Ele.me’s Food Delivery Initiative to Help Coronavirus Workers

Chinese food delivery service Ele.me has launched an initiative to deliver meals to medical staff working in the epicenter of the coronavirus outbreak. The company has gathered 100 restaurants, both chains and local establishments, to get meals to hospitals in Wuhan, China, according to an article in the South China Morning Post. 

The Alibaba-owned service has gathered major QSRs like McDonald’s and Burger King along with local Wuhan restaurants to supply food delivery orders to staff at more than 10 hospitals in the city. The Post reported that an Ele.me rider “safely delivered the first order to a frontline medical staff on Sunday.” Meal delivery to doctors and nurses on the frontlines has continued since.

Previously, Ele.me had suspended meal delivery services to hospitals in order to prevent the spread of the deadly epidemic. But businesses around China, many of them tech companies, are now upping funds and resources to help medical staff fighting the virus, and the various initiatives have become something of a team effort in getting aid to workers on the frontlines in Wuhan.

At last check, more than 7,711 cases of coronavirus have been confirmed and 170 people have died. The World Health Organization is meeting today to decide whether coronavirus should be declared an international public health emergency.

Which brings us back to food and food tech. A number of companies stepping up to help are focused on getting food to both workers and those quarantined. Besides Ele.me, Meituan, another food delivery service, has set up a 200 million yuan fund to aid staff and is also providing free takeaway meals every day for hospital staff in Wuhan. Travel service Fliggy, which has been refunding flights, has pledged to supply medical staff in Wuhan with access to things like fresh produce from convenience stores, according to the South China Morning Post article. And as my college Chris Albrecht wrote yesterday, a hotel in Hangzhou, China has dispatched robots to bring meals to quarantined guests.

As Chris notes, the initiative at the Hangzhou hotel highlights “how robots can be used in situations that are hazardous to humans and help save lives (everyone needs to eat).” The same can be said of food delivery, which happens to be one of those sectors of food tech that’s really easy to hate on. It’s ethically questionable in some cases. It may not be sustainable or profitable.  Delivery fees suck. 

But food delivery, with its streamlined model and technical logistics, is also an easier, arguably safer way to get a daily necessity — a hot meal — to people fighting a deadly crisis. In providing meal services to workers in Wuhan, companies like Ele.me are hopefully sending a signal to restaurants and food delivery companies around the world to step up and do likewise, whether it’s in the event of this virus spreading or at some future point, in the face of a different crisis. 

Uber Eats Loses Exclusive Contract With McDonald’s in the UK

Uber Eats took another competitive hit this week when it lost its exclusive rights to deliver McDonald’s orders in the UK. Rival delivery service Just Eat announced on Tuesday it had struck a deal to become the QSR chain’s second delivery partner in Britain, according to a report from CNN Business.

Joseph Barnet-Lamb, an analyst at Credit Suisse, told CNN that orders from McDonald’s account for about half of the 30 million deliveries Uber Eats does in the UK each year. “This is all part of Just Eat taking back control of the competitive landscape,” he said. 

Just Eat is already a leader in the UK food delivery space, and its planned merger with another European food delivery heavyweight, Takeaway.com, could give the company even more competitive muscle that players like Uber Eats and Deliveroo will have to fight. (British antitrust watchdog the CMA certainly thinks so, as the deal with Takeaway.com is currently under investigation, though it’s still expected to go through.)

This is the second time Uber Eats has lost an exclusivity contract with the Golden Arches. In July 2019, McDonald’s added DoorDash as a second delivery partner in the U.S., then later added Grubhub, too.

Elsewhere, Uber shut down its Eats service in South Korea, laid off staff, and, this year, just sold its India business to rival service Zomato.

None of this is particularly surprising. Uber is under pressure from investors to prove it can be more than just a cash-burning business — in other words, profitable. Part of that process includes shutting services down in markets where they don’t perform well or fall behind the local competition.  

That doesn’t mean Eats is leaving the UK anytime soon. However, Just Eats processed over 123 million orders in the UK in 2018. If its deal with Takeaway.com goes through, it will create one of the largest food delivery services in the world, and a competitive threat that goes far beyond the question of who’s delivering Big Macs.

British Authorities Open Investigation Into Just Eat-Takeaway.com Merger

Fresh off the heels of a bidding war for the acquisition of UK-based delivery service Just Eat, Takeaway.com, who also offers on-demand restaurant food delivery, faces a new opponent: British regulators.

The Competition and Markets Authority (CMA) said late last week that it is investigating the proposed Takeaway.com-Just Eat Merger to see whether the deal, worth £6 billion (~$8 million USD), would “result in a substantial lessening of competition” in the UK food delivery market, according to The Associated Press.

Specifically, the CMA is looking into whether Takeaway.com would have re-entered the UK market, which the service left in 2016, without the Just Eat deal.

This isn’t the first time the CMA has brought the hammer down on a major deal between two food delivery companies. In May of 2019, Amazon announced a major investment in Deliveroo, only to have it flagged by the Authority, who said it “presented reasonable grounds” that such a deal would make the two companies “cease to be distinct” from one another. In other words, the deal would undercut competition from other food delivery services in the UK, including Just Eat.

The Amazon-Deliveroo investigation is still ongoing, and at last check the deal was said to be in serious jeopardy.

For Takeaway.com and Just Eat, the situation seems a little less dire, at least for now. Takeaway.com said the deal would still go through but be delayed by one week. Takeaway.com said it was confident that clearance on the merger “will be obtained.”

Takeaway.com first announced its intentions to acquire Just Eat in July 2019 in an all-share deal that would create a new company, Just Eat-Takeaway.com. The company then found itself in the middle of a bidding war with Naspers-backed tech investment firm Prosus, who over the last several months has offered multiple counter bids for Just Eat.

While that bidding war was put to bed recently, it, along with this latest investigation from the CMA, underscores how fiercely competitive the food delivery market is getting, and just how thick in the middle of a consolidation process it is. With demand for off-premises orders set to drive restaurant sales for the next decade and investors applying pressure for these companies to show the third-party delivery model can be profitable, companies across the space are shutting down services, selling their operations, and, at least in the case of the big guys, gobbling up the smaller players. 

For its part, Takeaway.com said it was confident that clearance on the merger “will be obtained.” Now we’ll have to wait and see if that really does mean a simple one-week delay or if the two companies have a longer, more complicated battle on the horizon.

Uber Sells Its Eats India Business to Rival Zomato

Consolidation in the food delivery sector continues. Today, Uber said it was selling its Eats business in India to local rival service Zomato, according to an article from TechCrunch. The deal, which is valued between $160 million and $200 million, is effective immediately. 

The two companies have been in talks since November of 2019. With the deal, Uber will own a 9.99 percent stake in Zomato. It will shutter all operations in the Indian market, with Eats customers and restaurants becoming part of Zomato. According to TC, some Eats employees will have the option to join Uber’s ride-hailing service. The rest will be let go.

For Uber, a big part of the motivation behind the sale is to cut back on loss-making operations as it struggles to reach profitability by 2021. The company’s Eats business launched in India in 2017 but faces strong competition not just from Zomato but also another local service, Prosus-backed Swiggy. Both those competitors fulfill well over 1 million orders each day, while Uber Eats only does about half a million. 

The move to shutter operations in India is similar to Uber Eats’ decision in September 2019 to shutter operations in South Korea, where Woowa Bros.’ food delivery service Baedal Minjok owns 75 percent of the market share. 

Meanwhile, both competition and consolidation worldwide in the food delivery sector continues to intensify. In Europe, Uber Eats will have to contend with Just Eat and Takeaway.com, two companies merging to become one of the largest food delivery services in the world. Deliveroo is also a major competitor in that market. In the U.S., Uber Eats still lags behind DoorDash and Grubhub in terms of marketshare. 

All of these companies face an increasing amount of pressure to become profitable. And given the trend towards consolidation happening of late, India might not be the last market Uber Eats bows out of in the near future. 

Week in Restaurants: A Few More Predictions for 2020

Ghost kitchens might take the prize as the hottest dining trend to watch right now, but it’s not the only one poised to make an impact on the restaurant industry in the coming months. As this week ends and another year begins, here’s a roundup of a few more 2020 restaurant predictions from around the web.

More robots will deliver your dinner. “Robots” in this context mean everything from autonomous vehicles a la Nuro to smaller wheeled bots that rove around city streets and college campuses. And it’s those types of places — densely populated areas with plenty of foot traffic and sidewalks — where we’ll see more food delivery bots in 2020. The folks at Nation’s Restaurant News recently highlighted the work of both Domino’s and Postmates in this area, looking at how delivery robots are “fundamentally” changing those companies’ business models and will in all likelihood have a ripple effect across the entire restaurant industry.

More pressure to reduce food waste. From monitoring how much inventory goes into the trash to new laws for the dining room, waste reduction initiatives will abound in 2020. “Demonstrating to customers that preventing food waste is a priority—including through donating to local partners or teaming with a local farmer to compost non-edible food waste—further extends the sustainability halo effect on the restaurant’s brand,”Suzanne Cohen, Customer Marketing Manager, Essity Professional Hygiene, told Modern Restaurant Management.

The tech stack will get streamlined. If 2019 was the year restaurant operators adopted new technologies in droves, 2020 will be the year they start to choose their tools more strategically. “While there are always new solutions being released to help combat issues in the restaurant industry, operators will focus on streamlining technology in 2020 in order to make the lives of manager and their teams more efficient—allowing them to establish a better work environment as well as focus on creating positive guest experiences every single day,” David Cantu, cofounder and chief customer officer of HotSchedules, told QSR Magazine.

Operators will try to to offset off-premises ordering. Off-premises ordering isn’t going anywhere — in fact, it’s going to drive the bulk of restaurant sales over the next decade. However, as Technomic notes, in 2020, we’ll see more restaurant operators “employ creative means to drive in-store traffic,” whether that’s more loyalty programs, dine-in promotions, or front-of-house tech. “Off-premise occasions will continue to flourish,” says Technomic, “but 2020’s traffic battle will also bring on a flurry of counteractive efforts by operators. “

Food Delivery Got Really, Really Messy in 2019. That’s a Good Thing

Roughly this time last year, talk around the future of restaurant food delivery screamed promise and progress. Funding and acquisitions abounded. Valuations skyrocketed, and by mid-year, third-party food delivery apps were projected to have 44 million U.S. users by 2020. 

That number hasn’t changed, but a heck of a lot else did, and somewhere along the line, the rose-tinted glasses through which the industry viewed food delivery came off and reality set in. In case you hadn’t heard, reality is a messy business. At the close of 2019, food delivery is even messier, mired in regulatory battles, bad press, and questions around profitability that grow louder each week.

None of this means third-party food delivery is dying. All of it plays a crucial role in moving the discussion forward about food delivery — what it is now and what it should become going into 2020.

Before we go forward, here’s a quick look back:

Third-party Delivery Opponents Got Stronger and Fought Harder

Largely speaking, there weren’t many detractors — at least not vocal ones — of third-party delivery services like DoorDash, Grubhub, etc. at the start of 2019. While some chains, notably Jimmy John’s, opted out of third-party delivery, we saw more deals struck in the first half the year than questions raised. 

DoorDash serves as a good example of the sentiment around third-party delivery in the first half the year. DoorDash became the first delivery company to offer service in all 50 U.S. states. It also struck lucrative deals with high-profile restaurant chains left and right. And there was its valuation, which kept ballooning with each new funding round, eventually eclipsing $12 billion. 

The other major services also had their fair share of lucrative deals and high valuations. Uber Eats nabbed a “preferred” delivery partnership with Starbucks. Postmates raised millions ahead of its IPO (more on that in a minute). Grubhub, too, made a slew of deals with high-profile restaurant chains, including Taco Bell and Dunkin’.

Then things started to get tense. In June, an oversight hearing held in NYC called into question the high fees Grubhub and other companies charge restaurants for use of their services.

From there followed one controversy after another: antitrust investigations, ethically questionable tipping policies, plummeting stock. More recently, California passed Assembly Bill 5, which reclassifies gig workers as employees and undercuts the entire model on which third-party delivery is built. DoorDash and Uber, among others, have vowed to fight back in 2020.

We can certainly expect that battle to take place. But if events in 2019 taught us anything, it’s that no matter the front it chooses to fight, third-party delivery companies will find more than one opponent lying in wait. 

IPO Fever Cooled Down

Of the big four third-party food delivery companies, Uber, Postmates, and DoorDash were all said to be moving towards IPOs in 2019. (Grubhub IPO’d back in 2014.) However, Uber was the only one of them to actually follow through and go public — then subsequently racked up billions in financial losses. The company’s most recent earnings call saw some improvement: roughly $1 billion in losses in Q3 versus $5.2 billion in Q2. But it’s still $1 billion in losses.

Postmates, meanwhile, confidentially filed for an IPO in February but was at last check in talks to find a potential buyer after laying off staff and shuttering its Mexico City operations. DoorDash may be pursuing an IPO for 2020. Or it may be pursuing a direct listing, largely to avoid some of the scrutiny that comes with debuting on the public market. After all, profitability remains very much a question mark for third-party delivery companies, and IPOs in general fizzled this year, leaving even more questions about them for next year.

Hybrid Delivery Heated Up

Earlier this year, I wrote that “there are now more ways for restaurants to do delivery than the two extremes of pay for your own fleet or sign up with a third-party service.”

That middle ground gained, eh, ground in 2019 thanks to the rise of hybrid delivery strategies, where delivery orders originate through the restaurant’s own app and third-party services are used only for last-mile fulfillment. Some chains, notably Panera, are using an inverse version of this strategy, sending orders through third-party apps but handling the last mile themselves. 

There are even variations on those variations, but they all hint at the same thing for the future: the delivery stack — tech, operations, the all-important customer data — won’t rest in the hands of one but many for some time yet.

Progress, as George Orwell once wrote, is “slow and invariably disappointing.” The market for third-party delivery may be mired in confusion and controversy (of its own making in some cases), but, as I said before, that doesn’t spell the end for the model. In fact, third-party delivery is still expected to account for 70 percent of delivery orders in 2022.

In the near future, though, expect this area of the food industry to get messier, raise more questions, and incite more regulatory battles as it progresses towards normalization.

Uber Is in Talks to Sell Its Uber Eats Business in India to Zomato

Food delivery service Zomato is in talks to buy Uber Eats’ India business, sources familiar with the matter told TechCrunch. The deal values Uber Eats’ India business at $400 million currently, and the rideshare giant would potentially be able to invest $150 to $200 million in Zomato.

The deal comes as Uber Eats struggles to stay competitive in India, where it is currently the number three player behind Zomato and Prosus-backed food delivery service Swiggy. Uber Eats currently makes roughly half a million deliveries each day, while its competitors each do well over 1 million orders daily.

Uber has been in talks with Zomato since November of this year. 

India isn’t the first country Uber Eats has backed out of. In September of this year, the company shuttered its business in South Korea, citing “competitive pressures” most notably from Woowa Bros.’ Baedal Minjok food delivery service. (The South Korean market got a further shot of consolidation last week when Woowa announced plans to acquire Delivery Hero for $4 billion.)

Uber posted over $1 billion in losses on its most recent earnings call, where it also noted that its Eats business was still losing enormous amounts of money. In India, the company projected a negative revenue of $107.5 million for Uber Eats between August and December of this year, according to TechCrunch. The company also announced layoffs, which included Uber Eats team members, in October. 

Uber and Zomato are still finalizing terms of the deal, which could go through before the end of this year. The $150 to $200 million investment would give Uber a sizable stake in the Zomato and therefore entry back into India’s food delivery market. The combined forces of Zomato and Uber Eats would make for the largest food delivery service in India, ahead of Swiggy.

Delivery Hero Agrees to Buy South Korean Food Delivery Service Woowa Bros. for $4B

Delivery Hero announced today that it has has agreed to buy South Korean food delivery rival Woowa Bros. for $4 billion, according to an article published on The Wall Street Journal. 

Berlin, Germany-based Delivery Hero is one of the largest restaurant food delivery companies in the world, operating in over 40 markets across Europe, Latin America, Asia, and the Middle East. But in South Korea, Woowa Bros. is even bigger, with its Baedal Minjok service holding a 75 percent share of the food delivery market. The company also builds its own food delivery robots (for which it raised $320 million in 2018) and is an investor in restaurant robotics company Bear Robotics.  

Currently, Delivery Hero’s Yogiyo food delivery app ranks second behind Woowa Bros.’ Baedal Minjok service in South Korea. The consolidation of the two companies means Delivery Hero will gain an even wider reach in Asia and especially South Korea — the world’s fourth-largest market for food delivery.

Competition in that market is fierce but rapidly consolidating. Even with 10 million active users in Korea, Baedal Minjok is still competing with e-commerce company Coupang, which is backed by SoftBank and launched a food delivery service this year. It will not, however, go toe-to-toe with Uber Eats, which shuttered its business in South Korea in September citing “competitive pressures.” The deal with Delivery Hero will be a boost for Woowa Bros. and also give Delivery Hero access to more potential users. It will also intensify competition within the food delivery space even more.

Even so, Delivery Hero CEO Niklas Oestberg said on an analyst call that he does not expect antitrust issues to surface as they have with Amazon’s recent investment in Deliveroo in the UK.

Amazon Has 5 Days to Save Its Controversial Investment in UK Food Delivery Service Deliveroo

Amazon’s investment in Deliveroo — and its stake in UK restaurant food delivery — remains in doubt after British regulators said this week that the deal could mean higher prices and lower quality services for customers. Amazon and Deliveroo have five days to submit proposals that counter these concerns, which were raised by UK competition watchdog the Competition and Markets Authority (CMA). Failure to do so would mean a an in-depth investigation of the deal that could take six months, according to an article published in The Guardian.

Amazon first announced the investment in Deliveroo in May 2019, when it was meant to be part part of a larger $575 million funding round. Though the investment would form a minority stake, about 16 percent, the CMA flagged it in July, saying it presented “reasonable grounds” to suspect that Amazon and Deliveroo would “cease to be distinct.” Deliveroo was then prohibited from any activity that would lead to Amazon’s integration with the restaurant food delivery service, including changes to senior management or big contracts. 

In a statement released Wednesday, the CMA said the investment could “damage competition in online restaurant food delivery by discouraging Amazon from re-entering the market in the UK.” Amazon previously ran its own restaurant delivery service in the UK but shuttered that business after just two years. As regulators have stressed, the Deliveroo investment would give Amazon a path back into the market and immediate access to Deliveroo’s existing customer base. That in turn would undercut competition from other food delivery services in the UK such as Uber Eats and Just Eat.

“There are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses.” Andrea Gomes da Silva, executive director of the CMA, said in the statement.

There is also the concern that the deal would damage competition in the UK grocery delivery sector. Amazon and Deliveroo are both two of the strongest players in this area right now. A major investment like this could reduce the competition.

According to The Guardian article, Amazon could be forced to sell its stake in Deliveroo, as previous companies have had to do in similar cases over the years.