Amazon to shut down its Amazon Restaurants business in the U.S.

https://www.geekwire.com/2019/amazon-shut-amazon-restaurants-business-u-s/

by prostoalex • 7 years ago

120 127 7 years ago

ronnier• 7 years ago

Sad to see it go. I was on the original Amazon Local team for about two years, that ultimately turned into restaurants. A lot of my growth came from the people on amazon local, really solid people and good people, the product just had trouble catching on. That’s amazon, they’ll give just about everything a solid try and do their best knowing it may not work out.

Maven911• 7 years ago

Are you able to discuss some of the lessons learnt, like generically without going into too much private detail

civility15• 7 years ago

I wonder if Amazon would ever dive into the home real estate market. With modern day search, realtors provide very little value above doing the paper work, and that seems very automatable. There's just no reason to pay 6% of every house sale to middle men, but that's the way it currently works. A large company like Amazon or Google could make a ton of money at a much lower rate. I think this makes a lot more sense than going into the restaurant delivery business.

adrianmonk• 7 years ago

They already have trucks and people used to moving things around. They could sell you a house and have your stuff moved in 2 days. I even have the branding figured out for the moving service: Amazon Prime Movers.

hi5eyes• 7 years ago

give you a discount on furniture/moving/house if you sign up for prime

then onboard your entire life into amazons ecosystem, get great exclusive prime deals on the echo/whatever smart shit they want to dump on you

civility15• 7 years ago

There's already lots of healthy competition in moving companies. Imagine if the movers wanted a percentage of your home price instead of few hundred for the day's work.

The problem with realtors is that they've got a lock on the bureaucratic side, and the existing realty sites (Zillow, Trulia, etc...) are aligned with them. There are upstarts in some cities, but the existing realtors in those places collude to keep the process inefficient. It'll take a behemoth to crack it open, but there'll be a lot of reward for someone big enough to pull it off.

cherioo• 7 years ago

Redfin is already in that market and it doesn't seem to be doing very well. I'm actually fairly surprised how slow redfin is able to grow and expand their market. Their website felt second to none in terms of usability.

civility15• 7 years ago

Redfin looks like they're trying to be a "discount agent". Here is a quote from their front page:

We're full-service, local agents who get to know you over coffee and on home tours, and we use online tools to make you smarter and faster.

This isn't what I had in mind at all, and I'm not surprised they have trouble getting traction with that approach. If they save you 1.5% on your half, but the other agent still gets their 3%, you'd only save 25% of the thousands you spent in middle man costs. Meanwhile, all the 3% agents out there are applying pressure to see it fail.

In the ideal case where they get both sides, Redfin is only saving you 50%. There is no reason home sale paperwork should cost thousands of dollars to process. Someone like Amazon could eliminate agents altogether.

Here is another analogy - imagine TurboTax charged you a percentage of your yearly income instead of a hundred dollars for the "Deluxe" version. That would be insane.

ralph843• 7 years ago

FlyHomes is doing something interesting by actually buying and selling houses, not just facilitating transactions. It takes a lot of the risk and uncertainty out of the process. I hope they can succeed at scale.

prostoalex3• 7 years ago

It's expensive to have boots on the ground in every zip code. RedFin hires their own agents full time. OpenListings and Zillow refer online buyers to their affiliated agents who cut them a deal on commission in exchange for leads. You can always list a place with photos and all on Zillow or CraigsList and mention that seller will not pay an agent's commission. End of the day there's a "For Sale by Owner" sign for those driving or walking by.

But considering that in the US it's the seller who pays both agents, there are no immediate savings for potential buyers, and some, being new to the home-buying process in general or new to that zip code, would prefer some hand-holding and chit-chatting provided by their agent at no cost to them.

Among some not so obvious valuable tidbits that the buyer's agent can provide:

* general feel about the neighborhood, whether it's on the rise or in decline

* previous scandals and issues, like contaminated water, city attempting to pass an additional levy or tax, house being on the airport path, etc.

* potential future improvements, like a light rail station planned nearby

* referrals to various local professionals, like inspectors, surveyors, painters, or movers

* any other new developments in town or neighborhoods that the buyer might not have considered, especially when shopping remotely

ralph843• 7 years ago

Theoretically agents could do these things, but most don't. They want deals to close. Giving you reasons not to buy doesn't close deals. If it turns out you don't like the house they'll be happy to sell it for you later.

civility15• 7 years ago

But considering that in the US it's the seller who pays both agents, there are no immediate savings for potential buyers [...]

This is all part of the scam, and I'm surprised more people can't see through it. Five people walk into a room at closing. There are two agents, a title agent, the seller, and the buyer. Only the buyer brings any money - so it's pretty clear who is paying.

Put it another way - if the seller goes with a lower percentage agent, then the buyer keeps more of the offer price, and should therefore accept a slightly lower offer. This saves the buyer money too.

Among some not so obvious valuable tidbits that the buyer's agent can provide: [...]

And you think that's worth 6% of a house that costs hundreds of thousands of dollars? I think that's insane.

This all sounds like a pitch from a realtor.

emiliobumachar2• 7 years ago

Has an agent ever told a potential buyer that a neighborhood is in decline?

emiliobumachar2• 7 years ago

No reason to start on all zip codes at the same time.

craz8• 7 years ago

For the last few weeks they’ve been hitting me with exactly the same offers as Bite Squad - including free delivery for both last month AND this.

Despite the convenience of purchasing with Amazon, it’s just an expensive way to buy food!

At least they never just threw it over the gate like tonight’s Amazon delivery!

r32a_• 7 years ago

Amazon has heavily invested in Deliveroo. Will probably buy them out eventually

dawnerd• 7 years ago

Shame, they were the best restaurant delivery service I've used.

dewitt• 7 years ago

I'm not surprised. Amazon's entire MO is a relentless focus on the customer. They do that by methodically optimizing and controlling every aspect of the supply chain right up to the moment the product is handed off to the customer. And they get better at it every day.

Restaurant delivery breaks that model. There is too much variability. Too much can go wrong outside their control, and they don't have enough leverage to change it.

If they can't win (even at zero margin) and can't make customers consistently happy, why be in it at all?

sametmax2• 7 years ago

Mac donald's seems to do exactly that.

csallen• 7 years ago

McDonald's delivers?

Animats2• 7 years ago

Amazon had a restaurant business?

The funny thing is, Amazon probably could do a good delivery restaurant business. There are already many "delivery only restaurants"[1] Uber Eats encourages others to start them. But Amazon, unlike Uber, is capable of building physical infrastructure. The future of this is "food fulfillment centers", large warehouse spaces which house various specialty kitchens. Common functions, such as shipping, cleaning, equipment maintenance, and order handling are shared. Surprising that Amazon didn't go that way.

[1] https://ny.eater.com/2016/9/26/12717518/delivery-only-restau...

hbosch5• 7 years ago

I think you might be partially on to something here; generally the idea being that food delivery is essentially commoditized and Amazon is uniquely suited to thrive in commoditized industries with their vast infrastructural advantages.

They do have Whole Foods and Amazon Go, which both supply ready-to-eat foods along with meal kits. It would be a minor logistical challenge to simply start preparing their own meal kits on-demand and delivering them via Prime Now (which operates inside the exact same markets as Amazon Restaurants?) with the bonus benefit of owning quality control in the kitchens.

bobthepanda2• 7 years ago

The main problem is that kitchens operate with dirt cheap labor costs. In a market like New York, all those cheap hole in the walls are paying their workers cash under the table and running with razor thin margins.

It’s one thing to target a cushy market like bookstores, but restaurants are cutthroat, and on top of that meal kit customers are fickle.

thatoneuser2• 7 years ago

Hm kind of reminds me of Ikea's food racket. Actually I'm sitting here trying to think of why that wouldn't work but I honestly can't. Cool idea!

dagw3• 7 years ago

What is "Ikea's food racket"?

trevyn• 7 years ago

Just as there are already “enough” physical cars, there is also already enough physical restaurant infrastructure, so today it’s more a question of efficient utilization. What Uber Eats is doing in this space is really smart: Keeping track of local food search keywords, and reaching out to local restaurants saying “Hey, if you provided such-and-such food items at such-and-such time of day in your area, we think you’d do really well. You can sell these items on Uber Eats under a different brand if they don’t fit in your existing cuisine niche.”

Longer-term you’re probably right that centralization could be more efficient in some cases, but looking too far into the future often makes less economic sense today. See: Webvan.

el_programmador• 7 years ago

But a "restaurant on wheels" is a idea that will be truly profitable, at least in theory! Its true that restaurants abound in localities today but mobility of people (and their eating preferences) from one location to another has also increased. Restaurants which are profitable today may not be tomorrow. A restaurant on wheels can easily adapt to changing demands by constantly moving on from low demand areas to high demand ones. Maybe, Amazon can even build an AI or something to guide it for most efficiency.

Sendotsh• 7 years ago

large warehouse spaces which house various specialty kitchens. Common functions, such as shipping, cleaning, equipment maintenance, and order handling are shared.

Deliveroo in Australia does something like that.

https://foodscene.deliveroo.com.au/restaurant-profiles/secon...

https://www.news.com.au/lifestyle/food/restaurants-bars/deli...

solidasparagus2• 7 years ago

Who announced a $575M funding round led by Amazon three weeks ago.

alaskamiller3• 7 years ago

Yeah it did, and restaurants actually put up stickers for it on their doors!

What you're describing is what Travis Kalanick bought and have been building in LA and San Jose since last year. There are other commissary kitchens that's now doubling as virtual kitchens with half a dozen brands sharing utility, equipment and even staff.

I'll do you even one better, here's the real future in less than three years:

Restaurants will shed front of house as most low end full service will be liability, instead restaurants will consolidate, rely on DSPs (especially GrubHub because unlike the other two chooses to break apart their commission structure), and merge with digital agencies in order to brand, market, create content, and manage communities.

solidasparagus2• 7 years ago

I'm doubtful. No service, low-cost restaurant setups are not a new thing (quick service/counter-based) and full-service restaurants are still everywhere.

I don't know if that's because profit isn't overwhelmingly the most important driver when running a restaurant or because restaurants make most profit off of aspects that don't translate to counter-service/delivery, such as drinks. But I would expect these type of virtual restaurants to complement existing restaurants, not meaningfully replace them.

lotsofpulp2• 7 years ago

That misses a major purpose people go to sit down restaurants is for the atmosphere. Whether it be for casual dining, or celebration, or a date, or business meeting. The point is not the food, it’s to facilitate a social interaction under the common setting of needing to eat.

You’ve always been able to get good food without a front of house.

amyjess3• 7 years ago

Honestly, if we're bringing back no-FOH restaurants, can we get automats again? I've heard stories about them from my parents and seen a re-creation of one in Agent Carter, but I'd really like to actually get to experience one.

masklinn3• 7 years ago

There are already many "delivery only restaurants"[1]

"Delivery-only restaurant" sounds self-contradictory, a restaurant is by definition a place where you can eat.

These sounds more like takeouts, or traiteurs.

madeofpalk• 7 years ago

While I understand what you're saying, I think the distinction is useful because "takeout" has more of a specific meaning and association with more 'casual' food. Whereas these 'delivery only restaurants', or 'dark kitchens' are existing restaurants that people enjoy, but with an offsite, delivery-only location.

chrisseaton6• 7 years ago

'Delivery-only takeout' would also be self-contradictory, wouldn't it.

devit• 7 years ago

That sounds overdue.

Restaurant food is massively overpriced compared to raw materials (despite basic dishes like pasta and sous vide steak taking basically no time and effort to prepare), and mass producing it along with mass delivery using vans might fix that.

tnolet• 7 years ago

A price of an item is rarely if ever based on its raw material cost. With restaurant food even more. You pay for location, rent, heating, staffing etc etc etc

ghaff3• 7 years ago

If it takes no time or effort why not just do it at home? The results will be better.

It most certainly takes time and effort to have kitchen infrastructure, inventory, cook to order, and delivery.

ravenstine2• 7 years ago

Off topic, I just videos on cooking sous vide steak and I'm totally sold on the technique. Where has this been all my life???

zrobotics3• 7 years ago

Raw materials aren't the reason restaurant food is expensive, the biggest cost of running a commercial kitchen is labor. And that is even after considering that kitchen staff are often low-wage positions. How, exactly, will this save money? Sure, you don't have to pay waitstaff the ludicrously low rate of ~1.25/hour, but the delivery drivers need paid and the app will take its middleman cut of the profits.

And have you ever eaten hospital food or other cafeteria e? That is the quality to expect from a industrial scale kitchen. Delivery is convenient, but nothing about this business is very revolutionary, and I certainly don't see the restaurant industry being 'disrupted' anytime soon.

bethling• 7 years ago

Take a look at what Deliveroo is doing with their "Editions" brand. They get some space, set up small takeout only kitchens and enable a restaurant to expand their delivery range (different neighborhoods or even cities).

https://foodscene.deliveroo.co.uk/promotions/deliveroo-editi...

amyjess3• 7 years ago

I tried it twice, back when I had Prime.

Amazon's mapping system puts my house in the wrong location, and to make matters worse, in my experience the drivers are utterly nasty about it.

I have stood in front of my house as I can see the driver go by multiple times. I will jump up and down and wave and try to flag them down, and they just speed by. I call them to give them directions, and they ignore everything I have to say. I was often talking to them on the phone when I see them speed by, and they're not even paying enough attention to see me flagging them down with one hand while I have my phone at my ear. I ask them to open Google Maps because that has my address in the right location, and one guy shouted at me "This is Amazon Prime! We don't use Google!".

Both times, I complained to corporate because my food was an entire _hour_ late, and it was ice cold by the time it got here. The first time, I got credit for my next order, which is the only reason there was a second time. There was never a third time, and I let my Prime subscription lapse without renewing it not too long after that.

will_brown• 7 years ago

Surprising that Amazon didn't go that way.

Maybe customers can over look Amazon workers not getting bathroom breaks and being forced to urinate in plastic jugs so they can get their online orders next day...but customers might not overlook those working conditions when they find out the people handling their food are urinating in the kitchen because they don’t get bathroom breaks.

Not to mention the stories of 100 degree warehouses so amazon can save on electricity, I wouldn’t put it past them to not keep food as cold as it should be to save a few bucks.

freewilly1040• 7 years ago

There’s lots of competition and it’s a low margin business. Probably just didn’t see it as a market worth fighting for.

uremog• 7 years ago

So the goal is to be like a food court, but cheaper and/or better because, due to delivery-only, the location can be cheaper, and the space can be more efficiently used (no customer seating)?

Animats2• 7 years ago

Right. The location can be cheaper, and better laid out for a volume business. Like having a loading dock. If you can handle big trucks, you get to cut out a layer of restaurant service middlemen.

Fjolsvith• 7 years ago

I can see asking Alexa to bring me a three meat pizza, and the delivery drone places it on my personal robot, which grabs a beer from the fridge before it brings it to me at my recliner. That's Prime delivery!

John_Michael• 7 years ago

This is bad news, it was one of the best food delivery services in the U.S

icelancer• 7 years ago

Ah, this is too bad. We used it at home occasionally. Everything we've used has either gone out of business, cut ingredients to an embarrassing portions, or raised prices way too high (probably to where they need to be to be sustainable).

It's not a viable business, I think. Not without some big leaps forward.

imgabe• 7 years ago

Not surprising. I got a number of promotions for this but every time I went to see what restaurants were available it was just fast food. Nothing that wasn't already available from Uber eats or Caviar.

tracer4201• 7 years ago

Disclaimer: Amazon investor

I’m glad. I didn’t see this going anywhere. I’ve tried the service several times when I was living in Seattle. Pretty much every option had terrible ratings and everything I tried was generally a bad experience. Delivery was always on time, but paying $15-25+ per person for a soggy, wet meal just wasn’t worth it. We ordered a pizza one time arrived completely cold with soggy crust.

NotPaidToPost• 7 years ago

The market is already crowded with Uber Eats, Deliveroo, etc.

All of the incumbents are bleeding money.

Amazon decided to invest in Deliveroo not to miss the boat but it seems sensible not to pursue their own platform.

pxtail• 7 years ago

I'm amazed and amused reading some replies - it looks like some people would love to live in a world where single corporation fulfills all their basic needs:

* restaurants from amazon

* home real estate market[0]

* shopping from amazon

* entertainment from amazon

* alexa from amazon, listening all the time

* education (already some basic form of it exists - alexa is used to answer kids questions)

Although many important key services are still missing: healthcare, insurances, banking.. etc.

edit: banking-related product already out [1]

[0] https://news.ycombinator.com/item?id=20152956

[1] Banking - Amazon.com Credit Builder - https://news.ycombinator.com/item?id=20149304

whoevercares• 7 years ago

healthcare

Forget about Haven already?

TuringNYC• 7 years ago

Keep in mind feudalism, though far from ideal, had benefits.

Good lord if Haven can fix the broken US healthcare system, I'd happily embrace the feudal estate.

lukifer• 7 years ago

There is perhaps an appeal to megacorps as voluntary nation-state membership; it is not trivial to leave one's tech ecosystem, but it's much easier than leaving one's nation, and there are advantages to all the components of the stack working together. (Blood and souls for my Lord Apple of Cupertino!)

On the other hand, I think Douglas Rushkoff and Bruce Schneier are correct in comparing the FAANG ecosystem to feudalism: https://www.schneier.com/essays/archives/2012/11/when_it_com...

zrobotics3• 7 years ago

I haven't used the restaurant service, but I'm starting to be shocked at how quickly Amazon is going downhill in most of their consumer-facing businesses. I dropped prime last month after maybe 6 years, since the price keeps climbing and the value of the service keeps dropping. I used to make nearly all of my online purchases through them, but between the fakes and poor customer service I couldn't justify the cost of prime anymore.

Although I think this is a good thing, I'd rather not see one company control the entirety of e-commerce. And out of the big tech companies Amazon is the easiest to drop (excluding AWS, strictly consumer services). I'm still not Google-free, but switching email and search was much more difficult than leaving Amazon.

tfehring• 7 years ago

I want someone to come in and crush entrenched rent-seekers by building and scaling better, cheaper products. There are only a handful of companies in recent memory that have managed to do that - Walmart, Vanguard, Uber/Lyft, and arguably Airbnb and Robinhood are the first few that come to mind - and I can't think of any other than Amazon that have done it in multiple spaces (CPG + IaaS so far).

I'd prefer if different startups did it in each of those industries, but I can live with Amazon taking over the world if it means that health care no longer sucks and selling a home no longer costs 6% and kids in underfunded school districts get their questions answered.

cannonedhamster• 7 years ago

You can sell your home though various portals without having to ever speak to a realtor. Walmart has innovated in a few different places but primarily logistics. Disney is not just an animation hub, they work on robotics, software, as well as psychology and other areas. I think it's easier to see when your company isn't already a behemoth. Amazon arguably has done innovation better than most, but a lot of that has been through investor money other people wouldn't have access to. Established companies have to balance the books and as they've shifted towards profitability and revenue innovation has necessarily slowed.

I think you're already seeing many of your problems getting closer to solutions. There is that natural tension though between capitalism and it's tendency towards monopoly and the government's responsibility to ensure that the market stays healthy and competitive.

Nasrudith• 7 years ago

This seems to be a trend with big tech companies - they try to get into a new domain under their name and then when it succeeds half-heartedly kill it off.

It looks very dysfunctional and inefficient even from a venture capital "recycle it and risk it for another moonshot again" perspective and makes it look like they have lost their ability to innovate entirely once they start posting positive income to justify their stock cost. I am not sure if it is as dysfunctional as it looks or I am missing something.

ryanmercer• 7 years ago

I've been an Amazon customer (via my parents) since late 1995 or early 1996, this is the first I've heard of a restaurant branch.

bredren• 7 years ago

This biz unit kept spamming me. I had to complain multiple times to Amazon about their dumb emails. Sorry but good riddance.

Amazon to shut down its Amazon Restaurants business in the U.S.

Related Stories