Expanding on its AmazonFresh food delivery service and recent $13.7 billion Whole Foods Market retail acquisition in addition to its Amazon Go branded grocery stores, Amazon is expanding its food-related operations to launch ready-to-cook meal packages and delivery as it takes an even bigger bite out of the grocery business.
Now available in select markets, Amazon-branded meal kits (tagline: “We do the prep. You be the chef”) include raw ingredients to prepare meals including chicken tikka masala, falafel patties, salmon with soba noodles and tacos with pork that can be prepared in 30 minutes.
As USA Today notes, “Meal kits are a $2.2 billion industry (in the US), which is expected to grow 25-30% in the next five years, according to the Chicago-based food industry consulting firm Pentallect. Amazon’s entrance into the market sent shockwaves through the industry Monday, with shares of market leader Blue Apron tumbling roughly 11% on the news.”
The meal kits are already available to some customers of AmazonFresh with 17 different options like a Veggie Burger with Harissa Aioli to Steak Au Poivre with Parmesan Fries and all accompanied by the tagline “We do the prep. You be the chef.”
As for price, vegetarian options average $16 – or two for $20 – comparable to competitors Blue Apron and HelloFresh.
Since buying the organic grocer Whole Foods for $13.7 billion, Amazon has secured a beachhead in groceries and physical retail and will likely use Whole Foods’ more than 400+ locations as distribution centers for all their food services including meal kits.
“I’m not sure any of this will work, but that’s where they are headed,” said Michael Pachter, analyst at Wedbush Securities, to AP.
Amazon is also rolling out Amazon Pay Places, an extension of its mobile app, enabling customers to directly access third party services such as restaurants like T.G.I. Friday’s as it’s now doing.
— eBargains Today (@eBargainsToday) July 19, 2017
At launch, Amazon is partnering with T.G.I. Friday’s customers in Boston, Philadelphia, Baltimore, Washington D.C., Richmond, VA and Wilkes-Barre, PA.
“One of the things we’ve been doing the last couple of years is thinking about how to connect merchants with the Amazon customer base, knowing they are very active connected shoppers whether online or on mobile,” said Patrick Gauthier, VP Amazon Pay, to Pymnts.
“With what we are taking the lid off today — we are enabling merchants to instantly reach people who are highly mobile and very desirable as customers — without having to worry about app distribution.”
Gauthier noted that Amazon is not going into the order-ahead business and that Fridays has built the functionality they are managing.
“This is another example of how we are connecting the Amazon customer base to a third-party merchant and making it easier for them to transact by creating a framework that allows third party data and contacts to be passed into our app via an extension. It does not require merchants to build an app — it instead allows them to leverage the functionality they’ve built in a new way.”
For those less fortunate members of society who don’t know where their next meal is coming from, for whom AmazonFresh is beyond their grasp, Amazon is partnering with FareStart eateries to create jobs for those in need.
FareStart CEO Megan Karch graduated from the culinary training program, now in its 25th year. The nonprofit is dedicated to helping those who experiencing homelessness, in recovery, or those previously incarcerated to gain skills and employment in the food-service industry.
“I see students walk through our door with little sense of connection, little sense of hope, little sense of dignity, and to use their words, they come ‘broken,’” said Karch in a profile on Amazon’s blog.
“What I see when they graduate is a different person. I see them feel their own value. We use food as a tool for helping people see who they can be. We’re more than a restaurant. We’re more than a food business. We’re a life-changing business. FareStart is in the business of helping people change their life stories.”
In support of FareStart’s expanding services, Amazon will match all restaurant revenues and donations made to FareStart – up to $1 million – for the first 25 days of operation.
Jeff Wilke, Amazon CEO Worldwide Consumer, added, “I know that the work FareStart is doing is improving the ability of everybody who participates in the apprenticeship program to make a better life for themselves.”
Amazon has already donated more than 25,000 square feet of space within its headquarters buildings to FareStart. It just announced it’s opening a homeless transitional shelter inside one of its new Seattle headquarters buildings opening in 2020, to be run by Mary’s Place, a nonprofit that helps women and families who are experiencing homelessness.
Amazon donated space on its campus for Mary’s Place and announced matching grants of $1 million to Mary’s Place and $1 million for a Washington, D.C.-based organization called Friendship Place, providing emergency shelter for women and families, and services to help those in need find stable employment and permanent homes. And a fulfilling meal.