In the age of disruption and break-things-fast mantras, Amazon’s entry into the food scene has been more of a slow burn. Over the past two decades, the retail behemoth has burned—and in some cases, eviscerated—stalwart brands in each new ecosystem it invaded, from Barnes & Noble and Borders to Macy’s and Best Buy.

Amazon built its empire on competitively priced, quickly delivered goods. For a time, that empire mostly excluded restaurants, which are more of an experience than a commodity. But times are changing. On-demand has become a basic requirement for consumers, and perhaps no industry has jumped on that bandwagon as abruptly as foodservice. New technologies enabling delivery, mobile order, and mobile pay have proliferated in recent years.

It’s been a boon to the restaurant industry in many ways, but disruption is not without its drawbacks.

“It’s starting to become more apparent that restaurants, which had long been thought to be somewhat insulated from Amazon, are starting to feel some impact,” says Morningstar analyst R.J. Hottovy, who closely follows both foodservice and Amazon. “Whether that be the fact that consumers are just more comfortable ordering things because of the speed in which products ship to their house has gotten so much shorter, we’ve seen a big push toward food delivery, and obviously Amazon is part of that.”

Indeed, Amazon has been quietly peddling its own fresh-goods delivery service for more than a decade. Then, a few years ago, it began rolling out a restaurant delivery arm in select markets. But it wasn’t until last summer that the company really turned—or, more aptly, jerked—heads when it purchased organic grocer Whole Foods to the tune of $13.7 billion. Whole Foods’ stock surged while competitors’ numbers fell at the prospect of an Amazon-backed grocer. At the same time, stocks for leading distributors US Foods and Sysco dipped 3.4 and 5 percent, respectively.

The Whole Foods acquisition may have more direct implications for grocery stores and businesses farther up the supply chain, but it’s impossible for a giant like Amazon to make a move without generating tremors far and wide. As Bloomberg declared last summer, Amazon has put the restaurant industry on notice.

Exactly how Amazon will affect restaurants remains to be seen. After all, the retailer’s formula for success involves eschewing norms and breaking expectations.

The multibillion-dollar grocerant

Sales at restaurants and grocery stores are inextricably linked, wherein the success of one is often to the detriment of the other. If the cost of goods increases, consumers are more apt to eat out, but when groceries are less expensive, they’re more likely to prepare food and dine at home.

“The prices you pay at grocery stores have been relatively kept in check, whereas pricing at restaurants has been pretty aggressive the last few years,” Hottovy says.

Americans are not only spending more on food as a whole, but they’re also increasingly putting those dollars toward dining-out occasions. Since 2014, more than half of consumer food and beverage spending has been away from home, per data from the U.S. Department of Agriculture (USDA). Historically, grocery purchases accounted for two-thirds of such expenditures. The shift could be attributed to a number of factors: the rise of reasonably priced, high-quality fast casuals; the proliferation of delivery options; or just the increasingly fast pace of life with little room for at-home cooking.

According to the USDA, food consumption away from home amounts to some $800 billion (up 94 percent since 2003), beating at-home spend of $793 billion, which only increased 59 percent in that same time period. Nevertheless, industry reports suggest the barrier between these once differentiated competitors is continuing to erode—and Amazon’s entry into the space can only accelerate that process.

“I think fast-casual restaurants should be on notice. … For a made-from-scratch fast-casual restaurant like Marination, we compete directly with the salad bar at Whole Foods,” says Roz Edison, cofounder and co-owner of fast-casual mini-chain Marination and full-service Super Six. “It’s a similar price point; it’s a similar point of convenience, comparable service. You have to find a way to create value to your customers, and it’s not necessarily an easy thing to do.”

Being based in Seattle, Edison and her partner Kamala Saxton have something of a front-row seat to Amazon’s growth; they even have a location at the base of one of the retail giant’s many corporate offices in the South Lake Union neighborhood. In addition, three of Marination’s four stores use Amazon Restaurants, the company’s delivery service.

In the grocery store and grocerant space, Whole Foods was already a force to be reckoned with. Now with Amazon’s backing, its future potential should be enough to make anyone in the food business a bit wary.

For her part, Edison is keeping tabs on the situation, but she also believes fast casuals and grocerants can peacefully coexist.

“The No. 1 thing you do is you try, on a very human level, to connect with people who walk in the door at your restaurant—that’s all you can really do. Ten dollars is $10. It will feed you in both places, and both will be delicious. I have nothing against the Whole Foods salad bar; I go there myself,” she says, adding that once in a while customers want to mix up their routine and dining choices. “I don’t want to believe that our society is going to move 100 percent to eating out of a grocery-store salad bar. That would bum me out.”

Right to the doorstep

Aside from the Whole Foods acquisition, Amazon’s most concerted efforts in foodservice are, unsurprisingly, rooted in delivery. Long a hallmark of the pizza category, delivery has exploded within foodservice, as restaurants serving everything from burgers and salads to Korean barbecue and tacos now deliver. Some are building their own in-house teams, but many are turning to third-party providers like UberEats, DoorDash, and Postmates.

Convenience—in the form of online ordering and delivery—is the crown jewel of Amazon’s business model, making it a service ripe for disruption. But until recently it had made little effort to aggressively push into the space. Its subscription-based grocery delivery service, AmazonFresh, launched more than a decade ago, but it’s still only available in select markets. Limited bandwidth notwithstanding, some food operators are realizing benefits to being on the Amazon platform.

“To me, there’s no other place to shop. Once you have a presence on Amazon, it just changes everything for your business. … Anything you can get delivered automatically increases your ranking in people’s eyes,” says Annalisa Johnson, a Los Angeles–based food proprietor. “You can have the greatest product in the world, but if nobody knows about it, who cares?”

Johnson founded her own gourmet catering company, Annie’s Edibles, in 1997, and four years ago purchased Gotta Have S’more, which opened its first store in June. But even before the CPG brand expanded to the restaurant side, its cupcake-like s’mores were available to order through UberEats, Postmates, ChowNow, Williams-Sonoma, and Amazon. Johnson credits such widespread brand exposure in facilitating the transition to brick and mortar.

“I’m always impressed with how quickly Amazon can turn things around, and really how good their customer service is,” she says, referring to both personal and professional experience. For example, when Johnson requested products be shipped in Gotta Have S’more’s proprietary packaging to protect the product in transit, Amazon acquiesced.

Although Gotta Have S’more is no longer available on AmazonFresh, Johnson plans to continue to work with the company through a new platform.

In June, she submitted an application to be on Amazon Restaurants, the company’s answer to third-party delivery. Like AmazonFresh, service is not widespread; at press time, it’s been rolled out in 20 cities across the country. Half of those markets have less than 300 restaurants signed, while New York City and Los Angeles/Orange County are the only two to break 1,000. With just shy of 700 restaurants in Seattle, Amazon Restaurants takes the lion’s share of business in its hometown, comprising some 21 percent of food deliveries in the city, according to 2017 data from analytics firm Second Measure via Recode. It’s just a hair above UberEats at 20 percent.

“Amazon deserves the credit in Seattle … but their expansion outside of Seattle has not been victorious to date,” says Marcus Higgins, president and chief operating officer at EatStreet. Unlike other third-party delivery services, EatStreet flies somewhat under the radar, operating in what Higgins calls “the luxury of being in smaller, blue-ocean markets.” Founded in Madison, Wisconsin, in 2010, EatStreet targets second- and third-tier markets rather than the shiny metropolises that lure its competitors. This gives it an inherent edge; in these cities, EatStreet is often the first delivery platform to approach restaurants.

“The beauty of being in the tier-two and tier-three markets is … we have less competition, which allows for lower acquisition costs and higher profitability,” Higgins says.

Any category that enjoys explosive growth eventually cools to market contraction, and industry analysts believe that will one day be the case with delivery. Hottovy thinks platforms with substantial backing, like UberEats and Amazon Restaurants, have the best chance of surviving the culling process. EatStreet might not have deep pockets, but Higgins cites both the company’s focus on secondary markets and its unique business model (it hires all of its drivers as EatStreet employees) as key advantages.

In the short term, at least, Higgins views Amazon’s restaurant-delivery service as a boon to operators. Nevertheless, he also recommends caution.

“I think everyone needs to be slightly wary of what Amazon’s long-term intentions are in any marketplace,” he says. “In five years, if Amazon goes heavy into online food ordering, they have the ability to cause a lot more disruption than others. They haven’t shown the propensity or the desire to do that yet.” Even with its bullish track record, Amazon has been relatively passive in the food industry, even missing the mark at times. As Higgins points out, the retailer has yet to release a secondary app tailored to its restaurant delivery business the way Uber did. And for a tech giant like Amazon, it should be an easy enough task.

Murky forecasts

There’s no shortage of speculation as to what Amazon’s next move will be—restaurant-related or otherwise. At press, it’s still on the hunt for a second headquarters location while wrangling with Seattle over taxes. In February, it laid off hundreds of employees, even while it continued to hire en masse. The reason? While the company has never officially confirmed it, the cuts were aimed at eliminating redundancies between Prime Now and AmazonFresh, which have since merged.

On the delivery side, it’s testing a program called Prime Air, which would deliver goods, and potentially foods, via drone. (Given current FAA regulations, such technology is more a futuristic experiment than a viable business venture.)

And as for the notion that Amazon might purchase a restaurant chain as it did a major grocer—or even start its own restaurant concept—it’s far off but not far-fetched.

In January, the company launched its first brick-and-mortar retail outlet in the heart of its urban campus and just blocks from a Whole Foods. As of this summer, it was the lone Go store, but reports hint that six more Amazon Go locations could crop up before year’s end.

Using “the world’s most advanced shopping technology,” the shop has no checkout; instead, customers open the Amazon Go app to enter the store and the system automatically detects which items are selected and taken away. Amazon Go is technically a convenience store, but like many innovators in the space, its selection of goods includes upgraded meal and snack options.

“I don’t think that a restaurant is going to happen yet, but I wouldn’t rule it out completely,” Hottovy says. Ultimately he thinks these new programs and services all tie back to Amazon’s bread and butter: Prime.

“That’s starting to get to the point where you’re running out of white space for the number of Prime members,” Hottovy says, adding that with at least 70 percent of Amazon’s 100 million Prime members being in the U.S., the space for growth is continuing to shrink. “Last year was a signal to a shift in strategy for the company. It’s not about getting more Prime members now; it’s getting more engagement out of them. … I think the endgame for the company is finding ways to artificially raise that Prime membership fee and do it through Whole Foods and other things.”

If a more expensive and potentially tiered membership is Amazon’s goal, it would be a relief for suppliers and restaurant-delivery businesses. Such a tactic would mean it aims to pad revenue, not own the entire space. And so far that’s how it’s behaved in foodservice. As Higgins says, Amazon would have to offer restaurants some incredible perks and features to force them into an exclusivity contract.

Marination’s Edison sees the company hedging its bets through its many initiatives. Even within the foodservice space, Amazon is donning several hats. The irony that some of those roles—such as grocerant and restaurant deliverer—intrinsically oppose each other isn’t lost on Edison. If Amazon helps Whole Foods lower its prices, more customers could flock to grocery stores, possibly at the expense of its Amazon Restaurants clients.

At the same time, the more omnipresent Amazon is, the more data it collects on customers. Already it has permeated several industries, amassing huge amounts of data. But in the jungle that is the new rule of retail, there’s still much to explore.

“It’s like roulette. It’s like playing one chip on every number on the board. … They kind of want their finger on the pulse of everything,” Edison says. “They’re just living up to their name; their name is Amazon. They’re going to go wherever they feel there’s something for them to add value.”