Market Overview

Restaurant Investors Should Be Worried Over The Amazon—Whole Foods Tie-Up

Restaurant Investors Should Be Worried Over The Amazon—Whole Foods Tie-Up, Inc. (NASDAQ: AMZN)'s proposed acquisition of grocery chain Whole Foods Market, Inc. (NASDAQ: WFM) will be official on Aug. 28 — and restaurant investors should be more worried.

At the most basic level, Amazon's ongoing strength implies that consumers aren't shopping as much in brick-and-mortar stores as they used to, CNBC reported. Many consumers would combine their shopping experiences with a bite out but that is no longer the case, as evidenced by Starbucks Corporation (NASDAQ: SBUX)'s recent earnings report referencing retail woes.

But this trend will only worsen for the restaurant industry after the acquisition of Whole Foods gives Amazon insight into consumers eating habits. Amazon is known for compiling every piece of data on every consumer to optimize every aspect of its business, Eli Portnoy, CEO of Sense360 and a former Amazon employee told CNBC.

"I think restaurants have been immune to this because they never had a competitor who could do this," Portnoy said. "Now they do. Now they have Amazon that is going to come in and measure every single transaction and measure the impact of it and really think holistically, the same way they do on and across their other businesses."

Meanwhile, restaurants have attempted to take a deep-dive into how their consumers habits through loyalty and programs and other initiatives.

Restaurants will likely be ill-equipped to take on Amazon who may be better able to offer consumers a superior, cheaper and better food eating experience.

"Do I think restaurants need to think about it and care about it? Absolutely," Portnoy also told CNBC. "It's just another competitive threat in a very long list."

Related Links:

Winners And Losers From Amazon's Purchase Of Whole Foods

What Makes Sense About Amazon Buying Whole Foods

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