The rush to conquer the UK’s online food delivery market during a year of coronavirus lockdowns caused ballooning losses at Just Eat Takeaway.com, even as its sales soared.
The company, which runs Just Eat, the UK’s biggest food delivery app by market share, said revenues were up 54 per cent to €2.4bn in 2020, but pre-tax losses jumped 67 per cent to €147m.
Its fierce rival Deliveroo unveiled a similar picture to investors this week, as it prepares for an initial public offering in London, saying it had recorded 54 per cent growth in net sales to £1.2bn but losses of £224m in 2020.
Both companies said they intend to keep spending this year in order to take more market share.
Just Eat has offered heavily discounted or free deliveries in the UK to lure customers from Uber and Deliveroo, financed using profits from less competitive markets such as Germany and a €1.1bn convertible bond offering in February.
“We are now much cheaper than the competition,” said Jitse Groen, Just Eat Takeaway’s chief executive, which helped to drive an 88 per cent order growth in the UK in the first two months of 2021. Just Eat Takeaway is also investing heavily in marketing, where expenses increased 158 per cent to €369m in 2020.
The company said it expected “further order growth acceleration” in 2021 after seeing a 42 per cent rise in orders to 588m last year.
Groen said its growth forecast anticipated that coronavirus and its accompanying lockdowns, which have driven many new customers to food delivery apps, would ease “in the near future”.
While he expects a slowdown to the growth in orders delivered by Just Eat’s own “Scoober” couriers, Groen said its marketplace business — where customers’ meals are delivered by restaurants themselves — “will still thrive when there is no pandemic”.
“We believe our competitors that are mostly logistical [delivery] businesses will suffer [more] from the reopening of the economy,” he said.
Just Eat Takeaway is hoping its $7.3bn takeover of US-based Grubhub, announced last June, will complete in the first half of this year after obtaining regulatory approvals. Citing the upcoming merger, Just Eat Takeaway said it would not provide a financial outlook for the year.
Revenues in the UK, Just Eat Takeaway’s largest market where it faces its fiercest battle with Deliveroo, grew 42 per cent to €725m last year.
Groen said he was “not too worried” about stronger competition from a publicly listed Deliveroo, pointing to increased orders through its Scoober courier network of 600 per cent in the UK last year.
“I think that Deliveroo is a great operator,” Groen said. “We have copied quite a lot from the Deliveroo model in our own Scoober model.”
Just Eat Takeaway also revealed that it had turned down bids of up to €2.3bn for its 33 per cent stake in iFood, its Brazilian business which it owns jointly with Prosus, Naspers’ Dutch-listed investment arm.
The €2.3bn offer from an unnamed suitor was “simply too low”, Groen said, adding: “We are constantly in talks with various parties.”
Elsewhere in its year-end update, Just Eat Takeaway also warned of a potential hit from the UK’s planned rise in the corporate tax rate to 25 per cent starting in 2023. The company said this would “significantly impact the valuation of Just Eat Takeaway.com’s deferred tax positions in the UK”, with an estimated increase of €110m.
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2021-03-10 09:21:36Z
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