Just Eat (JE) is an online food order service. It acts as an intermediary between takeout food restaurants and consumers. The platform allows customers to search for local take-out restaurants to place orders online and to choose from pickup or delivery options. It was founded in Denmark in 2000 but has since moved its HQ to London. It operates in 13 countries however its main market is the UK, generating two-thirds of sales.
JE has built a platform by compiling a once fragmented market onto a single website/app. The platform is the market leader in all 13 countries in which it operates. It processes over 2.5bn orders annually and is growing at around 50% pa. It boasts over 18m consumers as customers along with over 70,000 restaurants. Just Eat provides hungry consumers with a wide variety of takeaway options, and provides its restaurants with instant access to customers, access to their CRM system, trend data for peak periods, estimated delivery data and competitive utility contracts.
As with any platform, the power is in its size. This is a type of industry where winner takes all. If they are the “go to” place for takeaways, they will have terrific buying power that will be difficult for competitors to challenge. Their strategy is, therefore, “to be the market leader in each region they operate”. They have tackled this goal by making consolidating acquisitions in several territories and disposing of businesses where they do not have a clear market lead.
In total, 11% of all takeaway orders made in the markets where JE operates are made online. Penetration levels are incredibly low. It is clear that there is plenty of room for growth. The takeaway market potential for all the regions in which they operate totals £23bn. If a similar level of success is achieved in other markets, JE’s revenues could reach £1.2bn in the long term.
This is a business which is growing at an incredible rate. The overall takeaway market is both growing and moving online. JE is the market leader in 13 different countries. The larger they get the stronger their barriers to entry will become. They have demonstrated an ability to succeed in the UK, and are now in a position to roll out this out in several far less mature territories. The nature of the business lends itself to significant operational leverage. We could see margins increase significantly from the current 20% level. With revenue growth rates expected to be well above 20%, profits are likely to grow at a very attractive rate.
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