Just Eat

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. 

They have 68,500 restaurants on their platform have grown at an average rate of 30% over the last 5 years. They offer restaurants access to a CRM system, which also offers tips to improve efficiency, delivery times, trend data for when their peak periods are as well as driver management and GPS.

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.

There is no doubt that the UK online takeaway market has become more competitive in recent years with the emergence of Uber Eats and Deliveroo. It’s important to realise that these are slightly different business models, targeting different types of customers. Typically, these businesses operate only in densely populated areas of the country targeting high end casual dining restaurants that require a delivery arm and consumers with high disposable income. JE doesn’t provide delivery drivers and focuses more at the traditional takeaway end of the market. Although growing fast, the total UK market share of all of these new companies (£500m) is comparable to the amount JE grew its share by in 2016 (£380m). Additionally, JE is much more evenly spread across the UK whereas the challengers are only really thriving in London which represents circa 15% of JE’s UK revenues.

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.

This document and all is contents remain the property of Middleton Enterprises Ltd and should not be copied or passed to any third party without prior permission. The contents of this document are for general information and use only and are not intended to address the particular investment or other requirements of any recipient. In particular, the information provided does not constitute any form of advice, representation or recommendation regarding any investments and does not constitute an offer to buy or sell the securities of any company. This document is confidential and is intended solely for the person or entity to which it was addressed. Further Middleton Enterprises Ltd does not warrant or guarantee the accuracy of the information provided and cannot be held responsible for any use of the document in whole or in part or the information it contains.