Just Eat Takeaway Losses Widen as Battle With Deliveroo and Uber Eats Intensifies - Barron's

Just Eat Takeaway faces stiff competition in the U.K. from Deliveroo and Uber Eats.

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Losses widened at Just Eat Takeaway in 2020, as the group poured money into expansion during a blockbuster year for food delivery that saw revenues boom and competition ramp up in key markets.

Shares in the Amsterdam-based company, which is expected to complete its acquisition of U.S. peer Grubhub in the first half of this year, jumped close to 4% in Wednesday trading.

The back story. The Covid-19 pandemic poured fuel on the fire of the food-delivery sector as millions of hungry and housebound people turned to groups like Just Eat Takeaway. Formed out of a merger between Danish JustEat and Dutch Takeaway.com early last year, the company has a dual listing in Amsterdam and London, where it is a constituent of the benchmark FTSE 100 index.

The newly combined company’s strategy in 2020 turned to expansion. In June, Just Eat Takeaway announced that it would buy U.S. food delivery giant Grubhub for $7.3 billion to create the world’s largest food-delivery group outside of China.

But one of the most pressing competitive concerns for the group is the key U.K. market, where tough rivals include Uber’s Uber Eats and Amazon -backed Deliveroo. Just Eat Takeaway has offered deep discounts on deliveries to attract new customers in the U.K., in addition to doubling its British sales team and pouring money into expanding its logistics network. The company previously relied on restaurants that could deliver food themselves, but has built out its own delivery system to match competitors.

In February, the group successfully raised €1.1 billion ($1.3 billion) through a convertible bond offering to help fund its strategy.

Also read:Amazon-Backed Deliveroo Chooses London for $7 Billion IPO Amid Food Delivery Boom

What’s new. Losses before tax at Just Eat Takeaway widened from €88 million in 2019 to €147 million in 2020. Revenues surged 54% to €2.4 billion in the period, led by growth in the German and Canadian markets, the company said on Wednesday.

The group delivered a total of 588 million orders last year, 42% more than in 2019, with the share of delivery orders growing to 26% from 18%. In the key British market, the company’s share of delivery orders rose from 7.6% in 2019 to more than 15% in 2020. In an update on 2021 performance so far, the company said that U.K. orders rose 88% and delivery orders were more than 600% higher in January and February than in the same period last year.

“2020 was an exceptional year for Just Eat Takeaway.com,” said Chief Executive Jitse Groen.

The company said it will prioritize market share over earnings in 2021, when it expects a further acceleration of order growth from 2020. The group didn’t provide a financial outlook, citing the material impact of the expected Grubhub acquisition and the continuing integration between the Just Eat and Takeaway.com businesses.

Plus:Just Eat Takeaway’s Big Bet on a Key Market Paid Off. Why the Stock Is Falling.

Looking ahead. Just Eat Takeaway prioritized spending on expansion over banking the windfall of revenues from the Covid-19 pandemic. That was wise: The group faces fierce competition, especially in the U.K., and growing and consolidating market share will be key to long-term growth in a sector with such tight margins.

In the short term, all eyes are on the U.K., where one of the company’s fiercest rivals, Deliveroo, will go public soon. That will put a stock market valuation on the competition Just Eat Takeaway faces. For now, the British expansion is continuing at pace, and the group’s management said it expects to continue growing U.K. market share in 2021.

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Just Eat Takeaway Losses Widen as Battle With Deliveroo and Uber Eats Intensifies - Barron's
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