Just Eat keeps getting fatter

The takeaway company's profits have taken a hit but its growth shows few signs of slowing.

by Jack Torrance
Last Updated: 08 Jun 2016

After expanding at a rapid pace in 2014 Just Eat had a pretty challenging performance to live up to last year. But while the online takeaway company’s profits have taken a bit of a dent it had a pretty tasty time of things in 2015.

The total number of orders it processed was up by 57% to 96.2 million (faster than 2014’s 52%) and revenues were up 58% to £247.6m. Its pre-tax profits slumped by 40% to £34.6m, a decline it blamed on one-off gains made from M&A activity in 2014. Underlying EBITDA, its preferred measure of profitability, was up by 83%. Not too shabby.

‘We are now market-leader in 12 out of 13 territories,’ said its CEO David Buttress. ‘Our business is becoming increasingly global, with our international business now larger and growing even quicker than our UK business was at the time of IPO.’

That rapid growth into international markets has been partly on the back of acquisitions. The company bought 10 competitors last year and another four last month. The glutton might still have room to devour more too – Buttress says 2016 will be ‘a year of further investment for growth.’

The company’s share price was up 3.7% this morning on the back of the news, but it’s not all sunshine and lollipops. Its shares are still down around 20% since the start of the year after tumbling almost 10% in one day when analysts warned about the strength of its competition. ‘We believe trends on delivery will follow trends on the high street, and Just Eat’s independent takeaway restaurants stand to lose,’ a note from Morgan Stanley said.

In particular there’s concern about the meteoric rise of Deliveroo, the London-based start-up that’s going after the more premium end of the market. Where Just Eat relies on traditional takeaways dropping food off themselves, Deliveroo has its own fleet of drivers, which has allowed it to break its way into restaurants that wouldn’t normally be able to offer home delivery.

You could argue the two companies are going after a very different type of customer but as people get a taste for Nando’s or Wagamama delivered to their door there’s a danger for Just Eat that they will lose interest in the local Chinese takeaway. Buttress and co will likely be tucking into a celebratory banquet this evening but they had better not get complacent.

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