Battle of the food delivery giants

Just Eat goes head-to-head with Deliveroo as it reveals rapid surge in demand during lockdowns

JUST Eat Takeaway threw down the gauntlet to rivals as it announced a rapid surge in demand from customers stuck at home.

The FTSE100 food delivery company, the world’s largest online takeaway platform, said UK orders rose 88pc in the first two months of 2021 as lockdown boosted business.

That followed a 35pc rise in orders to 179m in the UK last year, which pushed revenues up 42pc to £619m. Group sales, across all the countries where it operates, jumped 54pc to £2bn as the number of orders rose 42pc to 588m.

In a thinly veiled challenge to Deliveroo, which is planning a blockbuster £7bn float on the London stock market, bosses said they were investing heavily in Britain and ‘expected to increase market share in the UK in 2021’.

But like Deliveroo, Just Eat posted substantial losses of £126m in 2020, up from £75m the year before, due to the cost of marketing to new customers and expanding its teams.

Just Eat has tried to lure customers from rivals with heavily discounted deliveries, and it increased the amount spent on marketing by 158pc to £315.4m.

Bosses hailed the ‘exceptional year’ saying the company will continue spending to snatch market share.

Just Eat chief executive Jitse Groen said: ‘The pandemic brought unprecedented challenges, but it also created tailwinds. We expect a further acceleration of our order growth in 2021 compared with last year.’

The company’s biggest market is the UK, but it also operates in Germany, Canada, Australia, France, the Netherlands and Israel. The pandemic brought 12m new customers to the platform worldwide.

Shares in Just Eat rose 6.1pc, or 418p, to 7262p yesterday valuing the company at £10.8bn.

It is now worth more than RollsRoyce and British Airways-owner IAG and its value dwarfs other household names such as Marks & Spencer. Confidence in the food delivery sector will be put to the test when investors give their verdict on Deliveroo’s float.

The sky-high price tag – which could top £7bn – has led investors to question how many customers will still want food delivery once restaurants reopen and life returns to normal. There are also questions about the profitability of Just Eat, Deliveroo and Uber Eats, despite the enormous demand for takeaways, as the trio spend big to win market share.

Deliveroo this week posted a £223.7m underlying loss in 2020, despite a 64pc surge in sales to £4.1bn. Just Eat admitted yesterday that it believed ‘only clear market leadership positions’ will give it the scale to deliver healthy profit margins in the long run.

The firm was formed by the £6.2bn takeover of London-based Just Eat by Dutch rival Takeaway.com in 2019.

The Anglo-Dutch firm has continued to buy up rivals to cement its position as the world’s biggest online takeaway platform.

Its £5.2bn takeover of Grubhub, an American firm, was approved on October 7.