Get the app today! Download iPhone App Download Android App

SUBSCRIBE

Just Eat Rally Tested by Web Giants’ Food-Delivery Ambitions

Published on Jul 14 2015 10:45 AM in Restaurant tagged: Amazon / Just Eat / Google

Just Eat Rally Tested by Web Giants’ Food-Delivery Ambitions

Just Eat has ascended from a Danish basement startup to the London Stock Exchange over the past decade. Now its success is challenged by more established web companies looking for a slice of the food-delivery market.

Just Eat’s stock has jumped more than 60 per cent since its debut 15 months ago, boosting its market value to £2.9 billion.

Investor optimism over menu aggregators like Just Eat is predicated on a simple business model: as independent restaurants try to stay competitive against the big chains, they are willing to give up a chunk of their revenue to a tech-savvy middleman who can channel more food orders.

That strategy is being threatened by the likes of Google and Amazon.com, which now offer grocery delivery, same-day package arrival and limited takeaway food offers.

“Just Eat is riding high on a theme that has now fully run its course,” said Cyrus Mewawalla, a London-based analyst at CM Research, who recommends selling the stock and ranks it the 6th most expensive among 41 e-commerce companies his firm tracks globally. “Within five years you’ll be able to order a hamburger through Amazon and have it delivered to your front door."

Just Eat’s revenue growth may slow to 41 per cent this year - and to 18 percent in 2017 - from more than 60 percent in 2014, according to analyst estimates compiled by Bloomberg.

The UK accounted for more than 70 per cent of Just Eat’s sales last year. Restaurants pay a one-off fee of £699  to join Just Eat’s network, plus 12 per cent commission on every order. Last year, Just Eat processed orders exceeding one billion and its active users topped 8 million.

Chief Executive Officer David Buttress says while valuations for early-stage tech companies are ‘‘very high,” Just Eat, which was started in Denmark in 2001 and entered the UK in 2006, shouldn’t be viewed as an overpriced startup.

“This is not some company that jumped up suddenly,” the 39-year-old said in an interview.

Even so, Google and Amazon have started chipping away at the online food-delivery market in the US.

News by Bloomberg, edited by Hospitality Ireland

Advertising
Share on Facebook Share on Twitter Share on LinkedIn Share via Email