Just Eat chief executive Peter Plumb has stepped down from his position just 16 months after he joined the British takeaway ordering website and launched an investment drive that slowed earnings growth.
Plumb, who joined from MoneySavingExpert.com on a base salary of £695,000 pounds, upgraded Just Eat's technology and launched its own delivery service to address intensifying competition from Deliveroo and Uber Eats.
But the new strategy has demanded more and more investment, causing earnings momentum to slow sharply, and shareholder Cat Rock Capital Management complained last month the company had become the world's worst performing online food delivery stock.
Cat Rock said in December that Just Eat, which delivers meals from local takeaways as well as big brands such as Burger King, KFC and Subway, should consider selling businesses such as its stake in Brazilian market leader iFood. It also wanted executive bonuses tied to a three-year performance plan.
Cat Rock's founder and managing partner Alex Captain said Just Eat's board had recognised that change was badly needed.
"It is critical that the board now find a high-quality successor and implement a remuneration plan that creates clear alignment with shareholders' interests," he said.
Seeking A New Boss
Plumb stated that it was the right time to step aside and make way for the next wave of growth.
Just Eat said chief customer officer Peter Duffy had been appointed as interim CEO and a search for a permanent replacement had begun.
Liberum analysts said the reasons behind Plumb's departure were unclear, with one possible explanation being a boardroom dispute over the Latin American strategy.
But they were encouraged by the company's commitment, announced alongside Plumb's departure, to raise core earnings margins from 2019 onward.
"This was one of Cat Rock's calls and will be taken well by shareholders generally who were concerned that the investment may have become a bottomless pit," they said.
Just Eat could also now become a target for buyers, they added, following recent activity in the sector. Takeaway.com bought the German operations of Delivery Hero last month.
Food delivery companies have been spending heavily to build market share in multiple markets.
Just Eat, founded in Denmark in 2001, has operations in Europe, Canada, Mexico, Brazil, Australia and New Zealand.
Its platform initially connected customers with local takeaways that provided their own delivery, unlike competitors Deliveroo and Uber Eats. Under Plumb, it started providing delivery services as well as working with national chains.
Deliveroo, in turn, moved into Just Eat's territory in its biggest market, Britain, last year by allowing restaurants to use their own riders for orders placed through its app.
Just Eat said it expected to report 2018 underlying core earnings (EBITDA) of £172 million to £174 million on revenue of about £780 million, both slightly ahead of analysts' consensus forecast.
It said it would exclude its joint venture in Mexico and Brazil from its underlying earnings from 2019, which analysts said could indicate a willingness to sell. That would result in a 2019 revenue forecast of £1 billion to £1.1 billion and underlying earnings of £185 million to £205 million, it said.