Just Eat delivered more than just takeaways last month. It not only set a new Guinness world record for the largest human image of a pizza but also received the green light to gobble up rival Hungryhouse.
But the cherry on the cake for Just Eat was joining the FTSE 100 this week with a £5.5bn valuation, overtaking blue-chip big dogs such as Sainsbury’s, M&S and Morrisons. It floated just three years ago – at 260p per share. Those shares are now worth almost 800p each. Set up in a Danish basement in 2001, Just Eat has grown by devouring smaller players in each market it enters. Just this year, it has acquired HungryHouse and Skip the Dishes. But its rivals in the takeaway sector are aggressively chowing down market share in a move that could nibble away at this meteoric growth.
One key difference between Just Eat and its competitors is delivery. While Just Eat takes online orders on behalf of restaurants, it does not deliver the food. Deliveroo and Uber Eats, on the other hand, take orders from customers and deliver to their doorsteps. Another bittersweet spot for Just Eat is commissions – while a 13 to 14 per cent cut from restaurants makes its balance sheet meatier, partner restaurants complain that it eats into their profits. To maintain its dominance, Just Eat needs to keep its restaurant partners on board by not squeezing them too hard on price and margin.
Although Just Eat’s shares are up nearly 37 per cent this year, they remain vulnerable to sudden stumbles. Earlier this year, the departure of chief executive David Buttress led to a 14 per cent drop in the stock in the first two months of the year.
To keep customers hooked, AJ Bell analysts warn that Just Eat needs to keep developing its platform to provide the best possible customer experience. As with any internet business, it also needs to avoid any data loss or hacking which could potentially deter consumers from using its service. It can’t afford to slip up.
No doubt investors have a huge appetite for the online takeaway firm. But Just Eat faces a tall order – it needs to keep delivering for its restaurant partners and its investors if it’s to be number one in the £9.9bn takeaway sector.