Shares in food delivery platform Just Eat Takeaway.com (JET) jumped 5.8% to £93.54 after the firm said it saw a rapid increase in orders over the last three months.
In a trading update for the third quarter to 30 September, the group reported order growth of 46% compared to the same period last year and said that in one of its markets, Australia, it saw ‘triple-digit’ order growth.
The company also said its £5.75 billion acquisition of US rival Grubhub had been approved by shareholders, with completion expected to occur in the first half of 2021.
Just Eat Takeaway’s order growth comes as it starts an ‘aggressive’ investment programme in its legacy Just Eat countries to ‘strengthen its competitive positions’, having significantly increased spending on marketing and sales.
It said this programme has delivered accelerated growth and insisted that despite higher costs its adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) would remain 'strong'.
ANALYST VIEW
Dan Thomas, senior analyst at research firm Third Bridge, said lockdown has ‘rapidly expanded’ the size of the opportunity for Just Eat, as well as rivals like Deliveroo and Uber Eats, with the pandemic accelerating their growth by two to three years.
But he added that one of the biggest challenges for Just Eat will likely be defending its dominant position in tier two and three towns and cities, with a greater level of competition outside of London - where Just Eat enjoys a much higher market share - as Deliveroo and Uber Eats expand.
Thomas said, ‘Intense competition in some locations, combined with low customer density in non-urban areas, means that some geographies cannot be profitable for the big three food delivery companies.
‘With fast-food chains pushing for national delivery coverage, more tie-ups with retailers looking for a last-mile delivery service are on the cards.’
Deliveroo for example has already pushed into this area, and has a partnership with Morrison’s (MRW). Just Eat is currently testing a partnership with Asda.
