Just Eat Takeaway reported a 1% drop in orders in the first quarter of 2022 (Gareth Fuller/PA)
(Picture: PA Archive)Just Eat Takeaway has become the latest company to feel the squeeze from soaring inflation and the rising cost of living as it announced a major shift in its strategy.
The £4.8 billion food delivery company today vowed to cut costs, sell off its US business and make a profit, turning its back on the strategy of rapid growth fuelled by losses that has driven the company to date.
The pivot came as Just Eat Takeaway reported a 1% drop in orders in the first quarter of 2022, led by a 5% dip in North America. The business warned growth would “remain challenging” in the months ahead.
Management said turning a profit was now “one of its highest priorities”, following a loss of €350 million last year.
The business has faced called from activist investor Cat Rock Capital to sell-off US franchise GrubHub and Just Eat today bowed to pressure, saying it was now exploring a “partial or full sale” of the business. Just Eat acquired the company in June 2021 in a $7.3 billion (£5.6 billion) deal.
Just Eat CEO Jitse Groen said the company was “in talks with people” about the potential sale, and had appointed financial advisers. He wouldn’t rule out selling the business at a loss relative to the value of its purchase last year.
Russ Mould, investment director at AJ Bell said: “The price tag for any divestment will be closely watched and could embarrass current management.
“However, sparing management’s blushes should not be the priority and if this is the right decision for the future of the business then it seems logical for Just Eat to press ahead with a sale.”
Gross transaction value - the total value of orders made through the service - grew 4% at Just Eat Takeaway in the first quarter.
Groen was adamant the company would not see a marked decline in sales.
He said: “People are modelling demand to go down – that’s not necessarily the case.
“I don’t agree with the narrative that after Covid people are not going to order food – I think that’s plain nonsense.”
The company plans a round of cost cutting, including reducing courier expenses, in a bid to reach profitability by 2023.
“If you start to do smart things with the algorithm, that allows us to take two deliveries in one go… at the peak you would have to staff less people,” Groen said.
Shares in the business peaked above 8750p in May 2020 as the company rode a pandemic order boom but the stock is down by around three quarters since that peak.
Long-term shareholder Lucerne Capital Management recently expressed “disappointment” at the company’s financial performance and voted against the re-election of CFO Brent Wissink at its AGM. Lucerne said Wissink was “co-responsible” for “poor communication with shareholders.”
