Just Eat flags heavy investment after orders jump

Just Eat Takeway's revenue rose by more than half in 2020 after UK delivery orders jumped but the company warned it would have to invest heavily to maintain momentum.

The restaurant delivery company said it had strong and accelerating growth in marketplace orders and deliveries and "solid" financial performance in the final three months of 2020 after investing in its UK business.

Just Eat said it would pump more money into its business and prioritise market share over earnings growth, sending its shares down.

UK delivery orders rose 387% from a year earlier after Just Eat doubled its sales force and added premium restaurants to its roster. Just Eat said its UK delivery orders would soon overtake total food orders for Britain's third-biggest restaurant operator. Orders in the rest of the world rose 47% led by Australia where orders increased 166%.

Revenue rose by more than 50% in 2020 with an adjusted earnings before interest, tax, depreciation and amortisation margin of about 10%. Just Eat shares fell 4.7% to £86.42 at 10:01 GMT.

Jitse Groen, Just Eat's chief executive, said: "The fourth quarter of 2020 marks our third consecutive quarter of order growth acceleration. Our investment programme is very successful and has led to significant market share gains in most of our countries.

"In 2021, we will continue to invest in price leadership, improving our service levels and expanding our offering to restaurants and consumers."

The FTSE 100 group's business has boomed in the Covid-19 crisis as households have ordered food online instead of going out to restaurants during lockdowns. But Just Eat faces a battle for market share with rivals such as Deliveroo and Uber Eats.

Russ Mould, investment director at AJ Bell, said: “The investment in ramping up delivery capability is reflected in the margin pressure revealed by today’s trading update. There is a firm signal that management will prioritise market share over profitability for the time being at least.

“A big increase in the number of couriers employed directly by the company will bring with it increased costs, taking Just Eat further away from its original capital light model where it just provided an online platform for restaurants."

Just Eat also said it was reviewing which exchanges its shares would be listed on after agreeing to buy Grubhub in the US.