Just Eat Takeaway is looking to give up Grubhub, after investors severely punished the meal delivery company. This year, the food courier is counting on slower growth and profit is not expected until 2023.
Slowdown after Covid peak
After the peak of the Covid pandemic, a period of slowdown seems to be inevitable. Deliveroo was forced to admit so, Just Eat Takeaway now follows suit. In the first quarter of 2022, Just Eat Takeaway received 264 million orders, about the same as one year earlier. Customers ordered food worth 7.2 billion euros, which was 4% more than the year before. This is mainly thanks to more expensive and larger orders, as a larger number of users dropped out in the first half of this year.
“While growth in the second quarter of 2022 will remain challenging, key growth drivers, such as average monthly order frequency and returning consumers are expected to remain above pre-pandemic and even above pandemic levels,” said CEO Jitse Groen. “After two years of exceptional growth, we are maintaining the same high level of orders as during the Covid restrictions.”
Shareholders angry about ski trip
It does not appear to be enough to reassure shareholders, as the company’s stock market value has since plummeted to 5.6 billion euros. That is less than the 6.4 billion euros that Groen paid in 2020, in the middle of the pandemic, for its American sector colleague Grubhub, which is exactly where the shoe pinches. The takeover was supposed to be the breakthrough on the North American market, but it is mainly causing headaches for the meal delivery company.
Founder Groen had to defend himself to disgruntled shareholders in New York, but the fact that Just Eat Takeaway had just treated 5,400 employees to a ski trip costing 15 million euros was the final blow. The company is now forced to announce that he will be actively looking for a strategic partner and/or investigating the partial or full sale of Grubhub.
For the rest of this year, the company’s main objective is to improve profitability. Turnover per order should be higher, courier costs and operational costs lower. Only in 2023 does the company expect to achieve a positive gross profit. This year, the margin is expected to be between -0.5% and -0.7%.