Just Eat looks to battle Deliveroo for restaurant chains

The takeaway-ordering website Just Eat plans to move upmarket and take on Deliveroo and UberEats by working with branded restaurant chains in the UK.

Just Eat tends to work with independent local restaurants such as curry houses, while Deliveroo and UberEats largely focus on more upmarket restaurants and chains.

But interim chief executive Paul Harrison said on Thursday that Just Eat was running “some early pilots” with unnamed “casual dining chains”.

He said he wanted “to ensure our customers have no reason to go anywhere other than Just Eat” for a takeaway. He added that Just Eat was operating in “pretty competitive markets” and that it was now “up against Uber, one of the best-funded companies in the world”.

He spoke as Just Eat released half-year results and raised its expectations for full-year revenues, but left its profit outlook unchanged. The company said it would spend the extra money on initiatives such as ”increased collaboration with branded UK restaurants”. Mr Harrison denied the competition from Deliveroo and UberEats was costing it customers but said there was “evidence that chains want to provide food to our customers’ homes”. UberEats has recently started McDonald’s deliveries, which he said was “very direct competition”.

He declined to identify the chains it was working with, saying: “I’m not going to namecheck the chains. These are early pilots; some will resonate and some will not.”

A key difference between Just Eat versus Deliveroo and UberEats is that the former does not provide delivery drivers. Mr Harrison said Just Eat would not be supplying drivers and that some of the chains it was working with offered delivery themselves, while others had been introduced to “third-party delivery companies”.

For the half-year to June 30, Just Eat reported a rise in revenues of 44 per cent to £247m, ahead of consensus expectations of £232m, according to Numis analysts. The company said it expected full-year revenues to be £500m-£515m, up from £480m-£495m.

Pre-tax profits rose 46 per cent to £49.5m. Last year, Just Eat raised the commission it charges existing UK restaurant clients by 1 percentage point to 13 per cent.

Share awards to staff and other long-term employee incentives doubled to £3.3m, which Mr Harrison said was required to attract top software engineers and other technical staff. “We compete to attract the best talent in the tech world, so in order to do that we have to offer compelling compensation packages, including stock-based compensation,” he said.

The results indicate that Just Eat’s momentum has been unharmed by a series of management changes. In just over a year, it has lost its chief financial officer and chief executive, while its chairman died. Its plan to buy UK rival Hungryhouse is facing an in-depth probe by competition regulators over concerns that the combination will lead to worse terms for the restaurants that use the online sites to reach customers. Provisional findings are expected in late August or September, with a final decision towards the end of October.

 

Source : https://www.ft.com/content/c57d9798-72a4-11e7-93ff-99f383b09ff9

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