Just Eat Takeaway, one of the largest global food delivery companies, has reported a decline in orders across all markets in its Q3 2024 trading update. The company faces ongoing challenges in post-pandemic demand, cost reduction efforts, and underperformance in key regions like North America and southern Europe.
Despite these setbacks, Just Eat has managed modest growth in its gross transaction value (GTV) in some of its core markets, such as the UK, Ireland, and Northern Europe.
The online food delivery industry faces margin pressure from rising costs like delivery fees and commissions, as well as regulatory changes related to delivery workers’ rights.
Additionally, inflation and economic uncertainty may affect consumer spending, reducing demand for food delivery services.
Today’s briefing covers the information you need for assessing the broader market trends affecting the food delivery industry and understanding Just Eat’s efforts to achieve profitability amid competitive pressures and regional underperformance.
What happened?
Just Eat reported a 6% drop in orders globally, with particularly steep declines of 14% in southern Europe and Australia/New Zealand. Despite the drop in orders, GTV grew slightly in the UK, Ireland, and Northern Europe, which together account for 60% of Just Eat’s total orders.
However, the company missed expectations, with overall GTV falling 3% to €6.34 billion, below the consensus estimate of €6.5 billion.
The North American market, particularly the U.S. unit Grubhub, continues to underperform. GTV in this region dropped 11%, which is steeper than expected, contributing to the company’s overall struggles. Just Eat is exploring ways to sell Grubhub.
Jitse Groen, CEO of Just Eat Takeaway emphasized the company’s focus on strategic pillars for growth, noting that cost reductions and operational efficiencies are having a positive impact. He reiterated that Just Eat is on track to meet its full-year guidance despite challenges in some markets.
“We made good progress across our key strategic pillars, which we believe will drive growth.” he said
The company has focused on cost reductions and operational efficiencies, including layoffs and the use of AI in call centers. It has also shifted strategy by reclassifying many of its employed couriers as independent contractors to cut delivery costs.
Just Eat has been diversifying into adjacencies like grocery, pharmacy, and wellness to create new revenue streams and reduce its dependence on traditional food delivery.
Just Eat expects GTV growth of 2-6% for the full year, excluding North America, and forecasts adjusted EBITDA of €450 million for 2024.
Shares of Just Eat have dropped 3% in response to the Q3 update and have fallen by a sixth since the beginning of 2024.
What you need to know
According to Lumina Intelligence,the UK online food delivery market is projected to reach $44.76 billion by 2024 and is expected to grow at a CAGR of 7.33% through 2029, reaching a market volume of $63.75 billion by that time.
The projected growth suggests that expansion is still viable, but at a more moderate pace. This means digital leaders should focus on targeted growth strategies rather than aggressive expansion.
Prioritizing underpenetrated markets outside major cities or offering adjacent services (e.g., groceries, pharmaceuticals) can unlock new revenue streams while addressing regional demand gaps.
The online food delivery market is highly competitive, with Just Eat, Deliveroo, Uber Eats, and Amazon Restaurants vying for market share. This competition could lead to price wars and margin compression, making profitability a challenge.
The industry faces margin pressure from rising costs like delivery fees and commissions, as well as regulatory changes related to delivery workers’ rights. Additionally, inflation and economic uncertainty may affect consumer spending, reducing demand for food delivery services.
Technology will play as a key differentiator. The heavy investment in AI and automation by key players like Just Eat illustrates how technology is becoming a competitive advantage.
For decision-makers, leveraging AI-powered tools for personalizing customer experiences, optimizing delivery routes, and dynamically adjusting pricing will be essential to improve customer satisfaction and operational efficiency.
There is a need to explore investment in innovative delivery models, such as drones, automated logistics, and sustainability-focused offerings to attract environmentally conscious consumers and reduce operational costs.
The decline in delivery orders post-pandemic reflects a return to in-person dining habits, and the cost-of-living crisis is affecting consumer spending power. Digital leaders must respond by offering value-driven promotions and more cost-effective solutions.
In most of the cases this will mean, one, adapting to shifting consumer preferences by expanding healthier food choices and two, providing flexible pricing models to appeal to cost-conscious consumers.
TALK POINTS
These points are crafted to spark engaging discussions with your peers, helping you stay ahead of industry shifts, explore fresh perspectives, and drive informed decision-making in your professional circles. Whether you’re networking, meeting with partners, or leading your team, Talkpoints equips you with timely insights to elevate the conversation.
1.The online food delivery market continues its robust growth but at a more moderate pace post-pandemic.
The UK market is expected to grow to $44.76 billion by 2024, with a projected CAGR of 7.33% through 2029 . Growth has stabilized, with Lumina Intelligence projecting a more modest increase of 2.8% in 2024, following the pandemic boom .
2. As competition intensifies, companies are now focusing on profitability rather than growth at all costs.
Profitability is now a central focus for platforms like Just Eat Takeaway.com, which saw a 17-fold increase in EBITDA. There is a need for strategies to similarly shift towards operational efficiency, emphasizing technology to streamline costs while maintaining competitive pricing.
The bottom line
Can Just Eat balance ongoing investments in technology and partnerships while maintaining operational efficiency? Striking this balance will be critical to achieving profitability targets in a challenging economic environment.
With the latest data on market growth, profitability shifts, and technology investments, as a business Leader you can showcase a forward-thinking approach that positions your business to capitalize on the evolving dynamics of the online food delivery sector.
The growth potential in underpenetrated regions, especially outside major cities, presents a significant opportunity.
