JustEat Takeaway ponders sale of Grubhub as slumping share price and order numbers lead to growing investor pressure
- US-based Grubhub was bought by Just Eat less than 12 months ago for £5.75bn
- Shares in Just Eat Takeaway have plummeted by over 70% in the past 12 months
- Just Eat does not anticipate posting an annual underlying profit until next year
JustEatTakeaway.com could sell Grubhub following pressure from some investors to boost the company’s valuation.
Bosses at the online food delivery service told investors on Wednesday they were ‘actively exploring’ whether to conduct a full or partial sale of the US-based subsidiary, which it acquired less than 12 months ago for £5.75billion.
When that deal was completed, the firm was benefiting from a massive surge in demand for takeaway food prompted by the Covid-19 pandemic and the resulting lockdowns.
Delivery Boom: Just Eat has benefited from a huge surge in demand for takeaway food prompted by the Covid-19 pandemic and the resulting lockdowns
Soon afterwards, one of its largest shareholders, Cat Rock Capital, accused the group of poor communications with investors and called on it to pursue a potential merger and offload non-core assets.
The Amsterdam-based business had previously resisted calls to sell Grubhub, but investor pressure has remained as the value of its shares has continued to decline, plunging by more than 70 per cent in the past year.
Today, JustEat said it was ‘actively exploring the introduction of a strategic partner into and/or the partial or full sale of Grubhub,’ although it warned there was ‘no certainty’ of whether or when an agreement will take place.
The group revealed that the volume of orders processed on its platform fell only slightly in the first three months of 2022 to 264.1 million, despite the loosening of lockdown restrictions.
Higher average orders by patrons drove the total value of these purchases up by 4 per cent to €7.24billion, with Northern Europe and the British Isles both recording increases of over €100million.
The company expects growth in the current quarter to ‘remain challenging’, but believes the number of returning customers and average monthly orders will be at least above pre-pandemic levels.
Results: ‘After two years of exceptional growth, we maintain the same high level of orders that were processed during the Covid-19 restrictions,’ said Just Eat CEO Jitse Groen (pictured)
However, JustEat has lowered its gross transaction value forecast for this year and does not anticipate posting an annual underlying profit until next year.
Chief executive Jitse Groen said: ‘After two years of exceptional growth, we maintain the same high level of orders that were processed during the Covid-19 restrictions.
‘Our priority for 2022 lies in enhancing profitability and strengthening our business. We expect profitability to gradually improve throughout the year, and to return to positive adjusted EBITDA in 2023.’
JustEat’s losses jump to more than €1billion in 2021 as a boom in revenues and orders was offset by a significant spike in investment towards expansion.
These extra costs came from boosting employee salaries and couriers, processing orders and marketing spending related to the purchase of Grubhub, and sponsoring the UEFA Euro 2020 Football Championship.
Profitability was further affected by the group’s decision to offer voluntary rebates and the imposition of compulsory delivery fee caps across many parts of North America, as well as briefly reducing delivery fees in the UK and Ireland.
Yet Groen claimed in March that the group’s losses reached their apex in the first half of last year and was ‘rapidly progressing towards profitability’ because of its expansion strategy.
Just Eat Takeaway shares were up 6.7 per cent to £23.16 on Wednesday morning.
Decline: Despite the Covid-19 pandemic leading to a surge in orders on its platform, Just Eat Takeaway has seen the value of its shares plunge by over 70 per cent in the past year