The pressure is just about to ratchet up on Just Eat Takeaway as direct rival Deliveroo prepares to join the London market.
So it’s a good job its latest annual results delivered in much the way you might have expected given the boost to ordering in at home created by the pandemic, with revenue up 40%-plus and a big increase in the number of eateries using the platform.
“The reported £5 million paid to rapper Snoop Dogg to appear in its TV adverts indicates just what a competitive landscape it operates in – with Uber Eats and Deliveroo battling Just Eat for our takeaway spend.
“This means heavy marketing costs across the board and investment in increasing its in-house delivery capabilities, wiping out any profit the company might have made during its bumper year.
“At least this investment appears to be paying off with the company pointing to market share gains and further order growth acceleration in 2021. This is central to its strategy – not unjustifiably Just Eat believes that in order to deliver strong margins long term it needs to be the clear market leader in its various geographies, which include North America, the Netherlands and Germany.
“By doing so it hopes to benefit from a ‘network effect’ where being the dominant player means it is the most likely to be used by restaurants and consumers, thereby further reinforcing its position and enabling it to charge outlets more.
“While the ambition is a laudable one, achieving it will be a tall order. After all Deliveroo has backing from Amazon, albeit with some constraints from the competition authorities. What if Amazon decides to go it alone or another new entrant with deep pockets comes into the market?
“Just Eat Takeaway could see a souped-up version of the marketing war it already faces with significant implications for its future profitability.”