Grubhub gave us indigestion, admits Just Eat Takeaway (2024)

Just Eat Takeaway bowed to mounting pressure from shareholders by confirming it was exploring a sale of Grubhub.

The food delivery firm only completed the acquisition of the US business last June but the $7.3 billion deal has been cited by investors as a key factor in its poor share price performance, down two thirds since October 2020.

The shares rose 46½p, or 2.1 per cent, to £22.17½ yesterday after the board said that it “confirms its alignment with shareholders in wanting to both create and realise value from the company’s highly attractive portfolio of assets”.

It said it was working with advisers on “actively exploring” bringing in a strategic partner in the US business or “the partial or full sale of Grubhub”.

Just Eat Takeaway, which was created two years ago by the merger of London-listed Just Eat and Amsterdam-quoted Takeaway, recently dropped its listing on America’s Nasdaq in favour of the two European exchanges.

Cat Rock Capital Management, which owns 6.9 per cent of Just Eat Takeaway, recently called for the group to “refocus its business on Europe and unlock the significant value of Grubhub through consolidation with a US-based company”.

The investor said that Grubhub should attract “significant strategic and intrinsic value” as it was one of only four independent same-day delivery networks in the US, with 32 million customers generating $10 billion of sales.

Cat Rock said: “Grubhub’s same-day logistics network across over 4,000 US cities has incredible value to a broad range of ecommerce and physical retailers, including Amazon, Walmart, Target/Shipt, Instacart and Kroger, among others.

“Moreover, Grubhub’s restaurants and customers also have significant value to a broad range of US-focused technology, companies like Uber, Lyft, Booking.com, Square and Toast.”

Uber, the taxi-hailing firm, has a significant food delivery business, Uber Eats, and was outbid by Just Eat Takeaway for Grubhub.

The hoisting of a for sale sign over Grubhub came as Just Eat Takeaway reported a disappointing 1 per cent decline in orders in the first quarter to 264.1 million, below consensus forecasts of 274.6 million, on the back of a 5 per cent fall in North America to 89.6 million. In the UK and Ireland orders were flat at 67.6 million, again below forecasts.

The company also fell short of consensus on gross transaction value (GTV), the total amount spent on orders. While GTV grew by 4 per cent to €7.24 billion, that was below consensus of €7.37 billion and at constant currency group GTV was flat. Its worst performing region was North America, where GTV fell 5 per cent at constant currency, while UK and Ireland was up 2 per cent.

Jitse Groen, the Just Eat Takeaway chief executive, argued that the level of first-quarter orders, although slightly down year-on-year, had been maintained at the same high level of orders that were processed during Covid-19 restrictions.

He said that the rapid increase in the consumer base over the past two years, adding more than 20 million active customers, had created a higher than normal churn rate. While he expected growth in the second quarter to “remain challenging”, he said “management considers enhancing profitability as one of its highest priorities”. He said the group was expected to reach positive adjusted earnings on an underlying basis (earnings before interest, tax, depreciation and amortisation) for the 2023 full year.

In an update to its guidance, the company adjusted its forecast ebitda margin from a range of minus 0.6 per cent to 0.8 per cent of GTV to a slightly improved 0.5 to 0.7 per cent. It estimated that an extra €30 billion of GTV would be added over the next five years.

Lucerne Capital Management, which has a small stake in Just Eat Takeaway, announced last week that it supported Cat Rock’s stance on the food delivery firm and it intended to use its votes at the forthcoming annual meeting “to send a clear message to the board expressing our disappointment in [its] financial performance”.

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