Just Eat posts impressive UK numbers but New York City commission cap may hinder growth

Just Eat Takeaway.com NV (LSE:JET, NASDAQ:GRUB) posted impressive numbers in the UK but new laws in New York City may hinder growth in the US.

The food delivery group processed 266mln orders in the third quarter, which was a 25% increase compared to last year. Gross transaction value (GTV) climbed 23% to €6.8bn.

READ: Just Eat Takeaway third-quarter trading set to be mixed; rivals don’t have the appetite to take it out, says leading American bank

The UK alone saw a 51% jump in quarterly orders, crossing the 1bn milestone.

Orders in the US, instead, were up only 3% so the FTSE 250 group said it has started an improvement plan to focus “on Grubhub’s strongholds”.

As for its other markets, Germany was the second-fastest-growing segment with a 35% surge to 10mln orders.

“Poor growth in the US could be as a result of New York City, its largest US market, capping commission it and its rivals can charge restaurants to use their platforms at 15% of orders,” said Neil Shah, director of research at Edison Group.

“It’s clear to see that Just Eat Takeaway.com is continuing to benefit from Brits swapping home-cooked meals for takeaways… The company also looks well-positioned to see further growth in its traditional growth season over the autumn and winter.”

Just Eat also completed the acquisition of the Slovakian market leader Bistro.sk earlier this month and will incorporate it within its brand identity.

Management reiterated guidance for the year to December 2021, with order growth expected to reach 45%, GTV of €28-30bn and adjusted underlying margin 1-1.5% below zero.

“While Just Eat Takeaway.com has largely resisted a push into grocery it could become a strategic necessity as peers start to invest more in the space,” noted Dan Thomas, senior analyst at Third Bridge.

“On top of investing heavily in delivery, which now accounts for around 45% of global orders, the more challenging economics associated with grocery delivery and dark stores could continue to impact profitability. Significant investment in grocery would delay any return to Just Eat’s marketplace-led margin profile”

“Delivery Hero is still relatively early in its return to Germany but it’s hard to imagine Just Eat Takeaway.com’s Lieferando brand not losing some market share given its near monopoly position in the country.”

Shares shed nearly 3% to 5,355p on Wednesday at noon.

Story by ProactiveInvestors