Just Eat Takeaway has pledged to buy back up to €150mn worth of shares, seeking to appease investors as orders continue to fall at Europe’s biggest food delivery group.
The London- and Amsterdam-listed company reported a 14 per cent decline in the number of orders placed by customers globally in the first quarter to 227.8mn, narrowly missing analysts’ estimates. Gross transaction value, a measure of how much customers spend on the platform, declined 8 per cent to €6.67bn.
The company has been hit by changes to consumer habits, having experienced a boom while people ordered takeaways during pandemic lockdowns. Over the past year, the food delivery sector has also faced growing food prices and customers cutting back on spending because of concerns over the cost of living.
Just Eat has responded to the pressures on its business by raising prices and delivery fees, as well as cutting costs. Chief executive Jitse Groen said the company had done some “right-sizing” on staff numbers, describing the process as “sometimes painful, but it was necessary for our business”.
He added that Just Eat’s buyback scheme, which it expects to conclude no later than December, had been launched “to improve further future earnings per share”.
Shares in the food delivery group have fallen almost 40 per cent over the past year, as investors have soured on the company’s performance. Despite announcing the buyback scheme, Just Eat’s stock was down 2 per cent in early trading on Wednesday.
Silvia Cuneo, an analyst at Deutsche Bank, wrote in a note that the buyback programme, which corresponds to 4 per cent of the current market capitalisation of the company, “should reassure on the company’s flexible balance sheet”.
However, recent changes to Just Eat’s business appear to be boosting underlying profitability. The company raised projections for its adjusted earnings before interest depreciation and amortisation this year, to grow from €19mn in 2022 to €275mn. Its previous guidance from January forecast growth to €225mn in 2023.
Groen said this was, in part, because of changes to its algorithm, lowering costs per order and restructuring its logistical situation in the UK.
In March, the company announced it was axing 1,700 couriers across the UK after opting to rely on self-employed riders entirely in a move that is expected to create savings.
Groen had previously said the gig-economy model “comes at the expense of society and workers themselves” and led to “precarious working conditions”.
Groen said on Wednesday that his U-turn was because of UK laws allowing for rivals to hire freelancers, meaning Just Eat was at a “considerable economic disadvantage, as opposed to the competition”.
“We are supportive of better arrangements for employees or workers or freelancers just generally, but, unfortunately, that doesn’t work if you run an uneconomical model as a business. We can’t run a business that is not viable,” he added.
The company last month announced a €4.7bn writedown on the merger of UK-based Just Eat and Netherlands-headquartered Takeaway.com, and the group’s subsequent acquisition of US-based Grubhub.
Just Eat has attempted to reverse course by looking to sell Grubhub since April last year but has so far failed to find a full or partial buyer.
Analysts have highlighted upcoming delivery fee cap changes in New York, which, if lifted, would allow food platforms to charge restaurants more for services and boost revenues at the company.