Just Eat shares soar as takeout outlook improves

Just Eat shares soared after the company said an increase in the commission it charges UK restaurants for its online takeout service will give an additional boost to full-year sales and profit.

The shares yesterday climbed almost 10% to 421p at one stage, boosting the company’s market value to about £2.8bn (€3.56bn).

They are, however, still down 10% from a year ago.

The company, which was founded in Denmark in 2001 and listed in London in 2014, has recently extended its presence in Spain, Italy, Mexico and Brazil.

Last month, Just Eat increased the commission rate it charges restaurants in the UK to 13% from 12%.

The company is benefiting as more consumers order takeout food for home delivery rather than dine out.

Total orders rose to £31.5m in the first quarter, up 41% on a so-called like-for-like basis.

The growth is in contrast to Restaurant Group, owner of the Frankie & Benny’s chain, which on Friday forecast another hit to profits amid deteriorating sales.

“We understand the step up in guidance reflects only the UK commission rate increase, there is no shift in order growth expectations,” David Reynolds, an analyst at Jefferies, said.

The growth in orders was “very impressive” and the revised guidance looks conservative, Mr Reynolds said.

“We have had an excellent start to 2016,” Just Eat chief executive David Buttress said. “We are well-positioned to continue benefiting from channel shift in the category,” Mr Reynolds.

The company now expects full-year revenue of £358m, up from a previous forecast of £350m. Underlying earnings before interest, tax, depreciation and amortisation are seen in a range of £102m to £104m, up from the prior guidance of £98m to £100m.

The company counts 14.2 million active users and has partnered with more than 64,000 restaurants. Earlier this year, Just Eat bought rivals in Spain, Italy, Brazil and Mexico from Rocket Internet and Foodpanda in a €125m deal that extended its leadership in the fast-growing sector in the four countries.

The company said at the time its strategy was to be the clear leader in all of its markets.