International takeaway ordering website Just Eat has said it plans to work more with branded restaurant chains, knocking its shares despite an upgrade to its full-year revenue forecast.
Founded in 2001, Just Eat has grown rapidly, listing its shares in London in 2014. Its focus so far has been on serving independent restaurants but it is now branching out, investing in partnerships with chains like Burger King and KFC.
“The success of targeting chained restaurants with outsourced delivery is yet to be proven,” said analysts at Berenberg. “However, there are both offensive and defensive reasons for Just Eat to at least experiment with it,” they said.
Shares in Just Eat, up 43% over the last year, fell as much as 5.7% yesterday. The company is valued at £4.7bn.
Though the firm, which has seen several management changes this year, raised its revenue forecast for 2017 to £500m to £515m from £480m to £495m previously, it maintained its core earnings forecast at £157m to £163m.
“We intend to reinvest this revenue outperformance into additional profitable growth opportunities, including further building on the momentum within the business and increased collaboration with branded UK restaurants,” interim chief executive and chief financial officer Paul Harrison said.
He said Just Eat’s investment in partnerships was one of the reasons it had raised its revenue outlook, alongside better-than-expected growth in particular from its international business, which now contributes 43% of group revenue.
For the first six months of the year, Just Eat’s revenue rose 44% to £246.6m as it continued to win share from its largest competitor — the telephone. Orders increased 24% to £80.4m. Core earnings — as measured in underlying EBITDA terms — rose 38% to £73.6m.
“We... are pleased that 75% of total orders are now placed on mobile devices,” said Mr Harrison, who will revert to his finance role when Peter Plumb, former Moneysupermarket.com boss, takes over as chief executive in September.
Despite consumers in its core market of the UK having been hurt by a rise in inflation, caused in large part by the fall in the value of the pound since last year’s vote to leave the EU and by a slowdown in wages growth, Mr Harrison remained upbeat on prospects.
“That weakness that we read about, that we observe in the consumer market, is not apparent in our results, in our business and experience,” he said.
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