Just Eat Takeaway confirms lockdown boom

UK demand almost doubled in the first quarter of 2021, but will the exit from lockdown hit business?

Claims by Just Eat Takeaway.com NV (LSE:JET) that it continues to eat up market share in the battle of the food delivery apps only succeeded in turning up the heat under shares of rival Deliveroo Holdings (LSE:ROO) today.

Just Eat's impressive first-quarter figures showed order growth of 96% in the UK's latest lockdown, which was used by the FTSE 100 index company to highlight that its delivery operations are growing “multiple times faster” than its competitors.

The progress is in line with Just Eat chief executive Jitse Groen's pledge to prioritise delivery market share over profitability.

But rather than adding to pressure on Deliveroo after its recent disappointing stock market debut, the read-across from the update helped shares in Just Eat's rival to rise more than 4% ahead of its own trading update on Thursday.

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Deliveroo was changing hands today at 260p, which compares with the 390p issue price on 31 March. Concerns about the company's initial lofty valuation have been driven by unease over its workers' rights in the gig economy and the special voting powers afforded to founder and chief executive Will Shu.

This week's resumption of al-fresco dining for restaurants and pubs have also raised fears that the past year of Covid-19 lockdown trading may be as good as it gets for the sector.

The favourable conditions helped Just Eat to report overall order growth of 79% in the first quarter of 2021, with its biggest market of the UK being a stand-out success after the rise of 96% to almost 64 million orders.

This included a 695% jump in food deliveries to 22.9 million after the company's recent step up into logistics services in addition to its original “marketplace” order platform. New brands on its UK network included restaurants Leon and Tortilla, and coffee chains Starbucks and Costa.

Just Eat's shares rose 3% or 193p to 7,547p today as Groen said the start of 2021 had been “very strong” for the group as a whole. Analysts at UBS have a price target of 9,800p, which would take the stock back to the record high seen in October.

The bank said today's update should be taken positively by investors as they await further clarity on this summer's blockbuster acquisition of US-based GrubHub, a deal which is set to make Just Eat a player on the global stage. The company currently operates in 23 countries, including Germany, Canada and the Netherlands.

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It has overcome some of the sector's jitters over workers' rights by rolling out an employed delivery model through Europe, giving its couriers hourly pay rather than pay-per-job. Just Eat also became the first food delivery company to sign a collective bargaining agreement with the largest unions in Italy for the employment of its couriers.