Brought to you by Retailinsider.com and PCMS
The Name: Just Eat
The Place: Headquartered in London but operating in 13 countries.
The Story: So, we’re in Denmark and the year is 2001. And a company is launched which allows a hungry person to order a takeaway online after viewing a menu online and the thing to remember here is that most takeaway restaurants do not have an online ordering presence themselves. Cut to 2013 and Just Eat has a global staff of 1,000 and is processing Euros 750 million worth of food orders around the world. It’s growing in double digits and orders might top Euros 1 billion in the next few years.
David Buttress, chief commercial officer, Just Eat
Phew. That is a lot of hungry people. One small point – they are not actually retailers then are they? Err… technically no. But innovative certainly and changing the retail takeaway industry for ever undoubtedly, and therefore the high street and food retail too. In Denmark Just Eat now processes 35% of all takeaway orders and 90% of online ones. The UK potential is similar.
OK, they’re in. How does it work? Pay attention. The customer types in their postcode and finds all the takeaways in their area, plus reviews left by other customers. They then order on the Just Eat site and the order is transmitted to the restaurant – which has a dinky little receiving box precisely for that purpose. Customers choose how they pay and whether they collect or have it delivered and bingo. It takes three minutes to phone through an order (and of course you must have the menu with you), it takes 33 seconds to process an online order with the menu laid out before you. Welcome to the future.
Meaning… meaning that it’s only a matter of time before restaurants start taking the phone off the hook in the UK as they have done in Denmark. David Buttress, Chief Commercial Officer, cites the case of the Firezza pizza chain. Four years ago they did not have online sales, now it’s 55% and, true enough, if you look on the website there is no phone number listed.
The restaurants must be queuing up: Yes, over 500 a month are joining and by the end of this year the figure should be around 20,000 restaurants out of a total market of 35-40,000. A Just Eat sales exec will come and visit the establishment. If it passes muster then it gets the sticker in the window and can expect a follow up visit two or three times a year. The commission for Just Eat is 11% on an average order of £15-£20. On the plus side they then promote, host and optimize the shop online. For the consumer, of course, there is no additional cost and the benefit of a huge ‘visibility of choice’.
Well, what a lovely kind business to be in, feeding people: Not sure about that. There can be only one winner in each area according to Buttress, and you can’t even extract profits from a two-player situation where the only earner is Google. But from the winning position you are looking at 40-55% profit margins long term. In 2006 in the UK there were 11-12 players. Now there are two. He describes the current situation in Germany where there are about four serious competitors as a “bloodbath”.
Crikey, it’s all naan breads at dawn: Ah, I see you are assuming Indian food to be the major part of the takeaway market. An easy mistake.
OK. It’s all pizza margherita at dawn. Wrong again. By a country mile Chinese is the takeaway of choice and as there are virtually no Chinese restaurant chains that market needs the services of Just Eat the most.
So now I have to ask who the other UK player is? The UK trading name is hungryhouse but it has just been taken over by Delivery Hero which is a biggie. Still, Just Eat has 6% of the market in the UK and reckons it’s significantly bigger than the share of hungryhouse/Delivery Hero.
No love lost there then: Well no, but actually it’s Dominos pizza chain that Buttress reckons dislike Just Eat most - for helping independent providers a ‘best in class’ experience for their customers.
And who are these customers? Not surprisingly the youngsters aged 18-35 are the ‘sweet spot’ according to Buttress. There are two million active customers and they order on average once a month (although they probably go to the takeaway twice a month). Saturday is obviously the biggest night and 160 Just Eat staff work that evening in the customer call centres and beyond. But over the entire year the big spikes are Valentine’s Day.
Now you’re making me cry: And New Year’s Day when it’s hangover food for the masses. Buttress says that the customers are ‘becoming more promiscuous’ in terms of the different cuisines consumed (the rise of sushi is a good example) but most people are still ‘incredibly consistent’ in their food ordering within any one cuisine. It will be the same number on the menu each time.
Goodness: But despite having that automaton characteristic to deal with, Buttress describes the business as a service one which definitely needs a manual interface like a call centre and which is very much based on local markets and small local management teams. To grow from that to a multi-national is ‘very painful’.
And the future? The future could be one-click ordering (let’s get that 33 second ordering window down even further) and frighteningly - predictive ordering. Yes, for all you people out there who order the same food on the same night from the same takeaway every month. Before you have even had a chance to remember Just Eat will be reminding you that your custom is due. And then there are the food impulse brain transmissions….
Totally no way: You’re right. I made that last one up.
PCMS Group is a leading independent supplier of software and services to the retail industry; PCMS Store and Multi-channel solutions have been chosen by over 98 retailers including Arcadia, John Lewis and M&S.