Just Eat and HelloFresh tap into appetite for home-delivered food | Business

Sales have surged at the UK online takeaway company Just Eat and the Berlin-based meal-kit firm HelloFresh, underlining the popularity of home delivery services for fresh food.

Both companies tap into the desire of consumers in the UK and elsewhere to have freshly cooked meals delivered to their door – or pre-prepared ingredients for home-cooked meals – for convenience.

Just Eat posted 43% growth in revenues to £779.5m in 2018 and the company made a pre-tax profit of £101.7m, compared with a £76m loss in 2017. This year it expects revenues to exceed £1bn.

The London-based firm invested £51m last year, to improve efficiencies in UK delivery and expand its business overseas. The company gained more than 4 million customers in 2018, taking the total number of active customers to 26 million across Europe, Canada, Brazil, Australia and New Zealand.

HelloFresh, which delivers the ingredients for Instagram-worthy home-cooked meals (“no shopping, no planning”), was created in 2011 when Dominik Richter, now the chief executive, and a friend spent an afternoon packing shopping bags and delivering them by hand to family and friends.

Richter said: “2018 was our most successful year to date, in which we meaningfully expanded our customer offering in terms of meal types, choice and price and assumed market leadership in every single market.”

HelloFresh listed on the Frankfurt stock exchange in 2017 and has more than 2 million customers in 11 countries, including Germany, the UK and the US.

The company delivered nearly 200m meal kits last year, up 44%, and made revenues of €1.3bn, up 41%. Adjusted losses before interest, tax, depreciation and amortisation shrank to €54.5m from €70.1m.

Just Eat, which was launched by five Danish entrepreneurs in 2001 and later moved to the UK, started as a marketplace business that linked customers to restaurants taking care of their own deliveries.

The former boss Peter Plumb, who left abruptly in January, upgraded its technology and launched its own delivery service.

The firm faces mounting competition from rivals Uber Eats and Deliveroo but said on Wednesday that its results showed its “strategy is working”.

Peter Duffy, the interim chief executive, said: “We need to go faster to really cement our position in all the markets.”

Just Eat has come under pressure from the US hedge fund, Cat Rock Capital Management, which owns a 1.9% stake in the online takeaway service and has been pushing for a complete overhaul of the management, as well as a merger with a “well-run” rival such as the Dutch firm Takeaway.com.

Duffy said he was not a candidate for the permanent chief executive role “for personal reasons”, a statement welcomed by Cat Rock. It had criticised Plumb and Duffy for having no prior online food delivery experience.

Seeking to placate investors worried about rising costs, Duffy said 2019 would be the “peak year of investment in delivery”.

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The battle to win customers in the online takeaway delivery sector heated up a fortnight ago when US rival Uber Eats announced plans to cut the fees it charges restaurants.

It will also allow restaurants in 100 UK towns and cities to use their own delivery drivers on meal orders placed using its app.

Steve Clayton, manager of the Hargreaves Lansdown select funds, which own Just Eat shares, said: “Deliveroo and Uber Eats are pushing their delivery services hard, and increasingly trying to muscle into Just Eat’s marketplace business.

“For their part, Just Eat are trying to work with the same sort of branded restaurants their rivals are targeting and offering their own delivery offering. None of this comes cheaply and the costs are holding profits back.”

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