Just Eat Takeaway.com has announced plans to discontinue its platform and delivery operations in Romania. The largest food delivery company in Europe has been facing pressure from investors to turn around its business and consolidate loss-making operations.
In order to appeal to its investors, Just Eat Takeaway.com announced a number of profit-seeking measures during its first quarter trading update last month. One of the big announcements was to seek sale or partnership for US-based Grubhub. Now, it seems that the food delivery giant will have to cut costs or shut down operations in Europe as well to reach profitability.
Just Eat Takeaway.com announces Romania exit
Just Eat Takeaway.com was one of the biggest beneficiaries of the pandemic when people had to shelter in place and had little option but to order food online. This led to huge order growth for the company but its revenues did not see a major change. With most countries having opened their borders, customers have resorted to offline activities.
This has impacted Just Eat Takeaway.com, which has not seen a huge decline in orders but has reported a drop in revenue from each customer. In order to get its operations on track, Just Eat Takeaway.com has announced a number of measures and is now announcing its exit from Romania.
In a statement, the company says it will discontinue its platform and delivery operations in Romania effective from June 1. The financial details have not been disclosed but the company says this exit will not impact orders, gross transaction value, or revenue for the company. It also states that there won’t be any impact on Southern Europe and the ANZ segment.
“Over the past period, the competitive pressure, our relative scale and hathe overall market penetration for food delivery in Romania have been insufficient to sustain a healthy business,” the company says in a statement.
By ceasing operations in Romania, Just Eat Takeaway.com plans to focus its efforts on sustainable profits and market-leading positions. On Euronext Amsterdam, Just Eat Takeaway.com has seen its share price more than halving in the past three months. It closed trading at €18.58 and is currently trading at €19.43.
Just Eat Takeaway.com’s change in corporate structure
At its annual general meeting last week, Just Eat Takeaway.com announced that supervisory board chairman Adriaan Nühn won’t seek re-election and the company elevated Corinne Vigreux, the vice-chair of the supervisory board, to the role. It also announced that COO Jörg Gerbig’s reappointment to the management board was withdrawn after a personal misconduct complaint at a company event was filed against him.
While Cat Rock, the second-largest shareholder of Just Eat Takeaway.com, had initially appealed to other shareholders in an open letter to not appoint CFO Brent Wissink, it didn’t materialise. The board approved the reappointment of CEO Jitse Groen and CFO Wissink to the management board while also approving the reappointment of the supervisory board.
Just Eat Takeaway.com’s shifting focus to profitability and gross transaction value
At the trading update, Just Eat Takeaway.com made it clear that growth will remain challenging for the company during the second quarter of this year. However, it does believe that the average monthly order frequency will remain above pre-pandemic levels.
With shareholder revolt and a decline in revenue, Just Eat Takeaway.com has shifted its focus to increased profitability and gross transaction value. The company aims to add an excess of €30B in GTV over the next five years and is also prioritising enhanced profitability. The meal delivery platform plans to improve its courier costs per order and reduce overheads and operating expenses.
The Amsterdam headquartered company also plans to increase its revenue per order, which will gradually improve its EBITDA. To appease investors, Just Eat Takeaway.com is seeking a new partnership similar to the one it signed with McDonald’s. The challenges facing gig economy backed companies like Just Eat Takeaway.com are endless but whether these companies will be able to face the change, only time will.