TECHCITYINSIDER100: Having floated on the London Stock Exchange earlier this year – at nearly £1.5 billion the biggest UK tech IPO in eight years – online takeaway ordering service Just Eat is now targeting growth via mobile. CEO David Buttress explains all to Nico Franks.
From humble beginnings going door to door and asking takeaways to sign up for a place on its website 14 years ago, Just Eat now has nearly 7 million users with access to a database of 40,000 takeaway restaurants in the UK.
Yet there’s some debate about whether Just Eat is a technology business or a food delivery business that has technology at the centre of its work. Regardless of how you define it, Just Eat – one of Tech City UK’s Future Fifty most likely to IPO – did just that in April this year in what was seen as the biggest UK tech IPO in eight years, when the company floated at £1.47 billion, or 260p per share. The valuation has broadly held: at 21 August, the price was 252p.
Technology is at the centre of what Just Eat does. An algorithm based on proximity and number of positive reviews suggests where people will most likely get a decent feed without having to hang around too long.
Businesses pay to get a fee for a place in Just Eat’s database and the company, which began in Denmark and launched in the UK, now its biggest market, eight years ago, takes around 10% commission on orders.
The business model has allowed for Just Eat to become the dominant force on the online takeaway market. But for chief executive David Buttress, there is still plenty of space for growth – by helping to change the way most people order their food.
“Believe it or not, seven to eight out of 10 people in the UK still order their takeaway over the phone,” says Buttress, highlighting the fact that people aren’t quite as ready to be buying their lamb bhunas online as they are a new outfit.
Gradually, though, our behaviour is changing, says Buttress. Across all 13 countries in which Just Eat operates, including Canada and Brazil, more and more consumers are migrating their lives online.
The proliferation of smartphones has meant that picking up the phone to order a takeaway remains a part of the process – only now there’s no longer a voice at the end of the line, but an app.
“The transition to mobile has happened pretty quickly and mobile use has grown dramatically. It’s definitely a two-device consumer economy now. You’re probably watching the telly, but at the same time you’ve got your phone out and you’re using an app to order a takeaway,” Buttress says.
Over half of Just Eat’s orders are now done via mobile, a trend that opens up huge possibilities for the company in terms of improving the user experience and innovating.
“We’re looking at point-of-sale and order tracking, developing products that will really change consumer experience,” says Buttress, who seems keen to position Just Eat as an innovative tech company – possibly in retaliation to those commentators who have written the company off as a mere aggregator of takeaways.
“What do you care about most when you order a takeaway? That it comes on time and that it’s hot. We want our users to be able to go into the app and track their order in real-time. We can build a product like that,” Buttress says, comparing the potential feature to Uber and the way it lets its users see exactly where their driver is.
“We think it’s really important to be innovative. Every quarter we host a hackathon and lots of great ideas have come out of that. For example we looked at how to use Google Glass in the context of ordering.”
“By putting loads of smart people in a room, you have loads of energy and there’s a lot of entrepreneurial spirit, so we focus on what we can do to move our product forward,” Buttress says.
Following April’s flotation, acquisitions are also on the agenda. Only last month Just Eat took a majority stake in collection-based takeaway app Orogo, allowing it to make significant in roads with consumers who prefer to get their takeaway on the move.
“As a consumer you don’t think of your takeaway experience as just delivery. You’re also in the market for collection, on the way home from work or from a major sports event,” Buttress says.
“Our product continues to grow,” says Buttress. “If you look at the industry itself it’s growing about twice as quick as GDP, so the industry is in pretty robust health.”
“We’re one of those really fortunate products. In 2008, when times got tough, people stopped eating out and started eating in more. So we actually saw a small benefit from that. We’re a bit recession proof.
“Whether I speak to a banker in the city or a blue collar working in Manchester, takeaway is a treat for everyone. Be it once or twice a week or once or twice a month, you’ll have that ‘takeaway moment,’” Buttress says.
Early results post-flotation suggest that Buttress has a case for growth. Since going public in April, Just Eat’s interim results, released in August, show a big surge in profits.
Food for thought indeed.
David Buttress – CV
Chief executive, Just Eat
Managing director, Just Eat
BA (hons), law and business
Croesyceiliog Comprehensive School, Gwent.