Dive Brief:
- U.K. delivery company Just Eat is under pressure from activist investor Cat Rock Capital Management to move faster and consider the sale of its non-core assets, including its minority stake in Brazilian startup iFood, which would free up $755 million for investors, according to Bloomberg.
- The call to speed up its decision-making comes amid growing competition in the market from Deliveroo and Uber Eats.
- The investor wants the delivery company to come up with a three-year plan in the next 30 days, which should include at least 20% organic growth annually, which the investor believes is attainable and appropriate given the company already grows orders 27% organically, according to a statement.
Dive Insight:
There has been an abundance of activity from both Deliveroo and Uber Eats in the U.K. market lately. Uber Eats, for example, is aiming to open 400 virtual restaurants in the market. Rumors continue to swirl that Uber may acquire Deliveroo to consolidate into a company that could leverage Uber’s technology and Deliveroo's footprint and market experience.
Uber Eats also is expanding online payment capabilities to generate more business from its website versus its app, which up until now has been one of Just Eat's differentiators, according to Bloomberg.
A Just Eat spokesperson told Bloomberg the company has a strategy to deliver long-term shareholder value, but with shares down 26% this year, Cat Rock — which owns about 2% of the company's stock — is running out of patience.
"If management fails to commit to, and deliver on, the three-year financial plans and targets, we strongly believe the board should begin to consider strategic alternatives for the business," Cat Rock founder Alex Captain said in a statement.
The investor has plenty of experience in delivery to understand the space — with investments in Takeaway.com and Delivery Hero — and is therefore aware of how fast it moves.
Just Eat generates more than half of its sales from the U.K. market, so any market share erosion there could prove detrimental to the company. This underscores another reason why iFood — a golden child in the emerging Latin American market — is an ideal asset.
According to Forbes, the Brazilian-based online take-out service processes 8.7 million orders a month and is essentially creating an entire ecosystem in Latin America, with data-driven management tools, a marketplace and financial services offered to its restaurant partners. E-commerce is growing faster in Latin American than any market except for China, according to TechCrunch, so the environment is ripe.Just Eat's sales were up 49% year over year and the company had its biggest month ever in November.
