Just Eat more than doubles marketing spend amid ‘exceptional’ year

Just Eat increased its marketing investment by 158% to €369m (£316m) in 2020, in a bid to grow market share and boost long-term profits as demand for food delivery ramped up.

The company did “significantly” reduce its marketing spend from mid-March until May 2020 due to the uncertainty caused by Covid-19 and what it describes as the “lower relevance of outdoor advertising”. Furthermore, the decision to postpone the Euro 2020 football tournament resulted in Just Eat’s sponsorship costs for the tournament being deferred.

However, during second half of the year the company ramped up spend across both brand and performance marketing. Just Eat highlights, in particular, the costs associated with aligning its brand across all its markets.

The company defines its performance marketing channels – pay-per-click, SEO, app and affiliate marketing – as those which “directly generate” traffic and orders, while brand marketing covers its high profile Snoop Dogg TV campaign, online and outdoor spend. Marketing fell as a percentage of Just Eat’s revenue to 18%, down from 34% in 2019, which the brand says demonstrates the scalability of its business.

In total, Just Eat posted revenues of €2.4bn (£2.05bn) in 2020, a 54% year on year surge from €1.6bn (£1.3bn) in 2019, while EBITDA grew 18% to €217m (£186m). However, the company also registered a €151m (£129m) loss stemming from its merger with Takeaway.com and the £5.8bn acquisition of US-based Grubhub.

Just Eat: We’ve done two years’ worth of learning in six months

Despite the loss, Just Eat is pledging to “capitalise on the strong momentum” from its investment strategy to take market share from rivals Deliveroo and Uber Eats.

In the UK, 179 million orders were processed in 2020, representing growth of 35% compared to the same period last year, as delivery orders “more than doubled”. Revenue from the UK alone rose by 44% to €725m (£621m) in 2020.

The company says it is the “clear market leader in the UK” in terms of orders. During the first two months of 2021, UK orders rose by 88% and deliveries were up more than 600% compared to the same period last year. The company credits its revenue growth to partnering with fast-food giant McDonald’s and its exclusive partnership with bakery Greggs.

Chasing long-term success

Just Eat Takeaway.com CEO, Jitse Groen, admits Covid-19 brought “unprecedented challenges” to the business, but also created “tailwinds.” The company notched up three consecutive quarters of order growth acceleration in 2020, processing a total of 588 million orders – up 42% on 2019.

Groen says the company is now expecting a further acceleration of order growth in 2021, compared with last year.

Just Eat is keen to maintain what it describes as “clear market leadership positions”, as it believes only by being a market leader will it be able to target the sufficient scale and high order density needed to drive healthy delivery margins long term.

This push for dominance comes the same week as rival Deliveroo announced plans to give riders up to £10,000 in bonuses as it prepares for an IPO on the London Stock Exchange.

Commenting on the results, Chartered Institute of Marketing chief executive, Chris Daly, notes that Just Eat is one of the few brands that has been able to capitalise on a year of on and off coronavirus restrictions. Fast-growing revenues, says Daly, have allowed the takeaway delivery firm to invest heavily in logistics and marketing, which have helped drive reach.

“Although today Just Eat is making a loss, the growth in orders that have resulted from its bold marketing approach suggests it’s set for long-term success that will only be helped by its new partnerships with major brands such as McDonald’s, KFC and Greggs,” he adds.