MT301: What Are The Key Strategic Issues That Just Eat Takeaway Are Facing From The Situation Depicted Above: Business Strategy Case Study, UCD, Ireland

Just Eat Takeaway.com is going to war in London with its UK rivals Deliveroo and Uber Eats, as the Amsterdam-headquartered food delivery group increases investment in its own courier network. Jitse Groen, chief executive of Just Eat Takeaway, on Wednesday pledged to “go all out” in London as it looks to surpass local rival Deliveroo, just as the Amazon-backed company is preparing to go public in the coming months. “We do whatever we can to make life very, very, very complicated for the competitors,” Mr. Groen said. “It’s either all or it is nothing and we are going to go for all in the UK.”

London is the most valuable city for food delivery apps in the UK, which is itself Europe’s largest market for eCommerce services. Just Eat’s historical reticence to invest in its own courier network, which threatened to dent the profitability of its high-margin marketplace business, opened the door to dynamic new competition from Deliveroo and Uber, especially in big cities such as London. As a result, Just Eat lost market share in the years leading up to its merger with Takeaway. Some of Mr. Groen’s investors were alarmed by the aggressive strategy. Just Eat Takeaway’s shares fell by around 4 percent on Wednesday after its profit guidance fell well short of analyst forecasts, owing to what the company called “significant investments in delivery”.

Sherri Malek, the analyst at RBC Capital Markets, said in a note to clients that Just Eat’s guidance of adjusted profit margins of around 10 percent “implies a 27 percent downgrade to consensus” forecasts of adjusted earnings before interest, taxation, depreciation and amortization. Just Eat, which merged with European market leader Takeaway.com last year, saw its UK orders jump by 58 percent in the fourth quarter of 2020, as renewed lockdown restrictions on restaurants coincided with the arrival of its fleet of orange-branded “Scoober” couriers in London. While most of the orders placed through Just Eat’s app have traditionally been delivered by takeaway outlets themselves, or collected by diners, Takeaway’s Scoober competes directly with the delivery network operated by Uber and Deliveroo.

Deliveries made by Scoober increased by 387 percent in the UK, Just Eat said in a trading update on Wednesday, and now make up a quarter of total orders. Just Eat’s UK growth has been bolstered by the addition of hundreds of McDonald’s and Greggs outlets to its app in recent months. “We’re just at the beginning of what we are trying to accomplish in the UK,” Mr. Groen said on a call with analysts, as he promised to undercut the competition on delivery fees while expanding Scoober to other UK cities soon. The London-based company said last month that it was profitable on an operating basis for much of 2020 as the pandemic accelerated demand for food delivery. Uber has said it is now available to 75 percent of the UK population, up from 50 percent a year ago, and saw 150 percent growth in delivery trips in the three months ending in September. But Mr. Groen took aim at its rivals’ claims, saying: “We are at 100 percent [coverage] and we are going to go after London. If somebody else wants to go after 100 hamlets, then by all means.”

Answer the following THREE questions based on the case study above.

Q 1 What are the key strategic issues that Just Eat Takeaway are facing from the situation depicted above?

Q 2 What recommendation would you make to Just Eat Takeaway management in addressing ONE of the strategic issues that you have identified? Justify your recommendation with reference to business strategy literature.

Q 3 “Competitive strategy means you have created value for customers and you are able to capture value for yourself because the positioning you have chosen in your industry effectively shelters you from the profit-eroding impact of the five forces” (Porter, 1985). Discuss, with reference to the case above.