The UK may have just entered a double-dip recession but that doesn’t seem to have trickled down to how consumers are spending money on take-out food — and the companies that are building businesses around that. The UK-based online food ordering site Just-Eat has picked up a third round of funding totaling $64 million, its biggest yet, to further build out its online food ordering service.
The round was led by private equity firm Vitruvian Partners, with participation from existing investors Index Ventures, Greylock Partners and Redpoint Ventures. The investment comes only a year after the company raised a venture round of $48 million, and a Series A of $17.4 million in 2009, and brings the total funding in the company up to a whopping $129.4 million in the last three years.
Just-Eat will be using the money to expand into more markets outside of its current footprint of 13 countries in Europe — a footprint that Vitruvian’s managing partner Mike Risman says makes it the “world’s biggest takeaway e-commerce provider.” The FT cites figures from Experian Hitwise that say Just-Eat gets more hits than Domino’s and Pizza Hut.
That expansion will likely be the in form of entirely new operations but also acquisitions, something the company has already been active in doing, the company buying up Alloresto in France in February.
“This new investment will help our continued expansion. Takeaway e-commerce has massive growth potential,” said Klaus Nyengaard, the Copenhagen-based CEO who has been with the company since 2008 (it was originally founded in Denmark in 2000).
If a lot of e-commerce is about sorting out the logistics that makes it happen (for examples look at companies like Amazon, Ebay and KupiVIP — and more recently Uber, which may, longer term, try to use its network for more than just a car service), then Just-Eat is in a strong position for growth. The company says that it already covers 25,000 take-out restaurants in that 13-country footprint, and it sends out 100,000 meals per day.
The company says that it generates more than $750 million in revenue annually at the moment, but its own margins on that are pretty thin and shows why the company needs scale. Last year when it reported $500 million in sales generation, its own revenue bookings were only $10 million. Extrapolating from that, revenues for the $750-million year will be only $15 million unless there are better economies at scale or other efficiencies — and it appears that this is the case: the FT story notes that Just-Eat is projecting an annual run-rate of £60 million ($98 million) for this year. The company takes an 11 percent commission on all orders placed through the site, and says it has a 40 percent pretax profit margin in its most developed markets like the UK and Denmark, and less so in markets where it is still building itself up.
Vitruvian’s venture and private-equity activities focus on middle-market buyouts, growth buyouts and growth capital investments in Europe. The investment it’s making in Just-Eat is coming out of its inaugural fund of €925 million ($1.23 billion), which has also included investments in a variety of businesses in the tech/media/telecoms sectors as well as others. They include Tinopolis, Callcredit, Inspired Gaming, Openbet, Unicom, IMD, College Group, Flexpay and Healthcare at Home.