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Just Eat now expects Adjusted EBITDA to hit €275 million, increasing its earnings outlook by €50 million despite poor orders.
Online food delivery company Just Eat Takeaway.com is optimistic about its earnings outlook for 2023 regardless of a worrying reduction in the number of orders received. The company’s new outlook is interesting, especially since the figures are connected to a hopeful increase in numbers not yet achieved.
In an official press release, Just Eat increased its Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) from €225 million to €275 million. The company says the new figure accounts for wage costs inflation, and additional food and non-food investments, despite an “uncertain macro-economic environment.”
According to Just Eat, the number of orders received in Q1 2023 fell by 11% in Ireland and the UK. Across the entire Just Eat Takeaway.com group, orders dropped 14%. For gross transaction value (GTV), orders were reduced by 6% in the UK and Ireland, and 8% in total.
The company explained the reason behind the new outlook, simultaneously admitting that orders have not been as forthcoming as preferred. The press release noted:
“Just Eat Takeaway.com continues to recover from last year’s deceleration, with the Northern Europe and Ireland segments leading the trend. While the year-on-year GTV decline in Q1 2023 is significant, the comparison is with the quarter with the second highest GTV of the pandemic. Our efforts to improve profitability are running ahead of plan, allowing us to upgrade the 2023 Adjusted EBITDA target to approximately €275 million.”
Just Eat Profitability Measures for Increased 2023 Outlook
The online delivery giant has been taking several steps geared at ensuring profitability for its new 2023 outlook. Just Eat decided to shift to a gig economy, thereby cutting the company’s staff size. The food delivery firm has cut 1700 delivery workers as it no longer intends to employ courier staff. Furthermore, Just Eat fired 170 people working company operations.
The company has also initiated a share buyback programme as it tries to buoy earnings per share. According to the press release, JustEat will buy back shares up to €150 million. The company will either cancel the repurchased shares to reduce issued share capital or use the shares to cover compensation obligations.
Interestingly, Just Eat chief executive officer Jitse Groen had spoken against the gig model back in 2021. In a Financial Times article, Groen wrote that Just Eat employed tens of thousands of couriers to demonstrate a model that works. According to Groen, the EU must “eradicate unacceptable self-employment constructions” and ensure all member states comply. Groen believed that this would create a level playing field for firms, and give workers their deserved rights.
Last year, Just Eat expressed willingness to sell part or all of Grubhub, the company’s American subsidiary. In a company note at the time, Just Eat said its willingness is predicated on creating and realizing value from all of the company’s assets. However, it warned that there was no timeline or definite confirmation for the sale.