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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Hello, and welcome to Just Eat Takeaway.com Q4 2020 Trading Update Call. My name is Rinkel, and I will be your coordinator for today's event. Please note this conference is being recorded. [Operator Instructions] I will now hand you over to your host, Jitse Groen, to begin today's conference. Thank you.
Thank you, operator. And that sounded a little bit Asian, but thanks for handing over. Good morning, everybody, and welcome to this analyst and investor conference call to discuss the fourth quarter 2020 trading update for Just Eat Takeaway.com. On our corporate website, you can download our press release, the slides for this analyst and investor conference call and other related information. I will start today's presentation by taking you through the business and financial highlights for the quarter. Jörg Gerbig, our COO, will update you on the progress relating to our key strategic initiatives. He will also share additional background on our market positions in the largest European markets. Brent Wissink, our Chief Financial Officer, will then talk you through the performance for each of our 5 operating segments individually. I will end the presentation with some concluding remarks. After which, we will open up the call for your questions. Now please follow me to Slide 4. As you know, Just Eat Takeaway.com is active in 23 markets worldwide. Well over 90% of our gross merchandise value is generated in markets where we are the #1 player. For those new to the sector, the U.K., Germany and the Netherlands are the 3 largest markets in Europe in terms of revenue. In these 3 markets, Just Eat Takeaway.com is comfortably market leader, and Jörg and Brent will share further information on the performance.On Slide 5, I will take you through the business highlights. In August, we announced an investment program which is highly successful and is leading to significant market share gains in most of our businesses. The integration with Just Eat is on track and progressing well. We have created a combined operating model, and we have aligned our organizational structure. We also launched a delivery service, Scoober, in London and Paris to enhance our network effects, and we will continue to further roll out Scoober across our countries. Scoober allows us to further add premium restaurants to our offering with very short delivery times, an excellent service and much lower delivery fees than our competitors. The coronavirus resulted in unprecedented times for the company, our employees, our couriers and our restaurant partners. We supported our restaurants with various relief measures, and we launched campaigns to support health care workers with free or discounted foods across our markets. This resulted in approximately EUR 45 million in social support worldwide in 2020. And lastly, our shareholders approved the Grubhub transaction at the EGM in October. On Slide 6, you will find the financial highlights. In the fourth quarter of 2020, Just Eat Takeaway processed 180 million orders. In addition to the strong and accelerated growth in Marketplace Orders, our Delivery Orders grew 163% year-on-year. These orders represent a gross merchandise value of EUR 4 billion, generating a revenue in a range of EUR 720 million to EUR 740 million, up more than 60% compared with the fourth quarter of 2019. For the full year 2020, we expect revenue of approximately EUR 2.4 billion, a growth of more than 50%, in combination with an adjusted EBITDA margin of approximately 10%, reflecting significant investments in delivery in the fourth quarter of 2020. On Slide 7, you see the quarterly orders, GMV and revenue in a different format to display the strong performance in the last quarter of 2020. I would like to highlight especially the GMV in the middle of the page, which grew 68% to EUR 4 billion in the quarter compared with the same period last year. This metric is especially useful to compare us to our competitors as it is the only metric that isn't positively or negatively affected by the quality of the underlying orders. Moving on to Slide 8. The fourth quarter of 2020 marks our third consecutive quarter of order growth acceleration. At the end of the first quarter, at the start of the pandemic, we saw a negative impact on our orders. However, during the first lockdown at the start of the second quarter, our business recovered, followed by an accelerated order and AOV growth. We initiated our investment program, which led to further growth in the first quarter despite lockdown relaxation. At the same time, we did see average order value trending down to more normal levels, which you can observe in our GMV for the third quarter. We invested significantly on the back of the strong momentum, which, combined with the second lockdown across our markets, led to a further order growth acceleration in the fourth quarter. On Slide 9, you can see how our investments in delivery led to a significant ramp-up in Delivery Orders. In the fourth quarter of 2020, we processed 55 million Delivery Orders and the delivery share reached 30% of total orders. This growth in particular is a reflection of our strategy. Now turning to Slide 10, which most of you likely recognize and which forms the basics of our business model, the cohorts. This, I believe, is actually the most important slide of this presentation. On the left-hand side, you see the quality of our business. Even including the churn, people order more frequently over time. That hasn't changed during the pandemic. On the right-hand side, you can see that the vast majority of our orders come from existing users that behave and have behaved extremely loyal. The big difference between 2020 and other years is that our existing users have ordered far more frequently. This is caused by a larger portion of our user base turning into higher frequency customers. We therefore also believe that this effect will be lasting also after the pandemic. 2020 was also a record year for new user addition. If you compare the pink part of the chart in 2020 with the red part in 2019, you can see that the difference is significant. I would like now to hand over to Jörg.
Thank you, Jitse, and good morning, everyone. As Jitse mentioned, we are increasing our investment in the business to create further network effects and accelerate our growth. In this section, I will talk more about these strategic investments and demonstrate the progress we have made already and the positive impact these have had on our performance. Please move to Slide 12. In Q4, we have invested significantly to reinforce and extend our market leadership across our markets, particularly into legacy Just Eat markets, which has been historically underinvested. There are 3 broad areas where we focus our investments to strengthen our network effects. The first is in expanding our supply, adding more restaurant choice in all of our markets, with a focus on major cities. As you know, restaurant supply is a key driver of the positive network effects associated with our industry. In particular, we've continued to add chain restaurants to the platform, notably in the U.K., where we've now scaled up to over 800 McDonald's and 600 Greggs. We will continue to drive restaurant acquisition in 2021, and we have restructured and scaled up our sales teams to enable this. This quarter has also seen us launch Scoober, which is our delivery service using employed couriers, in a number of major cities, including London and Paris. As we have talked about before, we are strong believers in offering couriers fair and transparent working conditions as well as adhering to local labor laws. And we believe the launch of our own employed model in key markets is an important milestone in the long-term sustainability of our industry. The Scoober model also allows us more control over the quality of the delivery and provides better visibility of our brand on the streets. We are working hard to launch Scoober throughout Continental Europe this year. The second area of investment is in our brand. We believe food ordering is often an impulsive decision, and so being top of mind at all times across all markets which is critical to support continued growth. In the quarter, we have not only completed the alignment in the look and feel of our brand globally, but also invested significantly in terms of mind brand awareness and performance marketing in Just Eat legacy markets. We've also launched a major new loyalty program in Canada which provides our consumers with even more reasons to enjoy [indiscernible].Finally, we are also investing in our customer experience and value proposition. We want to be the price leader in our industry. That means offering even lower delivery fees across all markets, such as U.K., Canada and Australia, including, for example, free delivery in high street with selected chains in the U.K. We've also been enhancing our product and our underlying technology. During 2020, we've migrated the French and Swiss IT platforms to our core European platform. And in Q4, we've improved our user experience significantly with a new checkout and an enriched restaurant list with photography.On top of these initiatives, we also believe it's really important to support our restaurant partners and our wider society throughout these challenging times. As several countries reentered lockdown in the fourth quarter, we reintroduced our support package, offering partners rebates and commissions. We've also given back to our community, including couriers, health care workers and charitable initiatives, resulting in circa EUR 45 million in support worldwide in 2020. As we enter 2021, we will continue with our investment program that started in 2020. As always, we will prioritize market share gains over adjusted EBITDA. And we believe these strategic investments will fuel the next wave of growth for our business.Please follow me to the next slide. As Jitse mentioned earlier, we are the clear market leader in our -- all of our key markets, with over 90% of our GMV coming from markets in which we are the #1 player. And we have strengthened on those leadership positions in 2020. The charts here show Google Trends search interest in web and mobile of our 3 major European markets, which we believe is a good proxy for new customers. As you can see, we continue to perform very strongly in the U.K., Germany and Netherlands, despite significant investments to our [ strategy ].Moving on to the next slide. This slide focuses on our market share specifically in the U.K., with data from Google Trends on the left-hand side and credit card transaction data on the right-hand side of the page. This shows that we are a clear market leader in the U.K. and also that our share has been very stable in the second half of 2020. When you look at the next slide and the number of transactions that we are doing, you can see that we've actually extended our lead in absolute terms. Our estimates suggest that between September and December 2020, that led -- lead has widened up by around 3 million orders. In December, we processed over 20 million orders, of which 6 million were from delivery. We believe there is almost as many food Delivery Orders as the #3 player process in total. With a year-over-year growth rate of 387% in delivery in Q4, we're also the fastest-growing logistics business by far in the U.K. I'm now going to hand over to Brent, who will talk you through the segment performance in more detail.
Thank you, Jörg, and good morning, everyone. In this section, I'll walk you through some key highlights from each of our segments. Please note that I will only talk about order development and GMV, but we are not disclosing financial information at a segment level at this time. On Slide 17, you see our performance in the United Kingdom. In the U.K., we have seen very strong performance in the fourth quarter of 2020, with order growth of 58%. GMV grew by 62% on a constant currency base ahead of order growth. We processed over 20 million orders in the month of December, a new milestone. Delivery was a key driver of that growth, with 14 million orders in Q4, almost 5x higher than the same quarter in 2019, partly due to the rollout of McDonald's and Greggs, as Jörg mentioning before. We had a record month of restaurant sign-ups in November, including a new record of acquisition of marketplace restaurants, plus new brand additions such as Starbucks. Please turn to Slide 18, in Germany. In Germany, we continue to achieve very strong growth, with an order increase of 56% in Q4 and a revenue growth of over 70%. This was underpinned by an increase in Marketplace Orders from 21 million in Q4 '19 to 33 million in Q4 '20. Germany remains primarily a marketplace market, with delivery making up 7% of all orders in this quarter by growing -- but growing strongly at over 90%. We added a record number of net new restaurants during the quarter and continued expansion with major change, including McDonald's, Burger King, Subway and KFC. Moving to Slide 19, where we show our Canadian business. There, we have had an outstanding year and finished with a strong fourth quarter. Orders have almost doubled compared to the same period last year, whilst GMV increased to over EUR 0.5 billion, which is 103% growth on a constant currency basis. Restaurant sign-ups accelerated quarter-on-quarter. And our industry-leading COVID support package has helped us give back over CAD 32 million to our partner since March. We've also launched a new reward program in Canada and have seen exceptional engagement from customers, positively impacting both order frequency and retention. Let's proceed to Slide 20, where we show our Dutch business. In the Netherlands, we achieved over approximately 40% order growth to 14 million orders, of which 9% were Delivery Orders. Despite having a high penetration of users, we continue to accelerate new customer acquisition quarter-on-quarter. Marketplace Orders increased to 13 million orders, whilst delivery more double -- more than doubled to 1.3 million orders. GMV growth has even been stronger, growing by 56% to approximately EUR 340 million. Finally, please turn to Slide 21. The Rest of the World segment performed very well. Overall, Q4 orders in the segment grew by 47% to 50 million and GMV grew 62% against the prior year on a constant currently -- currency base. Australia was a star performer, achieving a triple-digit growth in orders and GMV, with growth further accelerating in the fourth quarter, which we believe has resulted in a meaningful market share gain. We also achieved high double-digit growth in a number of other larger markets, including Italy, Ireland, Belgium, Poland and Austria. We remain the clear market leader in the majority of markets within the Rest of World segment. That brings me to the end of this section on segment performance. And I will now hand over back to Jitse.
Thanks. I will continue with the conclusion of this presentation on Slide 23. Our growth in the fourth quarter of 2020 further accelerated. Our U.K. business performed strongly, and we have increased our Delivery Orders nearly fivefold year-on-year. We will continue to invest heavily in our business and prioritize market share over adjusted EBITDA. The integration of Just Eat is well underway and on track, including the rollout of Scoober and platform consolidation in Continental Europe. Then last, we anticipate completing the Grubhub transaction in the first half of this year. So to conclude, our mission has always been and still is to provide the best possible service to restaurants and our consumers everywhere we operate. This is now more important than ever. With that, operator, I would like to open the call for your questions.
[Operator Instructions] We have our first question from the line of Monique Pollard from Citi.
Just 3 questions from me, if I can. First thing, I just wanted to understand whether we should expect that own delivery pace of order growth to continue into 2021, particularly in the U.K. Obviously, the Scoober rollout happening at the end of the year and the growth in McDonald's partnership accelerating. So I don't know if that's sort of a one-off in terms of the pace of that growth. The second question I had was just whether we should expect any material change in the own delivery cost per order in the second half of 2020 versus the first half given you've had that rollout of Scoober. And then I was just wondering if you had had any change in your thoughts or view on the potential for additional verticals on the own delivery platform across Europe, particularly things like grocery given the pandemic.
Thank you, Monique. First, on your question about the pace of the delivery [ at home ]. There's a couple of things that are combining currently for our business. So if you look at specifically the U.K., we have added -- what was the latest figure? I'm looking at you now for the McDonald's counts.
875.
875.
875 McDonald's stores in just a couple of months in the U.K. That, of course, has a significant impact on the growth because we started 0 McDonald's orders and we go -- and we ramped it up quite significantly. We think that, that will likely continue at least for a couple of months. And the reason for that is that we have just by far the cheapest delivery rates in the U.K. And that's not only for McDonald's, it's for actually quite a lot of these logistical restaurants. So we'll see a continuation of that. Similarly, for other QSRs, we'll see, at least until the end of the pandemic or at least until spring, a very rapid growth of the logistics. We do expect that growth for logistics to continue also after the pandemic. We do expect that demand for logistics will trend down after the pandemic simply because a lot of the logistical business is replacement, it's a replacement of going to a restaurant. In the marketplace segment though, of course, it's not a replacement business, it's a replacement of the phone. So therefore, we don't expect the same sort of impact on marketplace. So if you look at the delivery rollout, we expect significant growth also in 2021 on that business. You see also, if you look at our figures, of course, that even in a country in which we have by far the largest logistical network, say, Holland or Germany, even there we're looking at 100% growth, give or take, on that network. So it is something that's still growing significantly. If you look at those 2 countries in particular, it's growing less fast than in the past because we have basically all the restaurants that we can add to the service. We're not going to be able to add McDonald's another time because we already have McDonald's. So also there, high growth. And we expect also, there, the high-growth to continue, at least until the end of the year -- of the pandemic. Then regarding your question around the own delivery. You need to understand that Scoober is not to say more expensive than the other model because it has quite a lot of benefits to our company. The Scoober delivery model is superior to using independents because you control the couriers. So we control quality. We control delivery times. We control the visibility of these people on the street. We have started in London. I guess the people living in London would have seen that already. It is still a small business, but we do expect the logistical business in London to become our largest logistic operation. Currently, that will be Berlin, but it will probably become our largest logistic operation. Also, because we're adding a quite a lot of nice brands to our service in London and delivery will be free in London for those nice brands. So I think that's actually also an important remark for me to make. The cost of the service itself is comparable between Scoober and third-party or using external. And that has -- of course, on a per person basis, it's more expensive, so it has a lot to do with how we set up that business and how we control quality and delivery times itself. Regarding your question on the verticals. The own delivery platform that we have, as you see, it has grown 163%. It is growing very fast at this point in time. We are focusing fully on the rollout of restaurants on that network and not on adjacent verticals. And I've said that before. You should look a little bit through these adjacent verticals because if you look at the profitability on orders, it's very clear. Marketplace Orders are the most profitable orders. We have been very clear about logistics. We think that we can run that at the gross margin at some point in the future, but that's it. It's not going to be highly profitable. And if you then look at, for instance -- I think that's what you're alluding to for us doing -- building up a grocery hub and delivering groceries. You need to understand that, that would equal revenue with GMV. And therefore, it would grow 10x faster than a marketplace order. But yes, I mean there's no profitability there. So we are focusing on the things that we think will improve our network effects. And for the time being, that's a logistical business and that's a marketplace business. And on top of that, of course, Takeaway Pay.
We have a next question from the line of Joe Barnet from Crédit Suisse.
Excellent. Three from me as well. So firstly, on the investment cadence into next year. I think the guide for FY '20 implies something like EUR 90 million incremental investment versus what consensus was expecting in the back end of 2020. Whilst you will continue to invest in FY '21, is it fair to assume that investment will normalize as the business scales? I guess the question is, basically, is investment front-end loaded? The second question, you've been more reticent around logistics economics in your geographies than many others have been in theirs. As logistics ramps in the U.K. and becomes a meaningful portion of the business, what's your view on that? I think, Jitse, you alluded to in the previous question, you said it could be positive. But when do you think that could be and any more detail you can give around how that's achieved?And then thirdly, looking at your guide for investment in 2020, is the investment focused solely on the U.K. and/or legacy Just Eat businesses? Is it fair to assume that German and Netherlands profits have continued to rise?
Thank you. Let me first take -- well, for the first question to Brent, on your question about the consensus and our investments being front-end loaded or not. Then the view on logistics, I will handle as well as the, yes, investments into predominantly Just Eat. Sorry, help me out on the view on logistics because…
Did your view on the economics change, and how does that affect the U.K. as an overall business?
Okay, okay. Okay, so about getting to gross margin, I think that was the question. If you analyze our business, for instance, in Holland and Germany, we can easily get to a neutral gross margin if we raise our delivery fee. And delivery fee, as you know, is somewhere between EUR 0 and EUR 1.50 for logistical orders in most of our countries. So that means if you raise it to something that's below what our logistical competitors are asking today, it will be gross margin neutral. That's, however, not how we are looking at logistics. We are looking at logistics as a way to expand our market share at the expense of the competition. So this is why, actually, we're investing in free or cheap delivery in most of our territory. So you can easily see that, that can also be done in the U.K. Now there's a couple of things different in the U.K. as compared to the continent. First of all, our logistical network is not at the level that we expect it will be. We've -- you've seen that the growth in the U.K. is 387% in terms of logistics. It is very big. We've also shown that to you in the presentation that we did 6 million orders in logistics in the U.K. in December. So you can imagine that with that growth rate, we are far from being at a, let's say, more docile growth rate of 100% that we have in the other countries. So it's not as mature yet. We also haven't rolled out Scoober across the U.K. yet. We are very proud of Scoober and we think it will make a significant difference to us in the U.K. It should make our business much better than what it is today because it's highly visible, also good quality and it's very fast delivery at a very reasonable price. So this is why actually we have quite some hopes around that model. And this is also why we are quite far away from running it at the gross -- a neutral gross margin in the U.K. Now on top of that, there's some uncertainty as to what will happen to the logistical business after the pandemic. You can imagine that if you have a choice of going to a McDonald's or ordering in a McDonald's and you have a kid's party that probably you want a kid's party not to happen at your house but happen at the McDonald's, so we do expect a shift there. So it's difficult for us to predict what will happen to the logistical business in our company, although we know it has to come down quite a bit for it to grow at 100%. But also, what that will do to competitors. Because, as you know, the competitors only do logistics, and therefore it's going to be an interesting thing for us to see. So the view hasn't changed. It's just you have to be realistic. A Canadian will pay $10 more for a delivery than a German or a Brit. And therefore, it's not the greatest investment case in Europe. Around the question about the investments, certainly, most of the investments are going into legacy Just Eat. You should also not underestimate the expansion of our logistical network in countries like Holland and Germany. For instance, if you look at Holland now, we have logistics in 40 cities, give or take. That investment is not as costly as opening, let's say, Berlin or Amsterdam because we're talking about now places that are 100,000 people or maybe below that. But still, it's an investment, so we're still making those investments in those countries. But of course, you have seen the growth in Germany, that's highly profitable growth. It's not -- whatever amount of logistics we're going to add is not going to significantly dent the growth of the EBITDA. If you look at what we're doing in Just Eat, yes, we're investing a lot of money in the U.K. We're investing a lot of money in Canada. Australia, you've seen the growth rate in Australia. We're quite enthusiastic about what's going on there. But also think about our leading positions in Spain and Italy. We're putting a lot of effort in those countries. We've announced the rollout of Scoober also in Italy and in Spain. Those rollouts will give us a better weapon to deal with competition. So also there, we're investing. It is across the board, but yes, most of it is going to legacy Just Eat. Brent?
Yes. Well, with respect to going forward, as we have explained it a little also before, we've invested more or less in 3 areas, catching up marketing expenses, increasing investments in sales and logistics. If you look what we're going to do next year, we'll continue this strategy. And what we expect is that, with respect to sales and marketing, we really catch up and that is what you called normal -- at sort of a normalized level, but investments in logistics will continue. We do not provide forward-looking statements. However, we've said that we prioritize market share gains over profit. That is not new. We have always done that. We've done that in actually any market where we have -- where we are. We continue investing in logistics where possible. And I think that, in particular if you look at the strategy going forward and the outcome of it, I think Q4 is a very good reflection what you can expect next year from us with respect to strategy and also with respect to performance.
We have a next question from the line of Marc Hesselink from ING.
Firstly, on the platform integration on the back-end side. I think you did France now and Spain and Italy. Can you share what your time line is or if there's an update? And also, if you've seen some benefits from that integration. Yes.
Yes, go ahead.
No, no. It's one by one, if it's fine.
Okay. That's okay. Well, if you look at France, in particular. So France was a territory in which Just Eat wasn't doing well. France is growing again. So that is a benefit, not only platform driven but it is clearly something that needs to be done and that we're happy about. In terms of time line, we are planning to migrate most of the European businesses to the legacy Takeaway platform. So that's still going to happen. And we're on track with that. And if you ask me about certain benefits from it, well, it reduces the cost of the platform. That's one thing. It gives us, for instance, Takeaway Pay in France. It gives us Scoober. Scoober can also run on legacy Just Eat, but it's easier for us to run it out of the legacy Takeaway software. And it gives us some advantages in certain partnerships that we have with, for instance, Tripadvisor, et cetera. And it's a website that's typically more Google-friendly. So there's a couple of those benefits there. But in general, the benefit for us is that we're able to now run France as if it were Belgium. I think that's the overarching benefit to us. That we don't have to spend quite -- that we don't have to spend a lot of management time on any particular country.
Okay. Clear. And then following up on that. In the -- you already alluded on Australia, expected some market share gains there. What can you say for the Rest of the World, like -- countries like France, Spain, Italy now that you speeded up the investments? Do you see similar stuff as you see in the U.K., like gaining share on all sites, signing up restaurants, all those metrics?
It depends a little bit on the countries that you're looking at. Poland is performing very well, as an example. France, as I said, we've turned around that situation in France, but we still have a long way to go. If you look at legacy Takeaway countries, they're performing very well. If you look at specifically Spain and Italy, those countries were not performing very well in the first wave. They are performing very well now. So there's also benefit in those countries. And particularly, Italy is growing very fast. So yes, overall, we're in good shape. If you look at our B2B business in Israel, as we know, they are quite good at vaccinating that population. So we do expect the B2B business to come back quite quickly now in Tel Aviv, which is going to be beneficial to us because we're mostly a B2B business in Israel, as you know. So overall, we see the same picture across the globe.
Okay, clear. And then final question is on the increase in active customers. Clearly, a lot of people, because of the pandemic, are moving onto your platform. And as a group, where you showed the cohort slide, it seems similar to the past. They come on the platform and they order more than previous cohorts. But are there different dynamics in those groups on a more like -- on a more individual level? Like are there people that use it one time and then they drop off? Or is it very similar to the past?
Actually, the most significant driver of our growth is -- if you look at all our customers, and we have quite a lot of them as you know, there are customers there that order once a year and there are customers there that order, let's say, 100 times a year. The growth shift that we have seen is not that people move from 1 order to 100 orders. We have seen people move from 10 orders to 13 or from 13 to 16. And this is also why it's a sustainable move for us because it's just that people move from, let's say, lower frequency order cohorts to higher frequency order cohorts. And that's also what you see in the cohorts. And that's also why the cohorts are so stable, they're improving, but it's a larger group, of course. So I would say it's a gradual improvement on a per customer basis. But on the total, it is significant. And yes, I mean that's great. Our churn is down. Our new users are up. The order frequency is high, not that much, a little bit. And the AOV is slightly higher. And I think that's important. We currently have no office orders whatsoever, right? So if you look at that segment, that's -- we expect that to come back, of course, after the pandemic. And we don't necessarily believe that we're going to see less orders from the consumers because, as I said multiple times, most of our business is convenience ordering. That's a pizza on Friday or sushi on Sunday. And only the logistical part of the business is replacement of going to a restaurant. So for most of our business, we do expect people to just continue their ordering behavior and then maybe on top order extra at their offices.
We have our next question from the line of Sebastian Patulea from Jefferies.
It's actually Giles Thorne here from Jefferies. Hopefully, everyone can hear me okay. My first question is on Scoober in the U.K. You've gone through a recruitment agency. Can you just confirm why you've done that? I'm assuming it's for expediency, but if you could confirm why. And if you could give some color as to how much additional cost that approach brought that perhaps will disappear as you migrate to employing people directly rather than via an agency. Secondly, I wanted to pick up on Wolt's launch in Germany. I appreciate this is a question for Wolt, but I don't get to ask what Wolt public forum questions, so I will ask you. What do you think Wolt is seeing about Lieferando in Germany that supports an investment case for launching in Germany at this point? And then my third question is -- I have 2. I'll go with the grocery question. So you've been very clear on why you don't like the idea of grocery at this point. My question is under what circumstances would you do grocery?
Thank you. Let's start with grocery first. We're not against grocery. I think that's the wrong way of looking at it. We have analyzed the business case. We don't think it's particularly attractive. If you look at our competitors, they have never spoken about this before the pandemic. So you also have to take this into account. I would hope that we're not in a pandemic for the rest of our lives. So also you could question whether the opportunity is still there after the pandemic. And if you analyze the competitors very carefully, I think one of them came out publicly in the U.K. that it's about 10% of their orders. Now for us to change our strategy for a limited amount of time because we can get maybe 10% of orders in grocery, it doesn't seem like a good use of our funds. I think that's the reason that we're careful with grocery as a service. Of course, if we put fast grocery delivery on our website, people will use it. There's no question about it. But we already have to employ tens of thousands of people to put them on our bikes to deliver food to you in 25 minutes, which is already a debatable business case. And then on -- if on top of that, of course, you do that for a business that has no margin, then it becomes even a more doubtful scenario. So yes. From the consumer side, we understand it. Priority wise, our priority is to grow very fast, specifically in London, specifically in the U.K., and all those places. And then in the end, don't forget people entered grocery because they're -- during the lockdown in March and April, a lot of the logistical restaurants were closed. So the business for our competitors fell away. You can see that also in the traffic charts. And this is why all of a sudden, grocery was a so-called compelling offer. Yes. We think it's probably -- if we have to spend our time, it's the least compelling thing to do. So that's why we're not doing it. But as I said, I cannot guarantee that we will never do it. You mentioned a competitor, Wolt, and what they see in the market. Well, you have to understand that in our current sector, a lot of companies are being valued on revenue growth. And therefore -- let's say, we open a business in Pakistan, I'm sure our revenue growth will be very fast. And specifically also, if you look at the delivery orders also in Just Eat Takeaway, it grows very fast. So it's easy for you to go to investors and say, oh, look, we can grow our logistics very fast. The problem though, take Germany -- well, first of all, if you would charge what -- we are currently not charging. But let's say, you charge EUR 1.50 or EUR 2 more on a delivery in Germany, which will make your proposition worthless because the largest player in the market is much cheaper than you. But okay, let's say you do that, then you get to a neutral margin on a very limited logistical business and you are competing with a marketplace that does, and we've disclosed this, 2.4 million logistical orders in the quarter. I need to remind you that this is far larger than Foodora and Deliveroo combined at the height of their investments. And that was after years of investment. Deliveroo must have invested EUR 50 million. I don't know what Foodora invested. On top of this, yes, we were much smaller, of course, at the time. When we acquired the German businesses of our competitor in 2019, we did 3 million orders in Germany on a monthly basis. Well, you see the amount of orders that we're doing currently. You have to ask them, indeed. I'm appreciative of the fact that you don't get to ask those questions in the public arena. This is possibly the worst investment case I've seen in the business thus far, but I wish them luck.Regarding the recruitment agency that you're asking about in the U.K., we do the same thing. Actually, I'll get to Jörg, because Jörg is actually in Berlin, he can comment on it.
I mean, yes. It's actually a partner we work with together also in a couple of other countries. So it helps us also like setting up that business as fast as possible. The route to market was very fast, because you have to imagine there's a lot of things you need to set up [indiscernible]. You need to look for a hub. You need to recruit a lot of drivers, payroll, as we set up, et cetera, et cetera. So we chose for a partner. We're working with also in a couple of other countries who's already knowledgeable in how we work, how things need to be set up. And we will analyze going forward which part of this -- of that value chain we will internalize and which ones we achieve with a partner. In this case, it was definitely speed to market. In terms of the question with regards to the cost and how that might change as we internalize it, it will not change dramatically. I mean the main costs you have at the beginning which are different is really like in terms of utilization and the staffing of the drivers, which, at the beginning, if you do a small amount of orders and you might overstaff a bit more to provide a better service. So the ramp-up phase, until you get to a certain density and the utilization will be lower, so it will be less efficient at the beginning. And once you get to some sort of density, then that will improve. So from the service provider costs, that will not change too much. But it's more the ramp-up costs at the beginning which will improve.
We have our next question from the line of Miriam Adisa from Morgan Stanley.
Three questions from me. Firstly, just on the U.K. again. I mean you said earlier that you're far away from Scoober being fully ramped up. Could you give us a bit more color on how long you think it might take to scale? I guess if we look at the Netherlands and Germany, it seems like you reached the -- over 2 orders now pretty quickly. So should we expect a similar pace of progress in the U.K.? Or do you think it could take a bit longer to get to that level of density? Then secondly, a question on the loyalty program that you're launching in Canada. Can you just talk about the rationale behind that and if that's something you're going to consider launching in other markets? And then just generally, how you're thinking about the benefits of that program given there's a bit of debate about whether loyalty programs can generate any positive unit economics? So just wondering how you're thinking about that. And then finally, if you could just give us an update on the iFood review.
Thank you. Regarding your first question, I will take that. The second question, I will pass on to Jörg. The density question is not really the question for the -- for U.K. for Scoober. If you look at the density in certain zones, we will get there very fast. That's just a matter of having the right amount of couriers fitting to the amount of orders that we have in a certain area. The question -- the most important thing that we're trying to fix for Just Eat in the U.K. is the position in London. Just Eat actually does quite a lot of orders in London. They're not visible because the couriers don't -- are not branded. Scoober in London already, in the areas in which we launched, should be quite visible. And we do expect that to take to, let's say, the end of the first quarter until we cover quite a significant part of the -- of London. On top of it, as I said, we'll make the delivery fees free of charge, so that should also support the business there. The issue though, of course, is Just Eat covers most of the country with both the marketplace and the logistics. So for us to get Scoober in all these places, that will take quite some time, but we'll launch a second city quite soon in the U.K. So that's going well, but we need to be just conscious of how big already that logistical business is and how much time it will take us to replace it with Scoober. The most important bit though is London. So we're actually happy with that. So for Canada, that -- I think Jörg can take it.
Yes. So with regards to loyalty programs, we actually do have loyalty programs already in most of our countries. So for example, even in countries like Germany or Netherlands, we do have loyalty programs. In the legacy Takeaway countries, these are mainly financed also by partners who are giving subsidies and vouchers and can redeem points. And so the consumer can basically redeem points for this sort of vouchers which are provided by our partners. In the U.S., the whole loyalty topic is quite big, also in Canada. So that is why we moved ahead also in Canada with providing this loyalty program. It's bit early to say what that results into in terms of reorder rates and different sort of things because we just launched it a few months ago. But we will also constantly review our existing loyalty programs in other countries and most likely align it over time. So we will have a consistent program across our different geographies as well. But we do think, if you set it up in a smart way, also partly sponsored by external partners, it can provide some benefits in terms of -- especially reorder rates to our business.
And on iFood?
On iFood, well, you know the intention. We've said that we are open to sell this at a price which is what we consider as fair. That has not happened yet. Still, we will live up to the intention if there is somebody who's willing to pay the right price. With respect to the company as such, as you've seen in the most recent updates that have been provided, the company has grown predominantly. We support -- we are very in support of what the iFood management is doing. So from that angle, we are quite satisfied what -- how the performance of iFood is so far.
We have our next question from the line of George from Numis.
I guess kind of following on, on the subscription program, I guess how you see the lack of a grocery proposition impacting that proposition compared to other subscription programs out there. And if you were to do grocery, whether you might trial that in a country such as Canada where logistics is much more advanced and consumers are willing to pay for delivery. So any thoughts on that? The second one is, given kind of the logistics penetration that we've seen coming through, particularly kind of rest of world and some of the European markets, whether the potential for anything inorganic would help accelerate that lease consolidation and therefore growth, the rationale there.And then the third one is on France. If you could touch a little bit more there. You said it's kind of back to growth. I guess it still appears to kind of be losing market share. When will France become a bit more central and an area that we will be hearing more on?
Jörg, will you take them?
Yes. So on the loyalty program, I mean, just to give you some background on the Canadian one. It's mainly about collecting points and then redeeming these points for a certain value. That is actually a bit different than what we were suggesting with regards to the proposition of just providing, let's say, free delivery if you become a member of a certain loyalty program. Because in general, we are already very cheap in terms of our proposal delivery fee, so in most -- or in some countries, we're not even charging delivery fee. So such a membership program, which some of our competitors are doing, doesn't really add a lot of value because we anyway is providing this already without you having to pay this membership. So that program actually is quite some different, and so I don't believe we need to actually offer such a membership program like you were suggesting because we're already providing a better price value proposition. And in terms of lack of grocery, I do think it's a different sort of proposition, usually also like even a different sort of product. If you really do your full grocery shopping, you actually are providing a very much different proposition in terms of product and capturing that in the same [ asset ] and the same proposition, with the same marketing proposition, is quite [indiscernible].And help me on the second question again, please.
Inorganic growth opportunities in Europe, for instance.
Yes. So within Europe, I mean like every more attractive market already has quite some sizable players in all the markets. So I think it's very tough to find organic opportunities within certain markets. Because if a market is attractive, it should have already had some sort of bigger player out there. In terms of our inorganic growth strategy, we've always made clear that if we are expanding, it either has to be a very large profit pool and it has to be a #1 position or we should see the potential that it might become a #1 in the market. So that would be the criteria we would be looking for.
Then to your third question around France. France is -- if you look at the legacy Just Eat portfolio, France is currently one of the weaker countries. We have said before, for instance, about the U.K., that a lot of work needed to be done, but that the business, if you look at the situation before corona, was actually, in absolute numbers, still outpacing everybody else in order growth. That's not true for France. So France for us is a country that's going to take more time to fix. It's not one of the bigger food delivery markets in Europe. Of course, everybody in Europe would understand that, but I'm just saying that for our American colleagues. The biggest market, as we said, are Holland, the U.K. and Germany. So those markets clearly are far more important to us than France. At the same time, we don't like France sitting there with us not being the #1. So we're addressing the problem. We've launched Scoober in Paris. That's going very well. And we'll essentially apply the same recipe that we have applied in other countries as well. If you look at the situation in Holland and Germany, that's clearly the objective also for the U.K. We'll get there in the U.K. France is going to be more difficult, but we're certainly going to venture a try.
Can I just follow-up there? I guess with the U.K., as you mentioned, had a healthy marketplace to fund the investment into logistics. France may be slightly less the case, that perhaps needs more investments. Could you just share a little bit in terms of your strategy in terms of cross-subsidizing using, let's say, Germany and Netherlands' profits to invest? And what -- how you'd prioritize that investment, which regions? I'm wary of the U.S. acquisition coming in and potential need for investment into that territory.
Yes. Well, this is essentially how we always grew, right? I started the business in Holland a long time ago, and we've used the Dutch EBITDA to grow in Germany. Of course, everybody told us that, that wasn't possible, but I'm glad that we did it. The same thing has always been the case for us. So if you analyze our markets, especially markets like the U.K., Germany and Holland, those are markets in which you can make an awful lot of money. It's very clear, for instance, that if you focus on Germany, that we'll see ever-growing EBITDA numbers in Germany and then we can use those funds to invest in other countries. You should not make mistakes though where we are going to invest. We do not invest in Pakistan. We invest in the markets in which we are already very strong. And if you look at France, in France, of course, I can be critical about what happened in that country before we merged with Just Eat. But it happened. And at the same time, the French website is not a small website. It is a very large website also for the country of France. So it's certainly a position that we can improve. However, if I compare that to running a 20 million order website per month in the U.K. -- think about the 20 million, right? I mean that's -- also if you compare it to U.S. competitors, in a much smaller country than the U.S., it's a huge website. And then adding to that the things that we believe should have been done already, of course, it's going to be hugely successful. In a country like France, you have a reasonable size website that you need to add logistics to and that you need to invest quite heavily in. Now you should assume that in a country as the U.K., we go all out. We do whatever we can to make life very, very, very complicated for the competitors. And you're only seeing the beginning now, right? So we're doing a couple of things. And we are quite aggressive at it, but we're just at the beginning of what we are trying to accomplish in the U.K. France, you should not expect us to go all out in the same way. We might go all out in Paris because of the position and the importance of Paris to the country of France, but you won't see us do the same in, let's say, some town in the south of France. That won't happen. We're always very careful with our money. But we do know that in markets in which we are big, whether that's Germany or Holland, whatever we do has some sort of return. And I do believe that we do the right things.
We have our next question from the line of Wim Gille from ABN AMRO.
Wim Gille from ABN AMRO. Let me see which questions have not been answered. Yes, first question will be on Takeaway Pay or the B2B proposition. You announced it late '19, at least you announced the launch in late '19. Can you tell us a bit more where you are in the, let's say, rollout of Takeaway Pay and what needs to happen before this becomes, yes, a much bigger scale in predominantly European proposition?The second thing in terms of Scoober, can you give us a bit more feeling on how you start with Scoober in Paris and London in terms of the number of drops per hour? And how long it will take before you kind of reach a more mature level where you are basically as efficient in London and Paris versus, for example, Berlin or Amsterdam?And then lastly, in terms of market share, you gave a nice growth rate in Australia and New Zealand, which is going quite well. Can you give us a feeling, based on your calculations, where your market share is currently in Q4 versus last year?
Sure. The last question I will defer to Jörg because he probably have some data on it. And then the first 2, I will take. Regarding Takeaway Pay, it's going very well. On the corporate end, we've signed up a lot of corporates in the countries in which we've launched it. Thus, we expect a surge in orders after the pandemic subsides, obviously, because the offices are closed. We do have the contracts in place, so we do have quite interesting companies now using it. But yes, there's no staff at the office, so that's why we do expect that, that will be quite successful after, let's say, April. And of course, earlier in Israel. Scoober, I answered that in a previous question as well. Drops per hour are not so difficult to get similar to, let's say, Berlin or Amsterdam in certain areas. The issue with the drops per hour, there were 2 issues there. If you compare our drops per hour, we calculate that based on the courier. If you compare it to other businesses, they will give you a fantastic drop per hour, but then they don't calculate the time that the courier is not doing anything because he would not technically be on the job, so it's not a comparable number. The other thing is, of course, that it's an average number. So if you look at the whole of London, I would say it's a pretty poor utilization. If you look at the areas in which we have started a couple of weeks back, it's already going to, let's say, Berlin or Amsterdam levels. So we're not so concerned about the drops per hour. We know that -- what Scoober does. Everywhere where we launched Scoober we automatically become the largest logistical provider. It has been the same in basically all the cities in which we've launched it. We just talked about Germany, for instance. Yes, our logistical business in Germany is huge. It's far bigger than any of the logistical players ever gotten in Germany when they were still active. So again, that's not the way we look at Scoober. Scoober, we know it's a good add-on to our business, and we know what it does in terms of order frequency for the marketplace business as well. We just -- where we launched Scoober, we have more Marketplace Orders, interestingly enough. Jörg, if you could give some comments on the market share in Australia.
Yes. So the market share are generally [indiscernible] happy. I mean if you think about where it's been like a year or 2 from here, it didn't look that well, but we've really turned it around and it's growing super nicely. In the fourth quarter, growth rates were at 166% in terms of orders, which is super strong, obviously. And if you look at various metrics like Google Trends, it seems like there's more search traffic now for our brand that the #1 brand there. Similarly, we see also like quite some nice market share gains if you look at other metrics like similar websites for example.So all in all, we are still confident on the development in Australia. And the further rollout of various chains will most likely further fuel that growth going forward. We also like to continue to invest and we're applying the same principle like in the other markets to fuel the network effects. So it's always about like really closing if there is any supply gap and investing heavily in top of mind brand awareness and performance marketing. And in Australia, obviously, also like logistics plays a very significant role. The share of logistics there is very high. So you have to be very strong on that end as well.
We have a next question from the line of Adrien from Bank of America.
So I have 3 questions, please. Under the old management team of Just Eat, they would normally say that the U.K. should be a market where own delivery should be about 10% to 15% of orders. It's now about 25% in Q4 for you guys and even 30% in December. So what do you think will be the profile of the U.K. market in the mid to long term? Second question, still around the U.K. So Uber has been very clear on their intentions for the U.K. market. We heard from Deliveroo yesterday saying they would enter 100 more cities. I mean, again, where do you think it ends up in the midterm? What risk do you see that the markets in the U.K. goes fully irrational? And then thirdly, indeed, you've mentioned that Germany and Netherlands, you've made big investments in delivery, you have the largest logistics business and yet delivery is only a very small proportion of orders. So I'm just curious why that is the case.
Thank you. Regarding your remark about the old management, first of all, that remark was probably a couple of years ago. So a lot of things have changed in the meantime. And I don't think that, that assessment is right for the U.K. There's more QSRs in the U.K. than there are in Continental Europe. And this is also why because a lot of people think the volume is with local Heros. The volume is actually with the QSRs in logistics, it's not with the local Hero. So the big swing factor is -- has changed. And I'm fortunate to see that we have the biggest change in the U.K. as a customer of Just Eat. So I think that the estimation is too low. Difficult for us to say what the actual amount would be because, as we said, logistics is, at least during a pandemic, a replacement market, right? The restaurants are shut, you can't go there. So the only way for you to order with these restaurants actually to order on a food delivery website. So it's going to be very difficult. On the other hand, we plan to, in time, run it at a neutral gross margin. And you've seen how profitable the U.K., German, Dutch business, other businesses that we own, are if you look at the marketplace business. And you will also be able to conclude that nobody else has the marketplace business. So for us, the most important bit is to expand our business and do that in a way that makes the whole business more transparent. And I think we don't have the luxury to be very selective in terms of, oh yes, we're only going to do marketplace or we're only going to be doing certain areas of the country. It's either all or it is nothing, and we're going to go for all in the U.K. Your question around the competition, yes, I'm always amazed at the ability of certain brands to play the media, because, obviously, that particular brand that came with the 100 cities is already in 150 cities. Can you name the 151st city in the U.K. for me, just please? I'm not from there, but it must be a city I have never heard of.
Yes. I wouldn't know. I'm French either. So -- but I live in London. I don't know. I'm going to have a go with [indiscernible], maybe. I don't know.
Can you name the 151st city in France then for me? No, you can't because that's -- so that's all fine. Just Eat has 100% coverage of the U.K. So for these guys at 100 cities and go to 2/3 of the country, it's fantastic for them. We're at 100%. And we are going to go after London. And if somebody else wants to go after 100 hamlets, then by all means. The remark of another competitor, yes, we've seen it. We're giving you our actuals and we're giving you public data. If other people want to talk about things that are not happening, then by all means, that's great. Then your last question was around delivery being small in countries like Holland and Germany. Well, you need to be conscious of the fact that, that is because we have actually launched logistics in our countries. And that just means that there was very little that -- very little market share that went to the competitors. And of course, if a consumer doesn't know whether a restaurant is marketplace or delivery, then the consumer has no idea. So if the consumer is on a certain platform, the consumer will order. And the consumer will order whatever the consumer wants. And if that's pizza, they will select pizza. If it's McDonald's, so it's McDonald's. In the case you offer both, then obviously, some of the orders are going to be logistics and some of the orders are going to be marketplace. If you only offer logistics, all of the orders are going to be logistics. So logistics in the U.K. is inflated because of the existence of logistical players. That's why it's high. The second reason why it's high is that there are more QSRs in the U.K. Third reason that is high is because it's a great market. It is the largest market in Europe, and we are fortunate to be the market leader in that market. There's a lot of space for us to grow both in marketplace and in logistics. I think that's the difference. And again, we're repairing what should have been done. Just Eat should have done this a couple of years back. If they would have done so, then probably the logistical share in the U.K. will be lower than it is today. But we are where we are. And we're repairing this, and we'll have to see what the logistical share is going to be after COVID. I imagine it will be quite a lot smaller than what it is today still because we are in a ramp-up phase. It will be sizable in the U.K. Is it a problem? No. If you can run it at a neutral margin, it's not a problem.
Just if I can just squeeze in a follow-up, because you talked a lot about London. Again, previously, it was something like 13%, I think, of Just Eat orders. Where does it stand today? Can you help us size the opportunity for -- if you're able to like succeed in London?
Well, first of all, I can't answer that because I don't know. So I would give you inaccurate answer on London itself. I do know that we look at it. And it is not the case that Just Eat is small in London. It's actually quite big. It's not that far removed from the logistical players. It's just that it is a very different segment. It's only marketplace for the largest part. So this is why we're focusing a lot on logistics to repair London. And as I said, Scoober has always made us the largest logistical player in a city. And I don't see how in a city in which also Just Eat is a huge player and in a country in which Just East is a huge player, why the combination of the largest player in the U.K. and Scoober is not going to be a success. It will be a success. It will be a success that's going to be, what is it? GBP 4, GBP 5 cheaper in delivery fees. So it's going to be an interesting battle.
We have a last question from the line of Andrew from Exane BNP Paribas.
First of all, Happy New Year. Secondly, an answer for you. I think it's Craigavon in Northern Island, population was 64,000. But 2 questions from me. So firstly, head office costs, and obviously that was a bit of a feature of the first half. Just wondering if we would see a significant sequential step-up versus the first half. Just to help us with our modeling a touch. And the second one, and it may be a simple one-word answer, but I'm just wondering on the Grubhub acquisition, whether or not DoorDash's pretty extraordinary IPO changes anything about the investment?
Thank you. I'll take the last question, and I'll give the first to Brent. Well, if anything, it's good that we pay too little. But I'm being sarcastic now. No, it doesn't. Look, the investment case around Grubhub is essentially the same investment case around fixed -- well, let's say, let's go back in time. Let's go to Germany. We've always focused on the places in which we were strong to expand our business. We've done that in Holland. We've done that in Germany. We've done it on the European scale. We'll do the same in the U.S. And I think if people look at that market as a market with a lot of competition, it doesn't have a lot of competition. The market is a bigger market than all the European countries put together and the European countries put together still. And we are, of course, by far, the largest in Europe. But still, there are -- there must be around 30, 40 competitors in Europe. So we'll take it if there's only 2 significant competitors. And we'll act out of strength because Grubhub does have some strength [ falls ] that we can expand and that we can improve. But I can't -- sorry, I can't tell you more on that. You have to come back in a couple of months. Brent will take the first one.
Yes. Well, headquarter expenses have been gone up due to all the investments that we've made. Also, we had to -- we thought there is a necessity to strengthen the headquarter expenses. By the way, headquarter expenses also contain the whole support for Scoober, which is certainly part of the headquarter ramp-up. But we think that, currently, the headquarter has been brought at a level which we believe is certainly able to support the business going forward. So there was certainly a ramp-up this year. And next year, it will be only limited because the investment that has to be made have been made this year.
And thanks for the answer on -- what was it, Craigavon?
Craigavon in Northern Island. Yes, 151st currently. Just on the headquarter cost…
That's why you know [ you're always ready for this one ]. Sorry?
Is there a significant ramp-up in headquarters costs in the second half versus the first half? I think in the first half, it was EUR 82 million. Just wondering…
Yes. There's a significant headquarter ramp up because of -- well, by bringing together and also investing more in the territories I just mentioned. It's clearly led to a ramp-up in the second half of this year.
I will now hand it back to the hosts for the closing.
Thanks, everybody. We'd like to round up this analyst and investor call by thanking you for your participation and your questions. And should you have any additional questions or remarks, please reach out to our Investor Relations Manager, Joris Wilton. Thank you.
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