Just Eat Takeaway.Com | LSE: JET Online Food Delivery Research Overview
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Just Eat Takeaway.com | LSE: JET Online Food Delivery Research Overview September 2020 Disclaimer The author of this deck, Cat Rock Capital Management LP (“Cat Rock Capital”), is a private fund manager. This deck, and its content, distribution and use, is subject to the terms specified at www.JustEatDoesDeliver.com. At the time of publication this deck, funds and accounts managed by Cat Rock Capital are is long 6.8 million shares of Just Eat Takeaway.com N.V. (LSE: JET) (AMS: TKWY) (the “Company”). It is possible that there will be developments in the future that cause Cat Rock Capital to modify this economic interest at any time or from time to time. 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The distribution of this deck in certain countries may be restricted by law and persons who access it are required to inform themselves and to comply with any such restrictions. Cat Rock Capital disclaims all responsibility where persons access this deck in breach of any law or regulation in the country of which that person is a citizen or in which that person is residing or is domiciled. Cat Rock Capital is subject to supervision by, and registered with, the U.S. Securities and Exchange Commission. 2 Table of Contents I. Online Food Delivery Industry Overview 4 II. Just Eat Takeaway.com (‘JET’) Investment Case 14 III. Grubhub (‘GRUB’) Acquisition Case 28 Appendices A. TEV / GMV or TEV / Gross Profit? 39 B. Why is the hybrid model superior to logistics-only? 49 C. How strong is JET’s position in the UK? 73 D. What is necessary to improve GRUB’s position? 76 E. What are the best data sources? 91 3 I. Online Food Delivery Industry Overview 4 Online Food Delivery Started 20 Years Ago With the Marketplace Model Online Food Delivery Pioneers Netherlands United Kingdom United States Est. 2000 Est. 2001 Est. 2004 Marketplace Model 5 Network Effects Are Strong More Consumers More More Investment Restaurants More More Consumers Consumers More Marketing 6 Strong Network Effects Drove Attractive Economics Historical Online Food Delivery Margins(1) 63% 51% 29% TKWY JE GRUB Netherlands United Kingdom United States Note(s): (1) According to company filings, based on FY16 EBITDA and revenue 7 Strong Network Effects Supported Strong Competitive Positions Historical Relative Size(1) 9x Takeaway.com 8x Grubhub 7x Just Eat 6x 5x 4x 3x 2x Just Eat hungryhouse Eat24 1x - Netherlands United Kingdom United States Note(s): (1) According to Google Trends, based on LTM search frequency as of December 2015 8 Logistics-Based Competitors Entered Between 2011 and 2015 Logistics-Based Competitors Est. 2011 Est. 2012 Est. 2013 Est. 2013 Est. 2015 9 Logistics-Based Competitors Grew Rapidly by Subsidizing Consumers and Introducing New Selection Subsidies New Selection QSRs High-End Suburbs 10 Incumbents Chose Different Strategies Grubhub Just Eat Takeaway.com Modest investment in Late to introduce logistics, Built in-house delivery nationwide delivery followed by outsourced capability across all capability and scattered approach countries Continued focus on Continued focus on Focused on areas with growing EBITDA per growing short-term greatest competitive risk order EBITDA and selection improvement Offered delivery with no fee to create best consumer proposition Focus on Focus on Short-Term Market Profits Leadership 11 Marketplace Incumbents Have Significant Structural Advantages Over Logistics-Only Competitors Large existing user base to drive utilization of 1 couriers 2 Better selection from marketplace 3 Lower delivery fees from marketplace 4 Network effects from established scale business See Appendix – p. 49 12 Sep-15 Strategy Hybrid of Effectiveness Shows Mgmt. JET of Record Track Mar-16 Uber Eats Thuisbezorgd Sep-16 Netherlands Mar-17 Sep-17 Mar-18 Deliveroo Note(s): (1) According to Google According to Google as(1) Trends of 9/21/2020 Note(s): Sep-18 JET Mar-19 Sep-19 Defending Market Leadership Mar-20 Grew Sep-15 Google Trends Google Profits While Aggressively Profits While Mar-16 Uber Eats Lieferando Sep-16 Mar-17 Germany Sep-17 Mar-18 Deliveroo Sep-18 Mar-19 Sep-19 (1) Mar-20 Sep-15 Mar-16 Glovo Pyszne Sep-16 Mar-17 Poland Sep-17 Mar-18 PizzaPortal Sep-18 Mar-19 Sep-19 Mar-20 13 II.