A lack of loyalty eats into Deliveroo and Just Eat’s market share

This morning’s Deliveroo results position it for long term growth reflecting the evolving demand for takeaways amid shifting consumer behaviour.

A six per cent increase in Gross Transaction Value (GTV) in its Q3 update comes as competition and changing market conditions continue to create challenges across the industry, with rivals such as Just Eat Takeaway (JET) reporting weaker-than-expected growth.

Deliveroo’s orders increased by two per cent year-on-year, with GTV per order also increasing by four per cent.

This contributes to a healthy seven per cent overall GTV growth in the UK and Ireland.

However, international markets slowed temporarily, particularly due this summer’s Paris Olympics, although growth is expected to resume in the next quarter.

Chief executive Will Shu highlighted progress in expanding Deliveroo’s grocery offerings and loyalty programmes, saying, “We continue to see strategic progress as we enhance our value proposition for consumers”.

However, Just Eat Takeaway’s recent Q3 update were less positive, with GTV growth missing estimates by around two per cent, especially in its largest markets.

But Just Eat reiterated its full-year guidance, expecting GTV growth between two and six per cent.

Just Eat attributed its decline in performance to a seasonal slump in July, yet noted its improvement towards the end of Q3.

Analyst Albie Amankona of Third Bridge noted that Just Eat “is facing increasing competition, with customers now using two or three different platforms instead of sticking to one, as they did before the pandemic”.

He emphasised the need for the firm to enhance its loyalty programmes to keep returning customers.

Both leading takeaway firms are navigating a sector facing pressures from both cost-conscious consumer bases and intensifying competition.

While Deliveroo has maintained a solid growth and expects even further improvement in the next quarter, the broader sector is struggling with lower volumes of orders.

Third Bridges’ Analysta have noted that Uber Eats continues to outperform both Deliveroo and Just Eat in key areas such as cross-category sales, reflecting the importance of innovation in maintaining growth.

As Deliveroo looks ahead, its full year guidance stays the same, with GTV growth projected in the range of five to nine per cent and positive free cash flow expected for 2024.

As Shu said, “there are many exciting opportunities ahead for the on-demand delivery industry”, and “Deliveroo is well-positioned to capture the significant growth potential in an industry still early in its maturity”.