The new managing director of food delivery business Menulog says aggressive investment in brand-building will be stepped up to chase more market share as the cost of expansion into new states dragged the group into the red in the first half of 2019.
Ben Carter, who took the helm of Menulog on June 1, said the group’s two-pronged business model of partnering with 10,000 restaurants who offered their own deliveries, along with the new Menulog delivery service which began 15 months ago as a rival to Uber Eats, was the right strategy for the Australian market.
He signalled an extra step up in advertising and marketing spend to win more customers now that the delivery service network had been expanded to Brisbane, Canberra, Adelaide and extra suburbs in Melbourne, Sydney and the Gold Coast.
…Menulog is owned by British parent Just Eat, listed on the London Stock Exchange. The parent group revealed on Wednesday night that Menulog in Australasia had made a loss at an earnings before interest, tax, depreciation and amortisation level of £2.1 million ($3.72 million) in the six months ended June 30. This compared with a profit of £4.4 million in the first half of 2018.
“Obviously that brings extra costs as you launch new zones,” Mr Carter said.
Menulog’s revenues increased 29 per cent to £27.3 million in the first half.
Just Eat is in the spotlight after European firm Takeaway.com made a €8.2 billion ($14.5 billion) buyout offer for the company on July 30.
A combined Takeaway and Just Eat would rival Uber Eats and would have leadership positions in many of the world’s largest food-delivery markets, including the United Kingdom, Germany, the Netherlands and Canada.
Mr Carter said Menulog across Australasia had 2.6 million active customers. The delivery part of the business was the fastest growing, and now was the time to accelerate spending as demographic shifts fuelled higher take-up rates by customers looking for convenience at any time of the day.
“It’s all part of the age of convenience,” Mr Carter said.
He said about 15 per cent of Australians now ordered food online for delivery to their home or office, but that was well below the penetration rate in the United Kingdom market of between 40 per cent and 50 per cent.
“It shows you how much headroom there is in Australia,” he said.
He acknowledged that Australia had a smaller population, but said the same demographic and structural shifts happening elsewhere in the world were occurring in the local market.
The Just Eat group paid $855 million for Menulog in 2015. It wrote down Menulog’s value by nearly 40 per cent two years later.