With aggregators increasingly operating at a profit, those that are not may get left behind.
In the past couple of quarters, Just Eat Takeaway.com has been making a profit for the first time since lockdown, even as sales have fallen. The company discussed this turnaround on a call Wednesday (Jan. 18) accompanying its fourth-quarter 2022 financial results.
“[We are] back to the same profitability as before the pandemic. Although, of course, with the company now being much larger, our future earnings capacity has also increased,” CEO Jitse Groen told analysts, explaining where some of these improvements come from. “We have increased consumer fees throughout the first half to 2022 and increased commission rates in Northern Europe in the first week of July. [Also, in] the U.S. we realized efficiencies following the commercial agreement with Amazon.”
In July, U.S. subsidiary Grubhub announced a deal with eCommerce giant Amazon in which U.S. Prime customers receive a free one-year Grubhub+ membership to order restaurant delivery without the fee. Plus, if the deal proves successful for Grubhub, Amazon could grow a 2% stake in the company to 15%.
While the company was profitable as of Q3, the continuation into the final quarter is notable given the 12% year-over-year decline in order volume in the fourth quarter, suggesting that the company has improved its unit economics enough to offset that significant dip.
Although North America was one of the regions driving this turn to profitability, the company “continues to actively explore the partial or full sale of Grubhub,” according to the earnings release.
Across competitors, profitability varies. Uber, for one, has achieved profitability with its Uber Eats delivery business. As of its most recent earnings report in Q3, the aggregator reached adjusted EBITDA of $181 million, up $193 million year over year and $82 million quarter over quarter. Meanwhile, the United Kingdom’s Deliveroo continues to operate at a loss, predicting in its Q3 results a negative adjusted EBITDA margin of about 1% of gross transaction value.
The United States’ leading player DoorDash, for its part, has been profitable in recent quarters, reporting in November a positive adjusted EBITDA of $87 million, while Berlin-based multinational delivery giant Delivery Hero is just breaking even.
Notably, the aggregators that are the most profitable are not necessarily the top-performing players overall. Research from PYMNTS’ Provider Ranking of Aggregators, which leverages a proprietary combination of publicly available information as well as app usage data, found that DoorDash is the top performer by a considerable margin, followed by Uber Eats. Just Eat, for its part, takes the bronze at No. 3, while Grubhub is down in ninth place.
The opportunity for all these aggregators is significant, with most consumers ordering restaurant meals online. Research from PYMNTS’ study “Super Apps for the Super Connected,” created in collaboration with PayPal and derived from a survey of more than 9,900 consumers across the U.S., the U.K., Australia and Germany, found that 70% of millennials in these four countries ordered restaurant meals online, well above the 61% of Generation Zers that said the same. Even with the least digitally connected group, baby boomers and seniors, about half do so.