Just Eat Takeaway.com NV

AEX:TKWY

Earnings Call Transcript 2021-Q2

[Operator]

Good morning, and welcome to the Just Eat Takeaway.com Quarter 2 2021 Trading Update. [Operator Instructions].I would now like to hand the call over to Mr. Jitse Groen, CEO and Chairman. Go ahead, please, sir.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Thank you, operator. Good morning, everybody. Welcome to this analyst and investor conference call to discuss the second quarter 2021 trading update for Just Eat Takeaway.com. On our corporate website, you can download our press release and the slides for this analyst and investor conference call.In this brief presentation, I will be taking you through our order growth for the second quarter and the first half year of 2021, which is ahead of target despite the impact of COVID-19 lockdown relaxations in a number of our main markets. Our continued strong performance is underpinned by our efforts in the historically under-invested legacy Just Eat markets, which are clearly paying off, for instance, in the U.K. and Australia.We will briefly discuss our observations and high-level strategy for the United States, and we will also provide guidance on order growth, gross transaction value and adjusted EBITDA margin as a percentage of the GTV for full year of 2021. I will end the presentation with some concluding remarks, after which we will open up the call for your questions. My fellow Board members, Brent Wissink; Jorg Gerbig; and Matt Maloney, are also here to answer your questions.The combination of Just Eat Takeaway.com and Grubhub is one of the largest food delivery companies on this planet. Total orders for the first half of the year amounted to 547 million, implying a run rate of well over 1 billion orders for the full year. Half year orders have increased by 51% year-on-year or 61%, excluding Grubhub despite tough comps. Our total delivery orders more than doubled to 235 million compared to the first 6 months of 2020, driven by numerous restaurant additions and our price leadership strategy. The company has aligned its KPI definitions with industry practice, which has led to replacing gross merchandise value, GMV, with gross transaction value, GTV, in the financial information presented.GTV represents a total value of orders based on our platform, including taxes, tips and any applicable consumer fees similar to the definition of most of our competitors. GTV amounted to EUR 14.1 billion in the first half of 2021, up 50% on a constant currency basis compared to the same period of 2020. Given the success of our investment program, expectations for 2021 have improved and therefore, we upgrade our previous guidance of more than 42% order growth with Just Eat Takeaway Takeaway.com, excluding Grubhub, to now more than 45% order growth for the full year.Lastly, management believes adjusted EBITDA losses have peaked in the first half and that there are various catalysts for the company to turn strength back to profitability going forward, while retaining significant growth during the second half of the year. I will explain this in more detail later in this presentation.As mentioned, the Grubhub transaction was successfully completed in June. The combined business is one of the largest online food delivery marketplaces globally active in 24 countries. It holds the #1 position in several of the largest profit pools in the world, and many of our local businesses today are already highly profitable. We are partnering with over 580,000 restaurants globally and serving nearly 100 million active consumers as per the end of June. The penetration upside offers very significant growth opportunities.On Slide 4, you find the split of our orders and GTV for each of our segments. Order growth for the combined business was 51% for the first half of the year. Just Eat Takeaway.com, excluding Grubhub, grew orders by 61%, while Grubhub accounted for 27% order growth in the first half of the year compared with the same period last year. GTV for the combined business grew more or less in line with orders, 50% on a constant currency basis, totaling EUR 14.1 billion in the first months of 2021.Moving on to Slide 5, as the pandemic unfortunately is still ongoing, our efforts in the historically underinvested legacy Just Eat markets have continued to drive growth and allowed us to win online share. The U.K. continues to be the fastest-growing segment and our main driver of growth. In the first half of 2021, we processed 135 million orders in the U.K., up 76% compared to the same period last year. Delivery order growth in the U.K. was 733% in the first half of 2021 compared to the same period in 2020, making us the fastest growing delivery business in the country.In London, we observed a significant inflection with triple-digit order growth in the first half of 2021 compared with the first 6 months of 2020, where our online share was estimated at around 20% a year ago in London again. Today, it is estimated at 30% and growing fast. It is important to understand that we are just getting started in London, and we can still make quite some improvements to the business. Clearly, our investment program in the legacy Just Eat markets is paying off.Now please follow me to Slide 6. As you know, we will hold an Investor Day in October when we intend to share more details around the strategy for the combined group. Nevertheless, I would like to use a few minutes today to update you on what we have seen in the past year and where our strategic focus will be. Grubhub is one of the largest players in the U.S., although it does not hold the #1 position in each and every region. We strongly believe that the U.S. cannot be seen as 1 market, like, for instance, the U.K. or Germany, but that each metropolitan area has its own characteristics. We will, therefore, refocus the strategic efforts to the Grubhub strongholds, whereby the focus will be to expand from that stronger base rather than target the whole country.In the second half of 2021, we further expect 2 catalysts positively impact profitability. Firstly, the removal of significant fee CAPs and voluntary partner support that we have put in place during the pandemic. And secondly, the reopening of offices, which is traditionally a stronghold for this Grubhub business. In the second half of the year, we will further focus on the transition of the Seamless brands to Grubhub in line with the single brand strategy that we have successfully rolled out throughout Europe, which, for example, contributed to our growth in Germany. This will allow us to optimize the marketing spend and benefit from the network effects around 1 single brand. In short, we are very excited about the positioning and possibilities of Grubhub, and we will share more details with you in October. On Slide 7, we'd like to guide you in terms of order growth, GTV and adjusted EBITDA as a percentage of GTV for 2021. Previously, we have guided 2021 order growth excluding Grubhub will be higher than the 42% we reported last year. We are pleased to upgrade this guidance to order growth for the full year of 2021 to at least 45%, again, excluding Grubhub. For the full year of 2021, GTV for the combination is expected to be in the range of EUR 28 billion to EUR 30 billion, which clearly established us as one of the largest food delivery companies in the world.2021 is an investment year to restore and expand our market leadership, in particular, in the legacy Just Eat markets. However, we believe that adjusted EBITDA losses peaked in the first half of 2021, and we therefore expect our adjusted EBITDA margin to improve going forward, driven by a few factors. Firstly, the removal of significant fee caps and voluntary partner support, both from the U.S. and Canada. Secondly, by improved unit economics in our delivery network. And thirdly, increasing benefits from the investment program in the legacy Just Eat markets. As a result, for the full year 2021, we expect Just Eat Takeaway.com, including Grubhub, to generate an adjusted EBITDA margin in a range of minus 1% to minus 1.5% of GDP. As stated previously, we will continue to invest in growth and prioritize market share over adjusted EBITDA.I will continue with the conclusion of this presentation on Slide 8. We are excited to have combined with Grubhub to create one of the largest food delivery marketplaces globally. As communicated before, we intend to provide further strategic updates for the combined business during our Investor Day in October. Strong results of the first half have improved our expectations with year, hence, we upgrade our previous guidance to order growth of more than 45% for the full year, excluding Grubhub. For the same period, GTV for the combined group is expected to be between EUR 28 billion and EUR 30 billion on a pro forma basis.Our efforts in the historically underinvested legacy Just Eat markets continue to drive growth. Specifically, we see continued online share gains in the U.K. paired with a significant inflection in London, where we have gained around 10 percentage points in share in less than a year. As these observations strengthen our belief and our strategy, we will continue to invest heavily in our business to drive further growth and market share gain.However, we believe EBITDA losses have peaked in the first half of this year as we see multiple catalysts for improved profitability. Hence, we expected -- we expect adjusted EBITDA for the full year to be in the range of minus 1% to minus 1.5% of GTV, which includes a significant impact of fee caps in the U.S. and Canada.In short, the combination of Just Eat Takeaway.com and Grubhub is in excellent shape. The first half of 2021 has delivered excellent growth, and I'm convinced that we will continue that trajectory. With that operator, I would like to open the call for your questions.

[Operator]

[Operator Instructions] Our first question is from Mr. Marcus Diebel of JPMorgan.

[Marcus Diebel, Research Analyst]

It's Marcus. I just have 2 questions. The first one is, obviously, on your comment that EBITDA loss have peaked. Could you elaborate a little bit more? You obviously highlighted the fee caps, obviously, and improvement in unit economics, but the third pillar, kind of like tech investments, marketing investments, is that also something that we should think conceptually going down? And then the unit economics seems like improved a lot, yes, because it looks like, obviously, your orders are still strong in the delivery operations.So if you could help us understand kind of like the yes, the unit economics in your delivery business, helping also on the EBITDA side next to tech and marketing investments. I hope that question makes sense.The second question is on the Marketplace business, clearly, what's very strong in Q1. Maybe you can comment a bit more to the Slide 5 what the latest developments in just Marketplace are, that would be helpful.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Thanks for the question, Marcus. Let me start with your second question around Marketplace. I think it's important to understand that the comp for Marketplace is difficult in Q2 because of what happened last year with the pandemic. Obviously, there was quite some growth there because also most of the delivery restaurants closed down. They shut down, so therefore, actually, it's quite difficult to grow Marketplace compared to last year. We do assume it's going to be different in Q3. So I think -- I hope that covers your question around Marketplace growth.Also, if you look at well, take, for example, the U.K., for instance. All the McDonald's stores were closed also for delivery. So that means -- and you can see that also in the Marketplace -- sorry, in the market share development of last year. You'll be able to see actually that the market share of our logistical competitors collapsed in these months. So I think it's important to point out in relationship with the Marketplace growth of last year as opposed to this year.Then your first question around EBITDA, we have told you previously that Q1 was trading in line with Q4. What happened after Q1 is that there were significant fee caps in Canada that we honestly did not expect because they are quite late in the pandemic, but still they were introduced. Of course, we were also hoping that the pandemic would subside by the 1st of April, that was in our calculation.So actually, most of our investments were targeting the 1st of April as a date to reduce the investments. And actually, of course, the pandemic is still ongoing, so we kept the investment program going. But that, of course, also resulted in larger growth than anticipated, hence, the upgrade in the guidance for the orders.Also in that quarter, of course, is EURO 2020, so that's also an increase, of course, in the cost for the first half year.Now if you look at the second half year, so we have a couple of things going. I'll give you an example for our expansion of Scoober in London. Now Scoober is a labor model, as you know, as opposed to the other logistical network we have in the U.K. It's very challenging to have 2 logistical networks in 1 city because your couriers cannot cross over certain areas. You would have people, for instance, in Zone 1 and 2, that can only work in Zone 1 and 2 because that's where we have the specific labor model, but we would not have that outside of the area.We will see that we'll have the labor model in the whole city of London, actually, I mean everything within the ring road, towards the end of the year, and therefore, we will have quite some efficiency gains in London, which is, of course, the lion's share of our efforts in the U.K. So with a couple of benefits there. You see us increase some of the delivery fees that are now extremely low. We are sometimes GBP 5 below our competitors. There is a lot of room for us to increase the delivery fees. You will see us do that a little bit in the next half year. And there will be significant fee cap reductions.We always have a couple of dates for the U.S. So we kind of already know when the fee caps are going to fall away in the second half. So it's actually not so difficult for us to improve the EBITDA in the remainder of the year.

[Marcus Diebel, Research Analyst]

Since I have you, could you maybe elaborate a bit more on Marketplace in Q3? I understand your comments on comps in Q2. It looks like at least from what we're seeing, that QSRs generally might be open again in Q3, Q4. Do you think that this is more relative to delivery or that the Marketplace is improving? Or how should we really think about it? If you can just elaborate a bit more why you think next to comps, Q3 should be better for Marketplace.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Yes, just because if you compare it with -- so very simple. Let's say you have 30% logistical orders in 1 year, but all the logistical restaurants closed down, then obviously, all the orders go to Marketplace restaurants. So a lot of the growth actually that we saw, for instance, in April last year, is caused by that. So actually, our growth last year was very high, and therefore, the comp with last year for Marketplace specifically is difficult.That will not be the case, of course, in the third quarter because you remember last year, actually, when it was unclear how long the lockdown would last, a lot of the QSRs chose to just close. And they closed for dine-in, but they also closed for delivery. And that, of course, after a couple of weeks, everybody realized we were going to be in the situation for a lot longer, and the restaurants reopened, but only for delivery. And therefore, actually in Q3, you no longer have that tough comp from Marketplace.

[Marcus Diebel, Research Analyst]

Yes, I understand, I guess that math and clearly, we all remember that phase, but it also shows the relationship between delivery and Marketplace, that they -- if one is stronger, the other one suffers, it seems. Whereas the bulk [indiscernible] seems to be that this is kind of like growing nicely next to each other. I understand the effects in Q2, but do you think this kind of like independence of Marketplace, independent from delivery still holds also in the second quarter? Because I guess the concern is that delivery orders over time might cannibalize the Marketplace. That's basically the relationship I want to find out.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

There two things I need to say about this. No. So first of all, you can also turn it around. If all the Marketplace restaurants would close, naturally, all the orders would be with delivery restaurants. So this is not a normal situation, obviously, that you do so much of your offering because of a pandemic. Hopefully, it's not a normal situation for humanity that, that happens too often. So that's a rather unnatural thing to happen to our business. Then on top of it, we are assuming also for delivery orders to generate profits. We're not going to run this at a loss for eternity in the U.K.A lot of our efforts are around taking market share, which is happening very significantly. The London example is there, but it happens in the whole of the U.K., we're taking market share from our competitors. And we're doing this with a lot of aggressiveness, and that includes having much lower delivery fees than our competitors.Our competitors are loss making, I think it's important to understand that. And they are loss-making even with delivery fees that are GBP 4, GBP 5 higher than our delivery fees. So there's a lot of room for us to improve, whether that's the efficiency of the delivery network or the delivery fees in the U.K. So I think both basically the assumption that there is cannibalism on the market is not right. We are growing Marketplace more significantly. It is just that last year, the delivery network was almost empty because the QSRs actually were forced to close down. And if you would see cannibalization, you wouldn't see the reorder rate increasing by that much as we see in the market.Like you're actually increasing the choice by adding either of the 2 Marketplace or delivery restaurants. And that clearly has an impact in increasing order frequency. And if your point was right on cannibalization, you wouldn't see such an increase of frequency over time, and so that's actually contrary to what we see.

[Operator]

Our next question is from Mr. Andrew Gwynn, Exane BNP as Go ahead, sir.

[Andrew Philip Gwynn, Senior Food Researcher & Analyst of Food Retail]

Three quick questions, if I can. So firstly, could you just give us an idea of the first half loss on EBITDA? Just so we can get a better understanding of the sequential change. Second one, market conditions, maybe just on the key markets for U.K., Germany and then also the U.S. And then the third one would be, I guess, the implication for sort of shrinking to greatness in the U.S. is we could well see a drop in GTV in the market, maybe not this year, but perhaps next year. Is that something we should have in our minds? Thank you very much.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

I'll take your last question. The first question would go to Brent, and the second question, I guess, to Jorg, and then maybe Matt can comment on the U.S.First, you should not see our efforts in the U.S., as I think you mentioned shrinking to greatness. We will continue the efforts that Grubhub is currently making in the U.S., but we'll add the efforts in the areas in which we are really small. And that's very similar to our strategy in Europe because, as you would understand, most of our investments in Europe go to the U.K. That's hardly an area in which we were very strong in the U.K. I also sometimes make the comparison if our U.K. business will be in the U.S., it would be far bigger than anything that's in the U.S., and I think it's important for especially American investors to understand how big the business is.So the investments there actually are to improve the businesses that we have, and we'll do the same thing in the U.S. There's a lot of growth available around cities like New York, in Chicago, et cetera. And it's, of course, much easier to grow out of strength then.We've been -- as you know, I started this business in Holland. And we know very well that if you then cross over into Germany with a lower marketing budget with no brand awareness, and in a much bigger country, you're not going to get anywhere, right? So it's very important to understand that already quite early on, it was quite clear to us where we needed to invest and how we would create, let's say, that moat or that fortress and sometimes also call it. It's much easier to work from very strong positions and then create it. But it doesn't mean we're not going to be in, say, Ohio or Arizona. It's just that our focus will not be there, it will be elsewhere. So for the first question, Brent, if you could answer that.

[Brent Adriaan Wissink, CFO & Member of Management Board]

Yes and no. Well, these trading updates provide you insight on how we are doing right now. And certainly, because to give you some guidance, what the full year will be.As we said, we believe that the full year loss will be 1% to 1.5% of GTV. Losses are big, and we will improve, and we will see improved results in the second half. First half was certainly impacted by the fee caps and the voluntary release that we provided to the restaurant. So -- but in a month, we will provide you with all the financial details per segment, and then we will give you full disclosure of the results.

[Jorg Gerbig, COO & Member of Management Board]

Thanks, Brent, with regards to market conditions, I'll start on the U.K. and Germany. So U.K., as you know, used to be more or less a drag on the Just Eat order growth. We started our investment programs after the merger investing into network effects, basically sales doubling the sales force in the U.K. or more than doubling by now the sales force in the U.K., also with a specific focus on chain acquisitions, marketing, logistics, price leadership. And we saw very much great results and most recently also significant market share gains.So as mentioned, London, for example, we are up by more or less 10% market share gain with triple-digit growth rates in the London area. Logistics in the U.K. overall is up on a year-over-year by more than 700%. And that's actually more -- by far more -- multiple times faster than the pure logistics player in the U.K. Our restaurant offering has also significantly expanded obviously is known about McDonald's and Greggs.McDonald's now, we're about to cross 1,000 sites in the U.K. and Ireland. We've actually started to roll out Starbucks in with now 450 sites live. Costa Coffee in March started to roll out, already over 500 sites live. And most recently, we also are like trialing PizzaExpress, for example, which is also very strong in London and it was a former exclusive to one of our competitors.So we're seeing very good progress on that end. So overall, very, very strong signs. And to my initial comment that it used to be more or less a drag on the overall growth rate of legacy Just Eat, it's actually the growth driver. Now if you look at our segment, U.K. orders in the second quarter grew fastest of all the segments, 61%. So it's actually not only absolutely speaking, but even relatively speaking, the fastest-growing segment we have. So that comes despite opening of the market. I mean, as you know, United Kingdom has already opened up the restaurants and will open up even more, but we're still seeing very strong trading and are very, very happy with the results of our investment program in the U.K.With regards to Germany, likewise, first -- second quarter growth was 50%, seeing very strong trading in the German market. And just as a reminder, I mean, we are heavily still investing in the German market which result to these strong growth rates. And we're actually driving the market, actually in terms of relative order growth even faster than the market was developing when there were still multiple players in the market. So we seem to do a very good job of this because we're actually able to grow the market faster than when we had the massive competition a couple of years ago. And even pre-COVID that was already the case.We're also strongly expanding logistics. As mentioned by the end of the year, we will be in 80 cities in Germany and doing very well also on the logistics front, fulfillment times improving, efficiency going very well. So overall, we're very happy in these 2 key markets.And with that, I would love to hand over to Matt to give you some insight on the U.S.

[Matthew Mayer Maloney, Member of Management Board]

Yes, thanks, Jitse, thanks, Jorg. Absolutely would not expect a drop in GTV over time in the U.S. In fact, I would expect further growth in market share gains. I think just a comment on the Q1 versus Q2 numbers, which you can see from previously disclosed as a separate company from Grub and now obviously, combined, the second quarter is much more difficult in terms of COVID comps. Many of the U.S. metropolitan areas, specifically New York City, where we're a strong market leader, still coming back online.We are in the U.S. investing significantly in growth focusing on our market leadership positions. I guess it was outlining, this has worked really well in just the takeaway U.K. markets. We're prepared to invest more behind that strength. We think there's a lot of room to grow, both in terms of new diners and in terms of higher frequency. If you look at the diners in more mature markets across the world, generally ordering much more often than you're seeing in most of the U.S. markets. The way we look at the world is in terms of supply, service and consumer pricing. We're still matching supply in some of the metros, but obviously, we've exceeded supply and the ones that were leading.In terms of service and logistics, we are as good or better than competition in terms of pricing, we're as good or better than competition. In fact, recently rolling out a guarantee of that low price guarantee.So we're already investing significantly. And with the fee caps that were outlined in this information rolling out this year, we're looking to increase that spending. And in fact, the fee caps are disproportionately impacting our business because the most aggressive fee caps are in some of our leadership markets. So I think we have a lot more room to invest, and we're confident that our strategy will increase our leadership in these markets where we've historically led.We've been executing in 2021 at nearly breakeven, while posting market share gains according to multiple third-party data sources. I would say that different from the U.K. case, we do not believe that continued market share gains will require a material investment from the European profit pools. So while we're still 1 month in, we're working hard to align our global strategies and learn the best practices that have been put in place in some of these legacy Just Eat markets, and there will definitely be more on our U.S. strategy in October. Thank you.

[Andrew Philip Gwynn, Senior Food Researcher & Analyst of Food Retail]

Just on the competitive backdrop, I mean that was sort of really the crux of the question. Is there a significant change out there, say, Uber Eats getting more aggressive or no real change? Perhaps just a very quick answer. Apologies for taking such a long time.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Are you referring to a specific market or just to all markets?

[Andrew Philip Gwynn, Senior Food Researcher & Analyst of Food Retail]

All markets, really. Just a very big picture comment, sir.

[Jorg Gerbig, COO & Member of Management Board]

So I mean, in the U.K., we currently don't necessarily see an increase aggressiveness from competitors. I mean, you have to see that when we showed some sort of data already, there was quite some vouchering going on at levels of 30%, 40%. It's very much hard to increase that further. From the pricing side, we also don't see any increased competitiveness.On the contrary, actually, we see competitors increasing pricing and also with the comment around trying to get less loss-making with competitors. We can't foresee that business changing. So overall, we feel very confident. I mean, we have a super strong position in the U.K., especially now I'm targeting that answer to the U.K. We're actually generating quite some profit in certain areas of that business, which we are deploying right now, but we're actually able to target that investment, and actually reduce or increase that investment as we seem necessary.I mean we will do anything to keep our market position on a leading market position or even expand it. And for competitors, this is actually quite a difficult situation to react. If you're not a market leader, you obviously have way less profits to deploy, if you have any at all. And with our price leadership, we can withhold that -- maintain that price leadership strategy as long as we want.So it's very tough for competitors to actually react. And that holds true for most of our markets because, as you know, 90%, or more than 90% of our GMV comes from leadership positions where we do have a hybrid model with quite some underlying profits to deploy. And therefore, we are actually the ones who can dictate the aggressiveness in the market and who can react if the competitors become more aggressive, but currently, we don't see that.

[Brent Adriaan Wissink, CFO & Member of Management Board]

I think what's also important to note here is that in the data that we are providing to you with our competitors, there are the significant vouchers, which we don't really believe are actual orders, but they are generated orders because you're handing out free food.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

There are white label orders. Now white label orders have no network effects, right? It doesn't really contribute to your network because nobody sees your network. People order with a different website of a restaurant rather than with your Marketplace. And this whole business is about network effects. And of course, this includes grocery. We've already said that we are preparing launch of grocery across our businesses, and that will make it even more difficult for the competition. And don't forget that this is also almost a perfect storm because now the vouchering applies to grocery shopping.So all of a sudden, people use the vouchers, not to say on food delivery, so it's not competing with us, it's competing with grocery shopping, which is essentially free grocery. And who wouldn't like free grocery delivered to themselves?So -- that's all included in the figures. Still, we're gaining market share. I think it's important to understand that also in the underlying businesses of our competitors, there is an issue. And therefore, we are very confident that we will continue to gain share in most of our markets. And yes, I think for us, indeed, also, as you said, we can keep this up for a very long time. And this is also, of course, if you look at our success in Germany. It took us a long time to gain market leadership in Germany, but when we took it also became extremely profitable. And in the U.K., we don't even have that issue. We are comfortable market leaders.

[Operator]

Our next question is from Mr. Sreedhar Mahamkali from UBS.

[Sreedhar Mahamkali]

Actually, if I could just follow up on Andrew's question. please, I'll have another go and see if I can get something. I think you talked about EBITDA trending back to profitability going forward. I just wonder if that means you'll be approaching breakeven in the second half or actually you're thinking it could be a profitable second half? That would be helpful.And secondly, then, is it fair to assume the large part of the sort of EUR 200 million you've talked about impact from fee caps and such, is that largely in the first half, perhaps spilling over another month into the second half? If you could clarify that, that would be great.And finally, again, still sticking with the guidance, does the guidance include any investments into Grub perhaps beyond these take-rate caps, I guess? Those 3, please.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Okay, thanks. So to your last question, yes, they do include the investments in Grub, so therefore, the total company. Regarding profitability, we have said that losses have peaked. We can't comment on that further. Obviously, we have our results for the half year, the full financial results in a couple of weeks, so you will be able to get that data. And we -- as you know, we disclosed first segments, you'll also be able to see where we make most of the investments.Regarding your fee cap question and the voluntary support, yes, most of it is in H1.

[Operator]

Our next question is from Mr. Giles Thorne of Jefferies.

[Giles Thorne]

My first question is -- it's a very high-level question, and it's picking up on some of the events year-to-date, be it Delivery Hero into Germany or DoorDash into Japan or several others, which essentially, to my reading, tear up a lot of the established rulebooks around how you allocate capital in this sector and how you compete, and in turn, trigger a change in strategy or just a different perspective on how you execute. I'm pretty sure to what you're going to say in response, but it'd be interesting to hear your take on whether the landscape has changed or not.The second, picking up on grocery, the comment you made a moment ago about making life a bit more difficult for your competitors in grocery, it'd be interesting to know just a bit more color on exactly what you plan to do this year. And any color on investments that you'll make into technology or product or sales would also be useful.And then finally, a question for Matt on the U.S., pretty closed question, but we've seen the first permanent fee cap come through in San Francisco. And I appreciate it's a continent-sized country with many flavors and colors of politics along the spectrum. But it'd be interesting to know, is this a lead indicator for what could happen in other cities? Or is this just a San Francisco thing?

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Thank you. So obviously, last question for Matt. Your first question around whether I think if I summarize it correctly, whether the rules of engagement or the way that the competitiveness in the sector works has changed, and the answer is actually no. Network effects are network effects. And the only reason that you would lose customers or lose or if you do not have certain supply.So within food delivery, it's probably a bad idea not to have McDonald's, probably a bad idea not to have salad bars, et cetera. But as long as we provide that, your customers are not going to go anywhere. And I think what people miss is that there are no examples of numbers 2, 3 and 4s that would ever make any money in any market, right? And it doesn't matter whether it's Marketplace or delivery people think that we make a distinction between the 2. That's not accurate.We run the largest food delivery company in Canada. It is fully logistics, and it is highly profitable. So why is it highly profitable? Well, because we are the #1 actually the business model in the U.S. and Canada. It works pretty well, the delivery business model.So if you look at people trying to do adjacent stuff, we're monitoring, of course, what these guys in Berlin are -- actually, I am currently in Berlin. What these competitors are trying to do -- but it's -- essentially if you simplify it, as you understand, we've been in competition in Germany for, I think we started in 2007, so let's say 14 years, give or take. And we were, at some point, in competition with 3 brands of Delivery Hero, namely Pizza.de, Lieferheld and Foodora. Foodora was the logistics -- and also, by the way, there was Deliveroo. Also, again, logistics.Now at the peak of their investments, and we're talking crazy amounts of money, these sort of companies, whether it's Deliveroo or Foodora, they were losing about EUR 7 in order, and they had 200,000 -- I don't think Deliveroo got there, but 200,000 monthly, give or take. We have 15 million, right? I mean I just want to put it in perspective. And we also run now a logistical network that's about 10% of the 15 million. So also if you look at Logistics is a very large logistical business that we are running.If we now analyze the competition, they are very much focused on logistics, and they are providing a logistical service that is inferior to our logistical business. They have less restaurants, the efficiency is lower, the delivery fees are higher. So it's -- and the coverage, of course, is not the whole country. The coverage is Berlin and maybe a couple of cities in some cases.The addition of grocery to it, and especially the flash grocery, yes, I mean, there are now, in Berlin, I think, 6 or 7 companies that are well invested in the flash grocery delivery space. Well, good luck competing with those guys, if you want to compete with that. Best case scenario, maybe you win, I don't know, but yes, it's not very much related also to what we would like to do in grocery, namely offer just regular grocery change. It's a different segment.So no, I don't believe that the rules of engagement changed. I think it's still the same. It's in the end, about network effects and protecting your business. And we have always protected our business and then specifically now have everybody on the line anyhow regarding delivery in Germany. It is a low percentage because there are not too many QSRs of any strength in Germany.We do not constrain the delivery network. It is the same open network we have in the U.K. It's the same open network we have in Canada. We don't force people to use Marketplace. We don't force people to use delivery. It's the same thing. -- it's a natural artifact of the German market.Then regarding your grocery question, I already alluded to it. We are working on collaborating with supermarket chains, and we're going to be an open network. If a supermarket chain wants to use our vast logistical network across our global businesses, they can. We'll do that more or less gross profit neutral, and it will just be an add-on to our logistical network.Now it's important to understand that we are large. So if we add a large grocery chain in the market, we're going to add millions of orders. You're going to be awfully excited because you're going to see further growth as a result of that. But we should -- it is an easy add-on for us because we have large logistical networks in each of our country, and we are available in all the large cities in our entire network, right? So it's something that's not so complicated.Regarding investments for sales, we've usually ramped up our sales force. So you can especially see that in London, we're signing up tremendous amount of restaurants in London, in the U.K., in Australia, but also in Germany, also in Holland. We have very large sales force. We have very high marketing budgets. Our marketing budget in Germany alone is about EUR 100 million on an annual basis. That is far more than the investments our new competitors are making into Germany.So just to put everything in perspective again. And we have a very large tech department. I sometimes see people talk about the tech department. They don't realize we have about 2,000 people in tech. So we have a lot of people focused on improving our tech platforms.Now of course, after a merger, you need to work on aligning systems. That is a lot of effort, that is a lot of work. But don't forget that we did a lot of these things. In Germany, you will remember that the 3 platforms of Delivery Hero were integrated in 1 month. So we have a lot of experience in these things. Still large businesses require a prudent approach to integration.So maybe, Matt, if you could comment on the U.S. fee caps?

[Matthew Mayer Maloney, Member of Management Board]

Sure, and just to reiterate, I think there's a lot of new competitors that are looking to expand their boundaries and talk about how they are tearing out the rulebooks and everyone needs to change, and I think that's all bogus. I think what we said earlier was -- or what I said was, it's about supply, it's restaurant supply, delivery service and consumer pricing, that's all it's about. That's the only things that matter. So everything else is smoke and mirrors, but it's a great answer to that.In the U.S., this is absolutely San Francisco being San Francisco. So if you follow the history of San Francisco, you recognize they're on the fringe of aggressive new rulemaking, which is generally litigated back. So I think that our business, like Jitse just said, we don't force anyone to use delivery. We're fundamentally a Marketplace business where we charge for advertising. And if San Francisco where to limit the fee commissions able to be charged by Facebook or by Google on any business, advertising, it would be an egregious overstep of their authority. And I think you're seeing a very similar situation play out in food delivery right now because most of our restaurants in San Francisco deliver for themselves. They're simply paying us new generation fees to get new customers.So I think you will see a response by the industry. In fact, there's a lot of conversations, and we have made no commitments to participate. But there's a lot of activity in response to the recent permanent fee cap. But you're not going to see -- I would predict you do not see another permanent fee cap being voted on until the San Francisco situation gets resolved in court.

[Operator]

Our next question is from Ms. Miriam Adisa of Morgan Stanley.

[Miriam Anuoluwapo Adisa, Equity Analyst]

Just firstly, just a follow-up on grocery. Could you just confirm then that you are planning to roll that out in your other markets by the end of the year? And perhaps if you could give any color on what you're expecting in terms of sort of the contribution to orders or GTV from grocery.And then secondly, just on the U.S. business, Matt, if you could give us some color on the performance in New York relative to other markets and also the B2B business, is that starting to recover?And then thirdly, if you could just give a bit of color on the Rest of World performance specifically Australia. And also if you could talk a bit about the trials of Scoober that are happening there as well.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Thank you. I will refer question 1 and 3 to Jorg and then, of course, U.S. questions to Matt.

[Jorg Gerbig, COO & Member of Management Board]

Sure. On the grocery side, the timing is obviously very much related to whether we sign up some of those big partners. As Jitse was mentioning, our strategy is to go with large retail partners, and yes, I cannot really comment on the timing of this. But that obviously also has an influence on the contribution of that service to our overall business. But if you look at the coverage of some of these potential retail partners, you're looking at hundreds of stores or even in some cases, more than 1,000, 2,000 stores in a certain country. So contribution could be sizable.If you compare that to currently, for example, in McDonald's, but obviously, McDonald's have quite some orders per store, but if you compare that to 1,000 stores of McDonald's in the U.K., you can already estimate that the contribution can be sizable. And some of our competitors have already more than 10% contribution from grocery. So I get that some sort of a benchmark you can look at in terms of the size. But like I said, it's very much dependent on the timing of signing a contract, and we can't give you an exact timing of that rollout, therefore.Rest of work performance, overall, we're also happy with that performance. Top line is doing very well. But there was also quite strong comps in some of these markets. So that also impacted that. Rest of World is obviously quite a mixed bag. You have of all sort of jurisdictions in there. But overall, we see, especially in Australia, continued market share gains from data we see from similar web and Google trends. We have basically regained #1 position. So very happy with the continuous market share gains in particular that market because we're specifically asking for Australia.

[Matthew Mayer Maloney, Member of Management Board]

I can speak to New York. I mean the city itself is coming back, but it's kind of slower than other major metropolitan areas in the U.S. You have to remember that New York City is a metro area, it's 22 million people, it's roughly GDP size of Canada or Brazil. It's a very large market. What work ends up looking like in New York City is yet to be seen. I'd say the B2B business is recovering slower than our consumer business for sure. There are many offices that are just not open yet. So what we think of as the seamless B2B product is just not coming back yet. That's very highly profitable, very strong product.You're also seeing in the consumer space, there are significant employment issues for restaurants across the country, but especially in Manhattan and with the majority of our restaurants being self-delivery. They're having a hard time not only getting customers to come back in but also to actually be operable. So I'd say, in general, New York's coming back but definitely slower than others, which would impact all competitors but us more so because we have such a strong leadership position in New York City, but we are feeling extremely confident and our ability to expand our leadership in New York, not only in Manhattan, but all the boroughs and the surrounding areas because that is a significant focus as we reiterated multiple times on this call.

[Operator]

Our next question is from Mr. Marc Hesselink of ING.

[Marc Hesselink, Research Analyst]

First question, I would like to understand a bit better the moving parts on the EBITDA. So earlier, excluding Grub, you had a EUR 60 million EBITDA for the year -- for the full year. Then hopefully, we now have the fee caps, and we are going to have the extra investments in the Grub business. Can you explain the moving parts? Is the underlying 60 million ex-fee cap, ex Grub still the same? And then the rest, the fee caps and the extra investments comes on top? Or is there other parts moving in there?

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Let me try to walk you through this. So Q1 was in line with Q4. Then Q2, we saw significant Canadian fee caps in the, let's say, legacy JET business of tens of millions, so I mean very significant. We suppose -- well, we assumed that the pandemic would end at the 1st of April, so we had all our investment program basically declining after the 1st of April because of the so-called end of the pandemic. That, of course, hasn't happened yet. So we decided to continue the investment program.And then, of course, at the end of Q2, there was Zero 2020, which, of course, also has been very costly, very successful for our business in terms of exposure and brand awareness and all of that. So we expect quite some benefits from that sponsorship. But that's -- so that's the difference with Q1.And on top of it, if you then also look at the Grubhub business, the lion's share of fee caps in the U.S. is in H1. Because we also now already see that in most of the cities, we have an end date for the fee caps.If you look at H2, we have that end date. We don't believe we have an end date for the Canadian fee caps yet, but we do have it for most of the U.S. business. But we all see, of course, that things are getting relatively back to normal, and the fee caps are mostly connected to states of emergency or restaurant occupancy being over 100%. That sort of a measure from the local government. Fee caps have a big impact, but also our investment program has a big impact.And to remind you what the investment program actually is. It is scaling up sales, it is reducing delivery fee to some -- in some cases, GBP 4, GBP 5 difference in delivery fee between us and the competitors. And of course, the competitors are loss-making. So we assume that their delivery fees are going to go up. So there's quite some room for us to increase those delivery fees in many of the legacy Just Eat countries. And also, those networks are sometimes not efficient, right?So if we introduce a labor model in a certain market, it is going to replace a model that was already there. And if you don't replace the whole city at once, then you have inefficiency. So we see quite some efficiencies coming in. And don't forget that the 70% growth in the U.K. is very difficult to keep up. We have to hire quite some people to facilitate the growth. So obviously, that can be far more efficient if you are bigger. But yes, everybody understands for ramp-up of 7%, you have to have quite some apparatus to deal with that.So it is not so complicated for us to improve the EBITDA. I think that's in a nutshell where we're going. And of course, again, in August, we will supply you with more details around the EBITDA for the first half.

[Marc Hesselink, Research Analyst]

Okay. Just to be 100% sure, so the EUR 60 million is a bit higher, but that's also reflected in the higher growth for the non-Grub business.

[Brent Adriaan Wissink, CFO & Member of Management Board]

60 million, are you referring to...

[Marc Hesselink, Research Analyst]

Yes, you always had like a EUR 60 million loss for the full year, excluding Grub.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Yes So Marc, I think at the time, we said that we -- based on the question, what do you think is the annual run rate for 2021, we said, take the Q4 run rate, which was something like EUR 20 million, EUR 25 million negative EBITDA. So I think you are multiplying 15 into that instead. So there's a big difference already. And then I think the answer remains similar on the on the additional information that we will disclose during the half year results in a couple of weeks, unfortunately.

[Marc Hesselink, Research Analyst]

Then the second question is on the U.S. The delivery proportion was actually quite a lot higher than I had -- so 2/3 of the business. I was actually expecting that more would be Marketplace. Is that temporary? Is that because of COVID that you now had more delivery because those businesses were holding up better. And eventually, the majority of your business will be Marketplace again?And also taking into account that you -- if you push the extra investment in the other markets and just your extra investments whereby expanding the delivery option, but this is already at a high number, so how do you think about that?

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Well, first of all, our focus is not necessarily in expanding the delivery option. Our focus is on improving the large markets of Grubhub and that can be in logistics. But don't forget that, of course, in the U.S., the unit economics for logistics are much better than in Europe. Ticket sizes are higher, labor costs are lower, willingness to pay is much more there. So actually, logistics or Marketplace in the U.S. doesn't make too much of a difference with what modality you choose there.If you look at specifically Grub, Grub has been disadvantaged in the pandemic because of the large business in -- both in cities like New York, where a lot of people left the city, businesses closed, of course. A lot of the business is a B2B business in New York as well. So in that sense, they were disadvantaged compared to other players. And the growth also for Grub was also in the logistical network outside of those cities. So yes, you will see more Marketplace go back as things normalize in the U.S. as well.

[Marc Hesselink, Research Analyst]

Yes, so that 2/3 being [indiscernible], that's not the historic Marketplace. I mean, that was probably a lot higher, right?

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Yes, it was a little high. But don't forget that Grub gained quite some size in the pandemic, right? I mean it still grew quite significant. A lot of that growth was actually logistics.

[Operator]

Our next question is from Mr. Andrew Porteous of HSBC.

[Andrew Ian Porteous, Analyst, European Retail]

I guess first one from my perspective was more on the U.K. business. I mean, it's clear from the chart that you've shown in the presentation that your market share gain seems to be coming at the expense of the competitor in green. I'm just sort of wondering where we are on sort of the overall proposition in the U.K. and how we get to those next market share gains.Where are we on restaurant choice, customer experience, sort of the overall app? Perhaps give us some color on where we are and perhaps what your ambitions are there in the future.And then secondly, really, just trying to get under how you're sort of thinking about the guidance and perhaps the link between GTV and EBITDA margin guidance. If you get towards the upper end of your GTV targets as sort of the $30 billion level, should we be thinking you maybe get towards the lower end of the EBITDA margins, i.e., the minus 1% rather than the 1.5%? Or is that link not there? I'm just trying to sort of conceptually understand how you're thinking about it.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

That link is not necessarily there. But it depends a little bit on what the -- the same thing with what we said about the 1st of April, right? There's a big difference whether the pandemic ends on the 1st of April or 1st of August. That, of course, if you have an investment program or not that makes a big difference, but it's not necessarily related. So that's the answer to your first question. I will give you a little bit of an answer for the first as well, and then maybe Jorg wants to say something about it as well.Actually, our growth in the U.K. is at the expense of new customers, so people that have not ever placed an order but also at the expense of both the competitors. And again, you need to take into consideration the makeup of the orders of our competitors. There's a lot of vouchering, there are white label orders and there are grocery orders in there. I don't care what exactly the percentage of that is.But if you compare the websites of our competitors or the apps of our competitors with our apps, you need to -- if you want to make a size comparison, really take that into consideration because that means actually, yes, you can add let's say, 20% of your business, and it's going to be groceries, but that means you did not add food delivery, and it might even mean that you've lost orders. And this is why actually we do believe that adding groceries is going to also again make a significant growth impact in the U.K. because it's not going to be at the expense of our food delivery network, obviously.So it actually comes at the expense of both the competitors. Now it is clearer towards the #2 in the U.K. but again, you are looking at 100% of the business of that competitor, and it includes more things than just food delivery and more things than just actual orders.

[Jorg Gerbig, COO & Member of Management Board]

And with regards to even some more color into the U.K., we continue to sign a [ set ] of restaurants in Q2, more specifically, with regards to the supply in London. We are now at more than 13,000 restaurants in the London area. And there is still a gap of about 6,000 restaurants. But if we analyze these restaurants and the gap, actually, a lot of it can be explained by grocery convenience and actually even more so by multiple kitchens.So you have some instances even where we actually list the restaurant as 1 versus competitors who are actually up to 23 entries for 1 restaurant. So like if you consider that -- off that gap, 40% actually is covered by those 2 categories.So like the gap actually has become very small. And so we are continuing to close that gap, and we feel very confident, like originally indicated to close that gap within the 12 months time frame, which we indicated previously, and we are very well on track of that. And as you see from the market share gains in London, it plays out pretty well in terms of the overall consumer experience and especially our logistics that is doing very well in terms of the customer proposition.Actually, if you look at -- we're doing the logistics ourselves in the cities, we are doing actually the logistics ourselves and not through a third-party provider, we're actually the fastest in terms of fulfillment time better than the others. And we're monitoring that by if you do mystery shopping over quite a large sample over several weeks of performance. We're actually the fastest in terms of fulfillment time ex London. Now London is a bit of a special situation because we're actually ramping up our logistics there significantly. We're also changing the way how we operate, and that obviously has a little bit of an impact, but we're not talking about large numbers here.So like we're very happy and satisfied about the development of basically the choice we are providing in addition to our customers, but also the quality of our service and the quality of our delivering is really best in class in the U.K.

[Andrew Ian Porteous, Analyst, European Retail]

One other quick one, if I may. You've gone very quiet on iFood and said no mention of that in this statement. Can you give us a quick update there? I assume if you've not mentioned it, there's not really a huge amount to say but it'd be interesting to know either way.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

No. No, it's still worth a lot of money, and we will welcome any office for it.

[Operator]

This is our final question, and it's from Mr. William Wood, Bernstein.

[William Woods, Analyst]

Two quick ones for me. I'd just like to know a little bit more about the how the demand has trended over the quarter, maybe month-on-month, and particularly how much can we bake in for the one-off exception of kind of the football impacting that.And then the second question is around delivery in Germany. Obviously, it's still a relatively small proportion. Over the next kind of couple of years, do you see the need for further investment like we've seen in the U.K. to bring that delivery level up to other kind of segments?

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Let me take that last question, I'll turn the first one to Jorg. Regarding the delivery percentage in Germany, it's very important to understand that we have signed up all the restaurants or almost all the restaurants, let me not forget, let's call it, 95% of the restaurants that are interesting to add to a logistical network. And that includes all the QSRs, and it includes all the local areas. So there are simply no more restaurants that you can actually have. I'm sure we're missing some, but that's what it is.We're now at, I believe, 50 cities in Germany in which we've done that. That leads to this share of logistics. This is not different to what we do in Holland. This is not different to what we do in the U.K., this is even not different to what we do in Australia and Canada. Now in Australia, a very large proportion of our business is logistics. In Canada, almost the entire business is logistics. We are not against logistics, and we provide the option to whichever restaurant wants to have it.So the whole idea that there are more restaurants and that percentage should be higher, well, sorry, there is no current demand for it in Germany. That's just the fact of life. And if you ask us, why isn't that demand there, it has very much connected to the size of the QSRs in Germany. The QSRs in Germany are much weaker than, for instance, in the U.K. and certainly much weaker than in the U.S. And even a large chain as McDonald's gets far less orders on a personal basis than the U.K. McDonald's store or even a Dutch McDonald's store.It is, in that sense, something that is naturally of this size. Don't forget also that companies like Foodora, which is essentially the same thing as foodpanda and also Deliverroo. At the peak of their investments before they left the country, and in the case of Foodora, before it was sold to us, they were tiny, they were doing 200,000 orders on a monthly basis. And a lot of that, again, vouchered, right? A lot of that is not actual order to give people free food. And those companies were in multiple German cities.And don't forget, Berlin is a bit of a different animal. Most of the volume in Germany, in logistics is actually in Berlin. So it's just not a large segment in Germany, and we feel quite agnostic about it. If it is larger, it is larger. If it is smaller, it is smaller. We don't particularly care.

[Jorg Gerbig, COO & Member of Management Board]

And with regards to the trading, we see very strong trading across the board. There is obviously stronger comps, and the markets are opening up. And in a lot of countries, the corona measures are ceasing, so that obviously has an impact, but we continue to see strong trading despite these strong comps also from last year.And a lot of this is also caused by our continued investment program. I mean, again, if you look at the U.K. growth rate, even if that wasn't helped by the pandemic, this is even something which goes beyond just the tailwind we got from the pandemic. It's really caused by also the investment program. And you see that also in quite some other markets, especially legacy Just Eat markets, which we deem to see have been underinvested in the past, where we actually invest quite a lot of money, but we also see the results of these investments that they are now growing stronger. And that proves our strategy right, and therefore, we're continuing to do that. But overall, we continue to see strong trading.

[Operator]

We have no further questions, sir. Please continue.

[Jitse Groen, Founder, Chairman of Management Board & CEO]

Thanks, everybody, for attending this call, and we hope to see you again with the half year results or the Investor Day in October. Thanks a lot.

[Operator]

Ladies and gentlemen, this concludes the Just Eat Takeaway.com trading update. Thank you for your attention. You may now disconnect your lines.