I’ve been roundly criticised for tweeting that there were a lot of junk IPOs taking place lately, implying that “Just Eat” was one of them.
Admittedly, I hadn’t done any valuation work on it. The name itself put me off. Seriously, who’s going to invest in a company called “Just Eat”, along with Boohoo (maybe that’s the sound investors will make 6 months down the line) and “Pets at Home”. Poundland also sound a bit daft, but given the popularity of nickel and dime stores, I think it is more likely to be on solid ground.
Still, I admit that I know nothing about Boohoo and Pets at Home. Some may argue that I shouldn’t talk about things I know nothing about. But seriously: “Boohoo”?
The Guardian carries an interesting article on Just Eat,
(http://is.gd/P0UitQ), confirming what we already suspected about valuation levels before even taking the calculator out of our draws.
The deal seems to be that they want to raise £100m in a flotation, valuing the company between £700m-£900m. “Its website and mobile apps handled more than 40m takeaway orders last year.” It seems that the deal is that Just Eat handles takeaway orders on behalf of restaurants, and takes an 11% commission on each order, worth an average of £2.11 each.
It will be interesting to see if Just Eat is able to expand into new geographic areas, and how easily it can achieve it. It may not be that easy.
Assuming that the company is price at the upper end of expectations, its valuation targets implies investors are willing to pay £22 for each customer order (£900m / 40m orders). Anyone could guess that this valuation is fanciful, even if you didn’t already know that they actually took in less than a tenth of that on the order.
On a more positive note, at least the Guardian didn’t blame Thatcher.
For something you didn’t know … there’s a company called PizzaMagic (www.pizzamagic.com) that has a similar kind of setup. I first learned about it over a decade ago, so it’s an idea formed when the Interwebs were new, back in the days when it was only the web, not web two-point-oh.
It’s actually a Pizza company that takes
orders over the Internet, and serves the Glasgow catchment area. It’s still going, and presumably doing very well for itself.