Eleven years ago this January, David Buttress and Jesper Bruch were huddled over a flat-pack desk in a borrowed flat in Docklands. After several months of discussions, they were setting up an online food delivery business – the first of its kind in the UK. For Buttress, it was the biggest gamble of his career; he had left a good job at Coca-Cola, where he had risen to become its head of the UK restaurant sector, to go it alone. He and Bruch, who had launched the delivery business called Just Eat in Denmark, were staking everything on the hope that the UK was going to change its consumer habits and start ordering takeaway food online. The going was tough to start with.
“In the first month Just Eat in the UK turned over £35 and that was between two of us,” Buttress says dryly. In order to drown their sorrows, he and Bruch spent the entire £35 in All Bar One in one session. “We were pretty depressed,” he adds. “It was kind of a shock after working at Coke. It was a bootstrap business.” But in the second month the fledgling company made £280 and then in the third month, £800. The trajectory was set.
“In the first month we turned over £35. It was kind of a shock after working at Coke. It was a bootstrap business”
Buttress has since become one of the most successful entrepreneurs in the UK, having taken the business from start-up to the FTSE – it even briefly inhabited the FTSE 100 before settling back into a FTSE 250 player. His is the classic entrepreneurial tale – Buttress has led Just Eat to become the UK leader in food delivery, and has had to keep ahead in a ferociously competitive market while balancing technology and regulation.
It might be a major listed company now, but Buttress insists on a personal touch.
Informality is a hallmark of Just Eat. The reception is jaunty, full of primary colours and Beano annuals. The tone is set from the top; Buttress himself is chatty and enthusiastic, switching easily from personal anecdote to business evangelising. This is not an overtly corporate culture – which meant that choosing the right lawyers as the company grew was very important.
“We always felt we were going to be global, so we believed having a really good GC early on would be an important”
“We have two rules picking partners whether they’re legal or banking – the classic one is that we want to work with the best people possible. But we also have a beer test,” he says. “We thought we’re going to be working a lot with them, whether bankers or lawyers, and we need the chemistry. So we took [each of the pitch teams] to the pub, made it very natural – after the meeting, we asked them to join us for a drink.
“You have to be authentic. We wouldn’t be for every law firm and not every law firm would be right for us.” Just Eat worked with Bird & Bird on the early rounds of fundraising and used Herbert Smith Freehills on its IPO in 2014.
But even more important for Buttress was having the right in-house capability. “We were ambitious right from the start as a company and always felt we were going to be global,” he elaborates. “So we believed having a really good general counsel would be an important part of that. Having a good general counsel from the beginning will help them understand our business and help us scale it the right way. And getting them in early means they understand the culture of our company and become a natural part of our business like sales and marketing.”
Just Eat GC Jeff Eneberi came on board in 2010 and has seen his team grow to eight lawyers. Buttress has strong words of praise for his legal team, which he commends for being embedded in the business. “The legal team in our company is as much a cultural contributor as anyone else,” he says. “In fact, two out of the last three years it’s won the ‘jammiest team’ award – an [internal] award that symbolises the ‘jam’ in the biscuit, what helps hold the company together.”
“The legal team is as much a cultural contributor as anyone else, winning ‘jammiest team’ twice in three years for helping hold the company together”
Having Eneberi’s team on hand has been crucial to Just Eat’s global growth as well. “We have to be very nimble around M&A,” Buttress explains. “We’ve been very successful in acquiring some of our competitors, which has given us a strategic position in 12 territories around the world. But our M&A is quite niche, so having an in-house team that understand the business is incredibly important.”
Only bite what you can chew
Some two-thirds of Just Eat’s revenues are from the UK, but international expansion and consolidation is high on Buttress’s agenda. It is now Europe’s largest takeaway ordering website by sales, with businesses active in Denmark, France, Ireland, Italy, Norway, Spain and Switzerland. Nevertheless, it has been decisive in dispensing with businesses in jurisdictions which it is not market leader; the company sold its Benelux business to local market leader Takeaway.com in November.
At the same time, it consolidated its UK position at the end of last year with a takeover of Hungry House for £200m, while upping its investment in North America by buying the Canadian company SkipTheDishes for £66m. Just Eat’s revenues for 2016 are projected to be around £370m.
The Just Eat model is simple, says Buttress. “It’s always been a no-cure, no-pain pricing model. [In the early days] I was going door to door to restaurants saying it’s £99 to join. We provide the hardware and the software – all you pay is 9 per cent of any order you receive from us. The only difference now is that restaurants pay 13 per cent.”
Just Eat’s model also differs from two of its major competitors, Deliveroo and Uber, the latter a recent entrant into the market. It holds itself out as the middleman between restaurant and client, and the delivery is made by the restaurant rather than third-party couriers. When Uber lost the case brought by a group of drivers at the Central London Employment Tribunal in 2016, Just Eat saw a jump in share price. Because the judgment found that the two drivers should be classed as employees rather than self-employed – which potentially opens up Uber and Deliveroo to higher costs by way of holiday pay, minimum wage and paid breaks – Just Eat’s model does not put it in the crosshairs of the unions.
Buttress won’t be drawn on his rivals, claiming that the more competition the bigger the pie. “The best companies – I learned this at Coke – build a category and every industry benefits from that. But within the category we want to be the best. Actually, half of UK consumers still order delivery food on the phone, so that’s our biggest competitor.”
“The tech industry is big enough and growing enough. Companies that work in it should not be lobbying people to earn less than the minimum wage”
But aspects of the gig economy worry him. “I find some of the stuff I read embarrassing,” he declares. “People earning less than the minimum wage – that’s not right. In the tech industry we can’t allow that in any shape or form. The regulations are quite clear around employment – people should earn the living wage and that should not be compromised on. The tech industry is big enough and growing enough. Companies that work in it should not be lobbying people to earn less than the minimum wage.”
The genesis of Just Eat
The success of Just Eat has both created and benefited from a wholesale behavioural shift among consumers. “Eleven years ago restaurants were genuinely saying that people aren’t going to buy stuff off the internet – they didn’t believe it,” he recalls. “The phone was the way people had done it for 30 to 40 years. We had to sell them the idea that it was a new revenue channel for them. If a restaurant has been a local business that’s processed 100 per cent of its takeaway business through the telephone they’re likely to be sceptical.”
Despite the initial reluctance on the part of some restaurant owners to embrace tech, Buttress argues that the sector is inherently innovative. “Look how food has evolved – they’re innovative about food concepts, customer experiences and so on. At Just Eat we have something like 27,000 out of a restaurant universe of 32,000 of delivery restaurants.”
Just Eat positions itself as a helpmeet to the sector. “We can use our reviews and rankings to do the [marketing] for them,” Buttress enthuses. “We have 10 million reviews on Just Eat. A restaurant cannot affect the ranking either from top to bottom. Just Eat becomes that neighbour who tells you the best place to get a curry. Unlike Trip Advisor you can only rate if you’ve physically ordered at that restaurant.”
So much for the cheerleading. The risk factors for the company inevitably revolve around technology, for both the restaurants and their customers. Just Eat has invested in a partner centre app that only the owners have, which Buttress says is accessed two million times per month, giving restaurants analytics about their customer base and buying habits. It means that information security has to be the bedrock of the business.
“Internet companies inherently sit on a lot of data –name, address, what food you order, the payment information,” he says. “So we spend a lot of time and money making sure it’s all encrypted, putting protection around the consumer.”
“The industry needs to help educate us all as internet consumers. Passwords people use are really important – it’s so naive in the modern world to use the same one over and over again. You only need one breach because a hacker can then go on and use all the details.” Buttress is a fan of Apple Pay: “Apple has done interesting things and started to make it more secure with the thumbprint, biometric information.”
Big appetite for the sector
Buttress is driven, but out of a genuine enjoyment of the sector; when he was thinking of leaving Coca-Cola he even considered setting up a restaurant of his own. “I love the industry,” he beams. “We are blessed in the UK with an unbelievably diverse choice of cuisine – only New York really has that and we have it across the UK.
“Many restaurant entrepreneurs are first-generation immigrants but they’re part of the community like all the other restaurants. The winner of the takeaway awards that we sponsor was a fish and chip shop in Leicester and he is hugely part of his local community. They’re not celebrity chefs, but they’re the real heroes of the restaurant industry.”
David Buttress: entrepreneur from the age of 12
“I finished my A Levels and was living in South Wales and I wanted to push myself, so applied for Middlesex business school. I’d built up a little business via a paper round at the age of 12 buying papers wholesale – my dad had to go to Smiths and vouch for me and underwrite it – the round had up to 150 houses by the time I was 18. So I was always interested in business.
“I chose a [joint law and business degree] because I wanted to give myself options. I wanted to do a dual discipline because I was conscious that business might not be academic enough.
“I built up a paper round business buying papers wholesale. My dad had to go to Smiths and vouch for me”
“Two skills I learned from doing a law degree were learning how to structure an argument in a clear and coherent way and how to process facts. That’s important when you’re doing an IPO – there’s a lot of information, a ton of data and you’ve got maximum 45 minutes to present to an investor. It’s not like it’s an eight-hour meeting – in actual fact, it’s less than 45 minutes to present your case because you have to leave time for questions.
“What is brilliant about Coca-Cola is that it is genuinely a meritocracy. It wasn’t political, it wasn’t about what school you went to, what your accent was. I thrived in that environment because I was competitive and highly motivated. They gave me a red van, kicked me into Brixton, Camberwell and Peckham and told me I had
to build that territory.”
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