Just add Just Eat

But the biggest - and best - surprise was the 1 per cent increase in restaurant commission rates to 13 per cent, which was not expected until later this year. Following the update, analysts upped forecasts for the current year in line with improved guidance from management. Revenues and cash profits are now expected to come in at £358m and £100m-£104m respectively, which represents increases of 2 per cent and 4 per cent. While the shares' rating may be high, as the group rides the upgrade cycle we reckon it is worth getting into this retail-leisure-technology hybrid sooner rather than later.

Diners want three things, says finance chief Mike Wroe: convenience, greater choice and a degree of control. Providing customers with this exact range of services helped the platform record 2,500 restaurant orders per minute at peak times in 2015. Into the current year, UK margins are still growing, having increased from 40.2 per cent to 45.8 per cent last year. And given the group's limited overheads and the minimal investment needed to support its ongoing businesses, its operations should continue to throw off cash. According to forecasts from broker Investec, after generating free cash flow per share of 10.8p in 2015 compared with underlying EPS of 6.4p, free cash flow should rise to 14.8p this year and then 18.2p in 2017, well ahead of the broker's EPS predictions (see table).

Just Eat - now famous for its singing television adverts - isn't just a UK-focused business, although it does generate 69 per cent of sales and 91 per cent of profit on home soil, where it achieved 49 per cent top-line growth last year. The company's international operations are split between established and developing markets, and are another key driver of revenue growth. Last year, the group reported sales growth across all these markets, including Denmark, Australia, France and Switzerland. The Danish business, which had previously been a cause for concern in the established markets division, continued to see order growth and a higher cash profit margin in the opening quarter of 2016, too.

However, what remains important for Just Eat in any of these territories is market share. In short, they need to be the dominant operator in the space. The business currently operates outposts in Benelux and Canada, but neither are turning a profit. While it's still early days in Canada, bosses aren't shying away from the fact that the Benelux business might have a finite lifespan. It'll be a year of "tough decisions" there, according to management, as they cut costs and centralise staff operations in an attempt to break even.

Crucially, Mr Wroe says the group doesn't need to operate in any more than the 15 countries it already does to increase sales. The possibility of 'Brexit' shouldn't be an issue either given that the business model isn't based on exporting goods. There's the strong possibility that further acquisitions could build up the company's market position abroad too, rather than a green field approach against incumbent rivals. The company did this in Ireland, snapping up smaller rival Nifty Nosh last November and made the substantial acquisition of Menulog in Australia last June. In all, Just Eat's six acquisitions in 2015 cost it just north of £450m and since the year end it has spent £95m on four more businesses.

For those concerned about the growing level of competition in the market, Mr Wroe has some interesting statistics at hand. Hungry House is probably Just Eat's best-known UK rival, but that company actually started life roughly one month before Just Eat in 2006. Just Eat is now approximately 10 to 12 times larger than Hungry House. Similarly Mr Wroe isn't overly concerned about the threat posed by retail giant Amazon (US:AMZ). Its ambitions appear limited to the logistics of fresh food delivery rather than the holistic online takeaway ordering service available with Just Eat.