Shares in Just Eat sank to the bottom of the FTSE 100 on Wednesday following news that rival Deliveroo is about to muscle in on its turf.
Announcing a shift in strategy, Deliveroo said a day earlier that restaurants will now be able to join its platform and have the choice of fulfilling orders using their own drivers.
Previously, eateries had to use Deliveroo’s army of drivers.
The move will pit it directly against Just Eat, which only offers a platform for restaurants to sell and deliver food with their own drivers.
Shares in Just Eat tumbled more than 8% in morning trade to leave the firm rooted at the bottom of the FTSE 100 as investors were spooked by the news.
Connor Campbell, analyst at SpreadEx, said: “The fast food service has been shaken by reports that Deliveroo intends to add another 5,000 UK restaurants by the end of the year, while allowing said restaurants to keep their own drivers if they so wish.
“It’s a model used by Just Eat, and means Deliveroo’s army of mopeds is potentially set to mount a significant challenge to the FTSE 100 firm’s grip on the food delivery sector.”
Deliveroo’s new initiative, dubbed Marketplace+, means that, from July, the group will have 5,000 extra outlets on its platform.
Deliveroo currently works with around 10,000 restaurants, and said Marketplace+ will help smaller local outlets extend their delivery offer.
It will also enable the firm to expand into 50 new towns and cities, gaining access to six million new customers.