Meituan, the renowned Chinese food delivery and travel platform, experienced a remarkable 27% surge in revenue, surpassing expectations, due to the gradual stabilization of the Chinese economy and increased demand for meal delivery and travel services nationwide.
The company’s core commerce business witnessed more than a doubling of operating profit, while the number of room nights booked during the crucial Lunar New Year holiday travel season saw a remarkable increase of over 40%. These factors contributed to Meituan’s impressive performance, with sales reaching 58.6 billion yuan ($8.3 billion) for the quarter ending in March, exceeding the average projected figure of 57.5 billion yuan.
Similar to its peers in the internet industry, Meituan benefitted from a surge in consumer spending on meals, travel, and event tickets following China’s reopening after the Covid-19 pandemic. However, the recovery has been uneven, with certain sectors of the economy falling short of the initial expectations for a robust resurgence. Recent official data revealed that retail sales grew at a slower pace than anticipated in April.
“Since the beginning of this year, the food delivery industry has continued to recover,” stated Meituan in an official statement.
Nevertheless, Meituan faces challenges from new competitors entering its market, such as ByteDance Ltd., the company behind Douyin, also known as TikTok in China. ByteDance is currently testing a grocery and food delivery service in Beijing, Shanghai, and Chengdu, aiming to gain ground against both Meituan and Alibaba Group Holding Ltd.’s Ele.me, the second-largest player in the Chinese food delivery market.
To maintain its leading position in the Chinese food industry, Meituan is countering its rivals by aggressively hiring new talent. The company reported a net income of 3.36 billion yuan, surpassing expectations of a loss of 210.4 million yuan. This achievement was partly driven by a one-time gain of over 1.3 billion yuan from treasury investments.
Furthermore, Meituan recently expanded its reach beyond mainland China by launching a sister app in Hong Kong. This marks the company’s first international expansion, and it aims to compete with established players like Deliveroo Pic and Delivery Hero SE’s Foodpanda. Meituan plans to adopt its well-known strategy of offering substantial subsidies to attract both users and delivery personnel. In Hong Kong, it will distribute HK$1 billion worth of user incentives, providing each newly registered user with a coupon package valued at HK$300.
Looking ahead, Meituan’s long-term success will depend on its ability to navigate shifts in demand in a post-pandemic market, as well as its performance in new business areas and overseas expansion. Additionally, the company faces the challenge of Tencent Holdings Ltd., a long-time investor, gradually reducing its shareholding in Meituan.