China’s food delivery giant, Meituan, overcomes economic challenges with record-breaking Q1 growth

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Amid a volatile economic landscape, Meituan has emerged as a beacon of resilience and growth. The on-demand services titan reported a stunning 25% year-on-year surge in first-quarter revenue, outpacing even the most optimistic forecasts. Revenue for the Beijing-based company soared to 73.3 billion yuan (US$10.1 billion), a significant jump from the previous year’s 58.6 billion yuan. This impressive performance was driven largely by a 28.1% increase in on-demand delivery transactions, which reached 5.5 million. Beating analysts’ predictions, Meituan’s stellar quarter stands as a testament to its robust business model and strategic market maneuvers.

Profitability also painted a rosy picture, with the company posting a 60% increase in net profit, reaching 5.4 billion yuan. During an earnings call, Meituan’s co-founder and CEO, Wang Xing, attributed this success to effectively capturing the industry rebound and invigorating local consumption. Despite this strong financial showing, the company’s shares in Hong Kong remained largely unchanged at HK$112.70 prior to the earnings announcement. This stability in stock performance suggests investor confidence in Meituan’s long-term strategies, even as the broader market grapples with a shaky post-pandemic recovery.

Looking beyond its home turf, Meituan is setting its sights on international expansion. Wang Xing revealed plans to introduce Meituan’s services to global audiences, with initial forays into Southeast Asia and the Middle East. Notably, the company plans to launch its international food-delivery platform in Riyadh, Saudi Arabia, following the successful debut of its KeeTa service in Hong Kong last year. This strategic move underscores Meituan’s ambition to diversify its revenue streams and establish a global footprint, leveraging its expertise in local commerce to tap into new markets.

Meituan’s aggressive growth strategies are not without their challenges. To fend off fierce competition from rivals like ByteDance-owned Douyin and Alibaba’s, Meituan has ramped up its marketing efforts and subsidized orders to boost customer engagement. The company’s innovative Pin Hao Fan group-buying service expanded to more cities, achieving record daily order volumes, while campaigns like Shen Qiang Shou introduced discounted meals from popular chains. However, these aggressive tactics have led to lower average order values. Despite these hurdles, Meituan’s new initiatives, such as its online supermarket and community group-buying services, have significantly reduced operating losses, signaling a promising trajectory for future growth.

(Source: Tipranks | Market Screener | XM | The Business Times)

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