Food delivery giant Meituan returns to profit on double digit revenue growth - P...

Food delivery giant Meituan returns to profit on double digit revenue growth

Food delivery giant Meituan returns to profit on double digit revenue growth

14 hours ago

Chinese food delivery and on-demand services giant Meituan returned to net profit in the first quarter on double digit revenue growth, as demand recovered after China’s reopening from Covid-19 restrictions.

Meituan, whose app provides services including bike-sharing, ticket-booking and maps, reported a total revenue of 58.6 billion yuan for the first quarter ended march, up 26.7 percent from 46.3 billion yuan a year earlier.

Meanwhile, Meituan returned to a net profit of 3.36 billion yuan from a net loss of 5.7 billion yuan a year ago, driven by cost-cutting efforts, such as the restructuring of its ride-hailing units.

On a conference call with investors, Meituan CEO Wang Xing stated that the company will keep investing in new technologies to pursue future development, with autonomous delivery and AI being of special importance.

In addition, the company is expanding into Hong Kong, with its food delivery brand called KeeTa for the city.

Meituan faces fierce competition from local players like Foodpanda and Deliveroo. In an effort to entice users, it has offered incentives and discounts.

The brand, which is Meituan's first venture outside of mainland China, may serve as a springboard for future globalization, according to Wang in March.

Meituan, which has 91,932 employees as of the end of 2022, wants to increase that number by 10,000 this year in order to compete with its rivals, which is contrary to a trend of industry layoffs. This raises more questions about the company's rising expense structure.

With a 69% market share in China's $1 trillion delivery sector, Meituan is still the largest platform. However, Meituan ‘s food delivery service is facing an increased challenge from Douyin, TikTok’s domestic sibling app in the domestic market.

Douyin has been recruiting local merchants and partnering with major courier services in the nation, including JD.com's Dada and SF Express's SFTC, both are intra-city, on-demand delivery services.

In recent months, Meituan has made inroads into Douyin's bastion of live-streamed and short-form video. Pilot projects have been developed in Beijing and Shenzhen that permit business owners to leverage video content on Meituan to drive traffic to their desired products.

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