When a sluggish consumer economy hits food delivery ...
The war between Douyin and Meituan, which we reported on at Tech Buzz China, might have cooled down. But Meituan has new worries.
Now that's one of the more serious signs of a slow consumer economy in China: Meituan Takeaway (Waimai) is shifting its targets from GMV to order volume because a decline in the average order value has resulted in a 10-20% drop in GMV. Beijing, Shanghai, Guangzhou and Shenzhen, among the most metropolitan places in China, have all shown negative growth.
Merchants' same-store performances have also declined. Daily order volume and average spending of several national fast-food chain brands with thousands of stores have declined by 10% to 20%.
Consumers are more price-sensitive and less willing to spend more than 30 RMB per person on takeaway. To cope with the declining willingness to spend, Meituan has been pushing cheaper (10-15 RMB), simple meals in their 'Pinhaofan' channel. In 2023, Meituan expanded Pinhaofan from 2nd and 3rd-tier to 1st-tier cities. This service has reached 120 million users (almost a quarter of Meituan's food delivery users) and 6 million daily orders in Q2 (out of a total of 58 million daily orders). Pinhaofan will account for half of Meituan's expected growth in food delivery orders of 10-12% in 2024.
Merchants on Pinhaofan used to be primarily small and medium-sized businesses, but now some big brands that are the primary source of advertising income in Meituan have reduced their ad budgets and also joined Pinhaofan. In Pinhaofan, merchants need to bid the lowest prices for a delivery area of a few kilometres to get traffic in the app (the Pinduoduo-sation of Meituan).
Meituan has also launched consumer subsidies to stimulate market demand and has also become more involved in the supply chain. It helped 150 brand chains set up 1000 satellite stores (a sort of 'dark kitchen') for delivery, and launched self-operated multi-merchant pick-up stores where Meituan sells on behalf of the merchants (the Temu-sation of catering).
Source: LatePost
