The latest milestone achieved by KeeTa shows how Meituan’s first foray outside mainland China has started to pay off, as the company last year saw local consumption recover in its home market amid increased competition.
A KeeTa delivery rider promotes the Meituan-owned food delivery platform in the streets of Mong Kok during the app’s local launch on May 22, 2023. Photo: SCMP
KeeTa, however, still lagged incumbent Foodpanda by value of delivery orders in Hong Kong the past quarter, according to Measurable AI.
Foodpanda, owned by Berlin-based Delivery Hero, commanded 47 per cent of Hong Kong’s market by gross merchandise value of all pickup and delivery orders in the first quarter, while KeeTa accounted for 27 per cent in the same period.
Meituan’s Hong Kong-listed shares on Tuesday closed 3.99 per cent lower to HK$115.50.
Meituan co-founder, chairman and chief executive Wang Xing speaks during a panel discussion at the Bloomberg New Economy Forum in Beijing on November 22, 2019. Photo: Bloomberg
In February, Meituan co-founder, chairman and chief executive Wang Xing said that he would take over control of the company’s overseas business as part of an organisational overhaul.
Meituan is “very actively evaluating opportunities in other markets” after seeing “positive results” in Hong Kong, Wang said in a recent company earnings call with investors.
Meituan’s foray into Riyadh will pit KeeTa against local rivals including Jahez International, Delivery Hero’s Talabat and HungerStation and Uber Technologies-backed Careem. The move comes as Saudi Arabia, already the region’s biggest economy, devises plans to invest trillions of dollars to become a tourism and commercial hub.
The next stop for Meituan’s KeeTa food-delivery platform is Riyadh, the capital of Saudi Arabia and one of the wealthiest cities in the Middle East. Photo: KeeTa
That expansion, however, is not expected to be “materially incremental” to Meituan’s current valuation because of long-term uncertainty, the firm’s market positioning in Saudi Arabia and the near-term losses this overseas foray might incur, Morningstar senior equity analyst Kai Wang wrote in a research note on April 26.
What helped Meituan “attain the lion’s share” of mainland China’s food-delivery market was exclusive contracts that prevented some restaurants from onboarding with other delivery platforms, according to Wang. That practice has now been prohibited by China’s anti-monopoly rules, which puts more pressure on the margins of Meituan’s food-delivery operation, the Morningstar analyst said.
Meituan is likely to operate from “a laggard position” in Riyadh, according to Wang. “We believe it will be difficult for Meituan to unseat incumbents already familiar with the market and that an incentive-driven strategy will be short-lived until the vouchers stop due to cash burn.”
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