Meituan becomes No 2 Hong Kong food service months after debut

BLOOMBERG

Meituan has become Hong Kong’s second-largest food delivery platform since debuting in the city last May, a sign that splashy subsidies are boosting the company’s first major foray outside mainland China.
The internet firm’s sister app “KeeTa” accounted for 37% of the local food delivery market in December, according to data from Measurable AI, a Hong Kong-based firm that tracks business receipts. That trails Delivery Hero SE’s Foodpanda at 42% but surpassed Deliveroo Plc’s 20% despite a phased rollout that still doesn’t cover the entire territory.
Meituan hired aggressively for its launch in Hong Kong, a trial run for the company’s attempt to take its services outside the home market that it already dominates. KeeTa — a nod to the fast-moving cheetah — has relied on a familiar subsidy-heavy strategy to draw in users and delivery people. The platform expanded rapidly over the past year, starting from the neighbourhood of Mong Kok in the heart of the city before covering the most affluent districts on Hong Kong Island.
In overall market share, KeeTa still lagged behind its competitors last month at 21%, compared to Deliveroo at 25% and Foodpanda’s 54%. But that discrepancy comes from pickup and grocery orders, which KeeTa doesn’t offer. Those services comprised more than a third of total orders for its two rivals.
Like other Chinese tech companies, Meituan has explored overseas expansion, particularly given a weak rebound in Chinese consumption after years of strict Covid controls.
Meituan, which grew into China’s meal delivery leader with backing from Tencent Holdings Ltd, had held talks with Delivery Hero about potentially acquiring the Foodpanda business in Southeast Asia.
While the KeeTa app has grown rapidly, the average value of its orders remains considerably lower, said Charlie Sheng, co-founder of Measurable AI. In December, delivery orders on Keeta averaged only HK$102, compared to Foodpanda at HK$168 per order and Deliveroo’s HK$185.
More than 1.3 million users in Hong Kong have downloaded the app, with more than 10,000 new downloads every day, a KeeTa spokesperson said. The platform expects to reach an order volume growth rate of more than 30%, and “maintain stable and rapid growth for a long period of time.”
Kai Wang, a senior equity analyst for Morningstar Asia, said KeeTa is not expected to move the needle for Meituan’s overall revenue given the small size of the local market. At the same time, subsidies aimed at acquiring users in Hong Kong may incur losses in the short term and may not be sustainable. The company’s shares were down as much as 4.6% in Hong Kong.
“Given that there is considerable competition, as soon as subsidies wane — customers are likely to switch platforms if they can get the food delivery at a cheaper cost somewhere else,” he said. “Meituan has other issues it needs to fix within other divisions before it expands internationally, given that they will have to initially incur heavy cash burn in those other markets due to heavy subsidies.”