While many have declared the arrival of a consumer spending winter and businesses frequently blame poor performance on economic downturns, Meituan's third-quarter 2018 financial report presents a strikingly different picture of China's consumption market. As a platform deeply intertwined with mass consumer behavior, Meituan's financial data provides valuable insights into the trajectory of China's consumer market. Major investment banks including Morgan Stanley, Bank of America Merrill Lynch, and CITIC Securities maintained positive ratings for Meituan following the report's release, signaling strong confidence in the company's growth prospects.
Core Financial Analysis: Growth Amidst Challenges
Meituan's Q3 2018 report revealed total revenue growth of 97.2% year-over-year, surging from 9.7 billion yuan in Q3 2017 to 19.1 billion yuan. While gross profit growth slowed to 35.3% (from 3.4 billion yuan to 4.6 billion yuan) due to expansion into new businesses including Mobike acquisition, the company showed improved cost control with adjusted losses narrowing to 2.5 billion yuan from 3.2 billion yuan in the previous quarter.
Business Segment Breakdown
Meituan operates through three primary segments: food delivery, in-store/destination (including hotels and travel), and new initiatives. The in-store/destination business currently drives gross profit growth, food delivery remains the core strategic operation, while new ventures like Restaurant Management Systems (RMS) and Kuailu Procurement represent future growth opportunities.
In-Store/Destination: The Profit Powerhouse
Revenue from this segment grew 46.8% year-over-year to 4.4 billion yuan, accounting for 23.3% of total revenue. Established in 2012 and formally organized in 2015, this business became a priority after merging with Meituan's platform in 2017. In 2018, Meituan surpassed Ctrip in hotel room nights booked, becoming market leader through precise user demand understanding and effective offline resource integration.
Food Delivery: The Stable Foundation
Despite intensified competition following Ele.me's merger with Baidu Takeout and subsequent Alibaba acquisition, Meituan's food delivery showed remarkable resilience:
- Gross Transaction Value (GTV) reached 80 billion yuan (54.4% growth)
- Revenue grew 84.8% to 11.2 billion yuan
- Gross profit surged 287.3% from 478 million yuan to 1.9 billion yuan
As the cornerstone of Meituan's "Food + Platform" strategy, food delivery's stability supports overall growth. Since 2016, merchant-facing B2B systems have enhanced service capabilities and bargaining power while digitally empowering restaurants to upgrade operations.
New Ventures: Future Growth Engines
New initiatives including RMS and Kuailu Procurement represent strategic opportunities with:
- GTV growing from 9 billion yuan to 16.4 billion yuan
- Revenue exploding 400% from 600 million yuan to 3.5 billion yuan
"Food + Platform" Strategy: Ecosystem Construction
Founder Wang Xing emphasized this core strategy during Meituan's IPO, focusing on "eating" as the central element while building a multi-layered technology service platform spanning demand to supply sides. The strategy encompasses:
Food-Centric Approach: Deepening Restaurant Industry Integration
Food-related services form Meituan's foundation, including consumer-facing products (delivery, group buying) and backend systems (RMS, supply chain solutions) that demonstrate comprehensive industry understanding.
Local Services Platform: Expanding Service Categories
Beyond food, Meituan leverages user traffic and technology to rapidly enter new verticals, mirroring Alibaba's "middle platform" strategy of using core infrastructure to expand into adjacent businesses.
Competitive Landscape: Direct Confrontation With Alibaba
Meituan and Alibaba now compete across multiple fronts including food delivery (Ele.me), local services (Koubei), travel (Fliggy), ticketing (Taopiaopiao), and retail (Hema). In October 2018, Alibaba merged Ele.me and Koubei into a local services company, signaling escalating competition.
Organizational Development: Building Competitive Advantage
Post-IPO, Wang Xing prioritized organizational capacity building, focusing on structural adjustments to enhance capabilities, clarify direction, strengthen teams, and maintain market leadership—reflecting long-term strategic thinking.
Innovation and Decision-Making: Business Expansion Strategy
Meituan evaluates dozens of new ventures annually through rapid experimentation, quickly scaling promising opportunities while abandoning underperformers. Following October 2018 restructuring, new businesses encompass transportation (ride-hailing, bike-sharing), instant delivery, retail (Xiaoxiang Fresh), and B2B solutions (RMS, supply chain).
RMS Relaunch: Strategic Adaptation
Originally piloted alongside food delivery in 2013, RMS was deprioritized when food delivery showed superior returns. After market conditions evolved, Meituan reassessed in 2016 and relaunched RMS in 2017, demonstrating market responsiveness.
Technology-Driven Future
Meituan's 95.1% year-over-year increase in R&D spending (2 billion yuan in Q3 2018) signals transition toward technology-driven operations. As one of China's top three algorithm-driven companies (with Toutiao and Didi), Meituan's technical capabilities may increasingly shape its future direction.