Author | Liu Baodan From performance to market confidence, Meituan is walking out of a three-year low point, but Wang Xing is not stopping there - he has even bigger plans. Going overseas has become a must for Chinese companies. Meituan, which has been warming up for 8 years, has finally made up its mind to put going overseas on the agenda. Recently, Meituan began recruiting senior engineers for international silver enterprise direct connection. After the model was successful in the Hong Kong market, Meituan officially kicked off its overseas expansion, accelerated recruitment and put the first stop of the overseas expansion in Saudi Arabia in the Middle East. Going overseas is a critical turning point, which means that after more than ten years of capacity accumulation, Meituan has to export its local life capabilities to the world, which is as significant as the replication of TikTok by ByteDance. In the wave of Internet companies going overseas, Meituan went overseas later because local life patterns are more important than social, e-commerce and other industries. However, Wang Xing must make this move. Against the background of intensified domestic competition and the shrinking of community group buying, he must find a new growth story. On his entrepreneurial journey, Wang Xing is still determined to create a new business legend in this global adventure. A must-have question. Meituan has fought a beautiful takeaway battle in Hong Kong. On May 6, Measurable AI, a market research firm, released the latest data showing that by March 2024, according to the number of orders, KeeTa, the takeaway business of Meituan in Hong Kong, has a market share of 44%, rising to the largest takeaway platform in Hong Kong. However, Hong Kong is only a stopover for Meituan's overseas expansion, and Meituan has set its real meaning of going overseas in Saudi Arabia. Wall Street news learned that Meituan has been recruiting people around the direction of going overseas in the past two months. The positions include engineers, overseas human resources and operation experts, international payment and transaction product managers, mainly responsible for payments, employee management and related products in overseas markets. More importantly, the recruitment of local talents. More than a month ago, Meituan posted relevant recruitment information on LinkedIn and the Middle East recruitment platform Baye.com, with Riyadh, the capital of Saudi Arabia, as the place of work. From the city selection, Meituan did not choose the United States with a larger market space, nor did it choose Southeast Asia where culture and food are more similar, but chose Saudi Arabia. It can be seen that Meituan's overseas expansion strategy still has a heavy experimental component and is more cautious. Wang Xing is not fighting an unprepared battle. For this overseas expansion, Meituan has been planning for many years. As early as 2016, Wang Xing began to consider the issue of going overseas and visited Silicon Valley, Berlin, Israel, Jakarta and other places. In 2017, Meituan officially laid out overseas accommodation business, first connecting hotels in nearly 100 countries overseas to the Meituan application. At that time, the domestic and foreign takeaway wars were in full swing, and with Meituan's listing in Hong Kong in 2018, Wang Xing's overseas strategy was forced to be shelved. Since then, Meituan has also made a series of international investments, including Swiggy in India, Gojek in Indonesia, and Opay in Nigeria, involving food, taxis, payments and other fields, to prepare for going overseas. Along with the frequent news reports of Meituan's victory in Hong Kong, Meituan's overseas plan was finally brought to an unprecedented strategic height in 2024, and Wang Xing once again rushed to the forefront. In February, Meituan put the home business group, the in-store business group and other businesses into the core local business sector, and appointed Wang Putong as CEO, while Wang Xing personally took charge of overseas business, which ensured the landing of the overseas expansion strategy in the organizational structure. In fact, before the confirmation of the overseas expansion strategy, Wang Xing personally visited the Middle East last May and met with members of the Saudi royal family, laying the foundation for Meituan's layout in Saudi Arabia.

In today's weather is good. Today's weather is good.

After Douyin entered the local life market with its traffic advantage, Meituan once appeared to be very passive, and its market value even fell by 2 trillion yuan. Now, Meituan finally starts to take the initiative.

Recently, Meituan held the theme of "Crossing the Cycle" for the 2024 Catering Industry Conference, clearly stating that it wants to help businesses with full-scenario operation. Wang Puzhong, CEO of Meituan's core local business, said that the catering industry is experiencing an unprecedented transformation and officially entering the era of deep cultivation. All brands and formats need to be online + offline, dine-in + takeout.

This is the first public appearance of Meituan's core local business department after its establishment. Essentially, after the establishment of the new department, the home delivery business has basically bid farewell to solo operations and has become part of Meituan's overall local business strategy, together with dine-in and other services.

In recent years, the local life market has become increasingly turbulent. After Douyin successfully entered the online group buying business, Meituan, as the king of local life, faced external doubts and began to fight back through a series of organizational adjustments to regain its fighting spirit. Full-scenario operation is more like a challenge, indicating that Meituan has shifted from a defensive stance to taking the initiative.

If we say that Douyin successfully entered the local life market in the first round of the battle, then this time, it's Meituan's turn to prove itself.

A game of chess.

As the core business, Meituan's local business is undergoing unprecedented changes.

Meituan positions itself as a helper for restaurant merchants. Wang Putzhong said, "We serve consumers, for consumers it's takeaway, group buying, public reviews, finding restaurants, reading reviews, and for merchants, it's about helping them manage the entire operation, that's our positioning."

According to Meituan's data, there are approximately 0.275 billion people using Meituan to meet their dining needs every week. In order to help merchants operate better, the merged local business department focuses on business synergy, which is the core manifestation of overall business management.

First, in terms of operations, Meituan is trying to connect dining with other businesses such as spas, massages, movie tickets, and bikes; in terms of models, Meituan is taking an overall approach to takeaway, dine-in, and on-site dining. This is also the reason behind Meituan's integration of on-site and home delivery departments in February, which is a strategic adjustment from the overall industry perspective.

Second, at the data level, Meituan is working to better integrate products and data, combining a lot of data together. For merchants, brands, and stores, the customer base on both sides will be thoroughly interconnected, and operations will be carried out on a "person" basis. Wang Putzhong predicts that by next year at this event, the product will already be launched.

From the perspective of overall business management, Meituan's home delivery and dine-in services also have new strategies.

Dine-in business is the main battleground for local life competition, and the outside world is also paying attention to every move Meituan makes. During the event, Wei Wei, Vice President of Meituan and General Manager of Meituan's dine-in restaurant business unit, publicly presented the "Comprehensive Picture of Dine-in Restaurant Operations," breaking down new business ideas from the perspective of operation infrastructure, marketing growth, and data assets.

Operation infrastructure refers to Meituan and Dianping as two major platforms, dining and takeout as two main scenarios, must-eat list and black pearl as two major rankings, these are the basic operations of businesses; the core of marketing growth is the "321 growth model", 3 live broadcast platforms including Meituan, Kuaishou, and Video Number, 2 distribution channels are mainly the distribution channels of the Meituan Alliance and special price groups, 1 marketing cycle refers to bridging the marketing calendars of both parties, the core is mainly achieved through marketing to achieve performance growth.

Data assets are very important accumulation for Meituan itself. In response to the 'channel isolation' in the traditional retail industry, Meituan uses the 'super membership' to connect. Whether staying in hotels, dining in restaurants, ordering takeout, or engaging in leisure and entertainment, users can use the 'super membership' universally, essentially connecting user groups and thereby expanding marketing correspondingly.

In terms of delivery, as a lifestyle, it has an increasingly significant influence on consumers. In the first half of this year, the annual active users of Meituan's delivery service have exceeded 0.5 billion. In other words, nearly half of the internet users are delivery users. For example, on August 7th, the peak daily orders for Meituan's delivery service exceeded 98 million, approaching 1 billion.

Xue Bing, general manager of Meituan's delivery service business unit, stated that dining and delivery share the same physical space, with significantly different rent costs and user demand. The operation and management are also different. To address this, Meituan has proposed the 'satellite store' model, opening up new solutions from the supply side.

The 'satellite store' is like a small store orbiting around the main store, similar to a forward warehouse, and can cover more users around the main store. As of now, more than 150 restaurant brands have cumulatively opened more than 1,000 satellite stores based on the operations of the dining stores. Xue Bing stated that brand satellite stores have become a new store type for delivery growth, quickly lighting up more cities at a pace of 100 stores per week.

Currently, the dining market is undergoing a period of change, with a significant decrease in the average customer spending and an increasing difficulty in the operation of dining enterprises. In response, Meituan announced the upgrade of the 'Prosperity Plan' to improve the operational effectiveness of the enterprises. For example, Meituan has upgraded the 'Brand Satellite Store' ten-thousand-store commission rebate plan, providing a commission refund of 6 to 12 months for restaurant merchants.

This is the first complete disclosure of its own operating strategy by Meituan's local business. With Meituan taking the initiative, the competition in the local life market will also usher in a new round of escalation.

Future

Before TikTok entered the local life, Meituan had stably held the throne of the king of local life for many years. The delivery riders built a strong moat for Meituan, and at its peak, Meituan's market cap reached as high as 2.4 trillion, making it the third largest internet company in China in terms of market cap for a long time.

However, all of this was broken by TikTok. Since TikTok began to focus on local life, the in-store business, which contributed core profits to Meituan, has been severely damaged. Meituan also appeared very weak in its counterattack, leading the capital market to reassess Meituan's value. On January 17, Meituan fell below its IPO price of HK$69, and its market cap has plummeted by 2.08 trillion RMB from its peak.

This undoubtedly dealt a huge blow to Meituan, and it also made Meituan realize its problems and begin to carry out drastic reforms.

In February, Meituan CEO Wang Xing announced a new organizational restructuring in an internal email. The main adjustments include the integration of the home business group, in-store business group, Meituan platform, and basic R&D, all of which now report to Wang Puzhong, the senior vice president of Meituan. Two months later, this department was collectively referred to as the core local business, with Wang Puzhong appointed as CEO.

This is the first large-scale adjustment of organization and personnel by Meituan in three years, and the previously independent home and in-store businesses have now joined forces. A source close to Meituan said that group buying and food delivery have a high degree of fit on the supply side, and they satisfy similar consumer needs in different fulfillment ways, so this integration was also expected.

From the results, Meituan's adjustment has already proven effective. On August 28, Meituan announced its second quarter report for 2024, achieving a revenue of 82.25 billion yuan and an adjusted net profit of 13.6 billion yuan, exceeding market expectations and gaining recognition from the capital market.

In particular, the profitability of Meituan's core local business has significantly increased. According to the financial report, in the second quarter, the core local business revenue of Meituan increased by 18.5% year-on-year to 60.7 billion yuan, with an operating profit of 15.234 billion yuan, a year-on-year increase of 36.8%, and an operating profit margin increase of 3.3 percentage points to 25.1%.

This means that Meituan has emerged from the darkest moments brought by TikTok and regained the initiative for development.

The dining industry conference has sent an important signal, with the integration of online and offline services in product supply, user behavior, and merchant operations, Meituan is ushering in its 2.0 version.

This is a significant turning point, representing Meituan's transition from defense to offense.

The local life market has undergone significant changes. Since the entry of platforms like Douyin (TikTok), both content platforms like Kwai (Kuaishou) and Xiaohongshu (RED) and e-commerce platforms like JD.com and Alibaba have begun to focus on the local life market, forming a siege against Meituan.

In the past decade, Meituan has successfully emerged as the king of local life, escaping from the fierce battles of group buying and food delivery. Now, Meituan needs to prove once again whether it has the ability to defend its throne.

A new round of warfare has begun in the local life market.