This is an English adaptation of a FoodBud historical article originally published on October 6, 2022.
FoodBud’s reason for tracking companies is not only to record and share information, but also to learn from others’ operating systems and bring those lessons back into its own work.
Meituan is worth discussing for two reasons: the pace of its data growth, and the execution speed visible in product changes. The author began paying closer attention after Chen Liang first disclosed Meituan’s hotel-and-travel data publicly, and later after an exchange with “Old K” in which some app-experience issues were raised and then appeared to be improved.
When the author spoke with Old K, Meituan and Dianping had only recently merged. The company was still externally referred to as Xinmeida, then later Meituan-Dianping, before gradually shifting toward simply Meituan. That naming change also reflected a broader process of absorbing Dianping.
The Meituan-Dianping merger and the gradual “de-Dianping” process strengthened Meituan’s monopoly-like position in its market. Baidu’s food-delivery business largely disappeared, leaving Ele.me, which had sold itself to Alibaba, as the main large-scale rival. From that perspective, antitrust penalties were unsurprising.
China’s travel market offers a comparison. Ctrip also holds a relatively dominant position. On the front end, users still see Qunar, Tongcheng-Elong, Fliggy, and Meituan Hotel & Travel, but Qunar and Tongcheng-Elong are closely tied to Ctrip in practice.
Qunar merged with Ctrip, after which founder CC and his team exited. Qunar’s current CEO Chen Gang previously led Ctrip’s train-ticket business. Tongcheng-Elong came from the merger of Elong and Tongcheng’s online business. After Ctrip invested in Elong, Elong’s CEO was Jiang Hao, previously head of Ctrip’s wireless business unit; after Elong merged with Tongcheng’s online business, Jiang Hao returned to Ctrip. Tongcheng-Elong also purchases some hotel back-end resources from Ctrip.
In China’s OTA market, Ctrip is effectively in a relatively monopolistic position. Meituan Hotel & Travel has not made strong progress in high-end hotels, and even after acquiring Kuxun, its air-ticket business did not really take off. But in hotels, especially economy hotels, it is highly competitive, and attraction-ticketing is another meaningful area.
The strategic contrast is useful. After Meituan bought Dianping, it integrated the asset into one company, gradually cleared out smaller players, and built a monopoly-like structure. Ctrip, after repeated acquisitions, allowed front-end brands to remain relatively independent while routing back-end resources through Ctrip. Its relationship with the fund Ocean Link also gave it flexibility around whether some investments and acquisitions needed to be consolidated.
For example, Ctrip invested in India’s largest OTA, MakeMyTrip, and effectively gained control: of 10 board seats, Ctrip held four, with more than 40% of voting rights. Ocean Link also participated in the investment.
For a market that has been consolidated through acquisition, keeping visible competitors on the front end while coordinating resources at the back end may be the more flexible strategy. Using an outside fund can further improve flexibility depending on whether consolidation is desirable.
In 2018, Meituan was fighting its ride-hailing battle in Nanjing, then launched in Shanghai. The author happened to be in Shanghai on launch day, used Meituan Taxi for two days, invited several friends to use it, and earned some cash rewards for new-user referrals. On a later Shanghai trip, that incentive had disappeared.
The following week, the author visited Beijing and met Old K at Meituan. The author had planned to offer suggestions on ride-hailing, but Old K said he was not responsible for that business, so the discussion did not continue.
At the time, the author was already watching ride-hailing aggregation. Geely had launched Cao Cao Mobility, showing that regional supply-side players could become strong in specific markets. Amap was also experimenting with ride-hailing aggregation. Its Shanghai experience was poor then, though it has improved substantially through iteration.
For Meituan, directly recruiting individual drivers and managing them from day one was difficult. The author’s intended suggestion was to open a traffic entry point and let regional players with local driver supply help build the market first, then recruit individual drivers later.
That playbook resembles Ctrip’s usual approach to new businesses: find local suppliers, invite them to build the business together, sometimes even outsource a business line exclusively at the beginning, then later build self-operated capabilities in selected markets. It can be harsh for suppliers, but it is a relatively secure way to open a new business.
The author later became a top-tier Meituan Taxi member, mainly because a new phone could not download Didi, making Meituan the default. Meituan’s membership system also appeared to be improving. Didi’s top-tier membership experience, in the author’s view, made ride-hailing very smooth; the author had previously spent time using Didi enough to reach the highest tier just to understand that experience.
Companies such as Ctrip and Didi have long explored international expansion. Meituan has done much less visible experimentation abroad, instead repeatedly opening new domestic businesses and fighting large battles in markets with clearer certainty.
The author knows people who worked as Dianping agents in Southeast Asia and North America. Its overseas influence was mainly among Chinese users. Restaurants and travel are relatively fragmented markets, which means there are integration opportunities. The author had also sold overseas destination dining vouchers on Meituan-Dianping; sales were acceptable, not large, but gross margin was good.
A friend recently said in a group chat that, globally, Meituan-Dianping was the only food-delivery company to make that business profitable. North America’s Uber Eats, DoorDash, and Grubhub, Southeast Asia’s Grab, and some European delivery platforms had not yet fully figured it out.
This suggests that Chinese companies and talent are strong in this type of business, especially in cost control. Based on comments from friends in Southeast Asia, Grab was still far behind in that respect.
Ctrip’s international expansion again offers a reference point. It first bought traffic through investment and M&A, while its own team focused on supply optimization. Internationally, Ctrip bought MakeMyTrip in India and Skyscanner in Europe. In North America, it had talked with TripAdvisor, but U.S.-China relations, the pandemic, and other factors made progress difficult. It also had discussions with European OTAs, but those ran into the 2020 pandemic.
Ctrip also made supply-chain moves, though their impact remains uncertain. In North America, it bought three local ground-service agencies: two on the east and west coasts, plus the online ground-service company ToursForFun.
Booking Group had previously invested in Meituan, Didi, and Ctrip, and also invested in Grab in Southeast Asia. The logic was to buy traffic in growth markets. The author views that as a strong strategy and considers Booking Group’s current CEO highly capable.
Recently, Booking Group’s OpenTable made a strategic investment in inline to expand in Asia-Pacific. In the restaurant market, the author believes no company in Asia-Pacific is stronger than Meituan. It is therefore somewhat unfortunate that Meituan has shown few visible overseas moves to study.
The author recently spoke with a friend building a restaurant supply-chain business in North America. The company operates in Canada in a business similar to Sysco, but uses a Costco-like model. It started with packaging materials, then moved into shelf-stable products, and only in the third step entered cold-chain products. Overall, its cash flow sounded good, and the model differed from China’s market.
Supply-chain businesses are difficult: gross margins are extremely low, and execution is exhausting. But this type of operationally demanding business is something Chinese companies are often good at.
The author had previously tried running a delivery-only restaurant and purchased through Meituan Kuailv. The initial impression was that the unit economics might not work, but the author did not study it in detail and therefore avoids a firm conclusion. Separately, the author has been ordering more prepared foods through Meituan grocery, including frozen bakery products and prepared chicken products. From that angle, Meituan does have an opportunity.
Many delivery restaurants already pay Meituan commission. Improving operating efficiency is a major issue: either machines replace labor, or food becomes more pre-prepared. Some prepared-food companies are already working on this, even building multiple delivery brands to drive their own product sales.
Delivery plus grocery may become the household’s second kitchen. Hema’s model still needs more time to prove itself; at least the Hema store near the author’s home had closed.
From an industry-development perspective, traffic platforms tend to invest and acquire upstream over time in order to capture more of the full-chain profit pool. SaaS and payment companies are basic infrastructure, so every platform needs them. Meituan has built infrastructure in multiple verticals and then collects fees on top of it, which can easily take value from upstream players.
The same logic applies across verticals. In restaurants, there are restaurant groups and back-end supply chains. In hotel and travel, there are hotel groups and back-end supply chains. Meituan’s reputation appears better in hotel and travel, while in restaurants its reputation is poor.
Meituan has invested in Dongcheng in the hotel sector and incubated businesses such as Qingzhu. In restaurants, it has invested in many chain restaurant groups through Meituan Longzhu. But the author has not seen much operational synergy; so far, these look more like investment-return plays, such as the investment in Mixue Bingcheng. How Meituan can integrate its restaurant-sector assets more deeply remains something to watch.
Note: all investment, IPO-related, voting-rights, and forward-looking observations reflect the article’s historical context as of October 6, 2022.