Meituan’s quarterly sales beat estimates as China’s appetite for meal take outs remained intact throughout Covid-19 lockdowns

Sales rose to 50.9 billion yuan (US$7.4 billion) during the three months ended June, versus an average projection for 48.6 billion yuan

It logged a net loss of 1.12 billion yuan, the seventh consecutive quarter in the red, but better than estimated as cost cuts kicked in

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A delivery rider for Meituan in Beijing on April 27, 2021. Photo: AFP

Published: 10:28am, 27 Aug 2022

Chinese food delivery titan Meituan reported a better-than-expected 16 per cent increase in quarterly revenue, after appetite for meal takeaway remained largely intact despite an economic downturn and Covid-related disruptions.

Sales rose to 50.9 billion yuan (US$7.4 billion) during the three months ended June, versus an average projection for 48.6 billion yuan. It logged a net loss of 1.12 billion yuan, the seventh consecutive quarter in the red, but better than estimated as cost cuts kicked in.

Meituan is one of the few Chinese internet companies that managed to expand at a double-digit pace despite macroeconomic headwinds. The economic fallout from Covid-induced lockdowns in cities like Shanghai dealt a serious blow to larger firms including Alibaba Group Holding and Tencent Holdings, both of which reported their first-ever sales contractions since going public nearly a decade ago.

Meituan could have lifted second-quarter food delivery operating margin from a year earlier even as the growth rate of transactions narrows to a historical low of less than 3 per cent vs. gains of 16-17 per cent in the prior six months.

A staff member takes a bag of ordered food from a Meituan delivery worker during a media event of Starbucks launching a partnership with Meituan in Beijing on January 18, 2022. Photo: Reuters.

The company probably cut spending on promotions and user incentives, which make up more than 55 per cent of total selling plus marketing expenses, during Covid-19 flare-ups and lockdowns in mainland China.