Image source @ Visual China
"The takeaway platform is contributing, my point is not to be a diode that kills people with a stick, but with the barbaric growth of the takeaway platform, there have been many situations affecting social development, such as the treatment of riders, the income of merchants, food safety and quality." On February 20, Mr. Yan "answered" netizens on Zhihu.
The controversy stemmed from the fact that he had posted a takeaway receipt the day before and complained about the platform's commission, which in turn began with the release of a regulatory policy. On February 18, the National Development and Reform Commission and 14 other departments jointly issued a notice on several policies on promoting the recovery and development of difficult industries in the service industry, one of which pointed out that it is required to guide Internet platform enterprises such as takeaway to further reduce the service fee standards of catering merchants and reduce the operating costs of relevant catering enterprises.
Merchant service fees, commonly known as "commissions", are directly related to the income of takeaway platforms, and it is not the first time that they have been discussed, but each time it can still cause a lot of turmoil.
As soon as the latest policy came out, the first thing caused was the shock of the stock market, the Us group Hong Kong stock fell more than 17% in one day, and Ele.me's parent company Alibaba Hong Kong stock and US stock market also fell at the same time. With various rumors and analysis inside and outside the industry, "can the Meituan takeaway commission still be reduced?" "Where is the way out for catering companies?" It has become the most concerned issue.
As early as 2020, a "commission war" pushed the US group takeaway to the cusp. In April of that year, the Guangdong Provincial Catering Association and 32 catering associations in the province issued a "joint negotiation letter" to Meituan Takeaway, proposing to cancel the "exclusive cooperation restrictions" and reduce commissions.
The policy on the platform to reduce commissions has followed suit. Since March 2021, the National Development and Reform Commission and 28 other departments have studied and formulated the Implementation Plan for Accelerating the Cultivation of New Consumption (hereinafter referred to as the "Plan"), which specifically mentions that it is necessary to reduce the cost of platform transactions and payments. Guide online platforms such as takeaway, online ride-hailing, and e-commerce to reasonably optimize the fees such as commissions and commissions for small and medium-sized enterprise merchants and individuals to use the platform to operate, and use technology empowerment to promote cost reduction and efficiency increase for operators within the platform.
In May 2021, in the context of anti-monopoly, the two major takeaway platforms, Meituan and Ele.me, both launched the "rate transparency reform", no longer using the original one-price commission extraction method, but split into technical service fees and performance service fees.
During this year's two sessions, the government work report was mentioned again. On the morning of March 5, the fifth session of the 13th National People's Congress opened in the Great Hall of the People, and Premier Li Keqiang of the State Council made a government work report, which mentioned "guiding large platform enterprises to reduce fees and reduce the burden on small and medium-sized merchants". Compared with last year's proposal, this year, on the basis of "guiding large platform enterprises to reduce fees", a new "reduction of the burden on small and medium-sized merchants" has been added.
The standard of running water, the buckle point of iron
Ms. Li opened a light food store in Shenzhen in April 2020, although this year's takeaway was popular due to the black swan of the epidemic, she did not plan to do takeaway at first, but due to problems such as store location, the business could not be quickly on track in a short period of time, so she decided to go to the US group. "At that time, the dual-platform service rate was 22%."
In the "rate transparency reform" in 2021, the service fee collection standard of meituan is specifically adjusted to: the technical service fee is basically about 6%, and the performance service fee is charged according to the distance and the order price, of which the distance is charged according to each increase of 0.1 kilometers, and the order amount is charged according to each increase of 1 yuan, and at night, the platform will charge each fixed fee according to the time period.
On the surface, the platform commission seems to have decreased, and many merchants have changed their contracts as a result. But according to Ms. Li to the Titanium Media App, this is not the case.
She took out a screenshot of the apprentice's new contract order as an example: a 1 km order, the customer actually paid 22.69 yuan, the technical service fee was 1.12 yuan, the performance service fee was 3.9 yuan, and the service rate of the single order was 22.12%, which was the same as before the "reform"; for a 4 km order, the customer actually paid 21.29 yuan, the technical service fee was still 1.12 yuan, and the performance service fee increased to 6.8 yuan due to long-distance delivery, and the service rate increased to 37.20% accordingly, much higher than before the "reform".
Under the new toll, the left is a 1 km order and the right is a 4 km order
Ms. Shen, who has been doing takeaway for 5 years, also has a deep understanding of this, she told the Titanium Media App that after the service fee split, it did not usher in the imaginary platform loosening, and the order deduction point within 3 kilometers was the same as before, and it was increased 3 kilometers away.
"Because the customer base is relatively far away, I didn't sign a new contract." Ms. Li said that after Meituan was fined for "choosing one of the two" last year, the old contract rate has been reduced to 16%, and an order she showed showed that customers actually paid 22.9 yuan, the platform service fee was 5.5 yuan, and the service rate was 24.02%. This is because the service fee guarantee is 5.5 yuan, that is, the actual order paid within 30 yuan is charged a service fee of 5.5 yuan. "So the profit of small orders is lower."
Under the old charging standard, the actual payment is less than 30 yuan for orders and "large orders"
It is worth noting that in the above three orders, there is a certain difference between the actual amount paid by the customer and the "merchant arrival + service fee". And this is not a case, Mr. Yan, who has been in the industry for 3 years, discovered this phenomenon early on, taking an order he posted as an example: the customer actually paid 20.8 yuan, deducted the platform service fee of 3.61 yuan, and deserved 17.19 yuan, but the actual amount was 13.69 yuan, a difference of 3.5 yuan.
"Merchants also need to share the delivery cost with customers." Ms. Li explained that in addition to the service fee on the surface, the platform actually deducted the service fee, and overall deducted at least 25 to 30 percentage points.
In addition, it seems that the "benefits" given by the platform to consumers are also borne by the merchants. Generally speaking, a member red envelope with a denomination of 5 yuan can be exchanged for a merchant red envelope of 6 yuan or 7 yuan, of which the merchant bears the cost of 3.5 yuan or 4 yuan respectively, and the Meituan subsidies are 2.5 yuan or 3 yuan respectively. However, as we all know, the membership fee is collected by the Meituan side, and each member earns 2.5 yuan in red envelopes. "If you don't attend the event, there will be a lot fewer orders." The above three are homologous.
In this context, can they still make money?
Individual shops have always been supported by takeaways
"Takeaway is far from being unprofitable or even losing money." Ms. Li believes that most of the money that the market cannot make is because of the franchise problem, "franchisees want to deduct points, some collect on materials, and some directly collect on turnover or profits"; some merchants invest too much for platform exposure, which is not proportional to the amount of incoming orders; some people spend some money on platform operation, increasing cost expenditure.
She admits that because she does not have these additional expenses, the average income from takeaway can reach 80% of dine-in. "For example, dine-in food sells for 23 yuan, and the takeaway platform sets the price and full reduction quota, and can receive 18 yuan in the case that the user does not use the red packet, which is equivalent to a 20% discount, which is also the reason why the takeaway price is generally more expensive than dine-in."
It is understood that the average gross profit margin of the light food store that Ms. Li is operating is about 50%, close to the level of 60% announced by the industry. Moreover, at present, the number of takeaway orders has accounted for 80% of the entire store, and 20% of dine-in food is mainly maintained by repeat customers.
Mr. Yan also said that there is no focus on dine-in, so the business has been supported by takeaways. "For a small shop like ours, the cost of maintaining dine-in is very high, and doing takeaway does not need to rent the so-called wang shop, which is equivalent to reducing the rental cost." In addition, dine-in is also full of uncertainty, a pandemic, holidays, and even bad weather can destroy the dine-in business, while takeaway risks are smaller. ”
In fact, not only this kind of individual small shop, many chain catering enterprises have also taken takeaway as an important breakthrough in revenue growth in recent years, especially after the epidemic, takeaway has gradually changed from "optional" to "mandatory", and the single volume has further increased. Aurora Big Data's "2021 Catering Takeaway Merchant Research Report" shows that due to the impact of the epidemic, the overall revenue of the catering industry in 2020 fell by 16.6% year-on-year, but the takeaway revenue increased by 13.3% year-on-year, and the contribution of the takeaway business to the catering revenue also increased significantly.
Taking Haidilao as an example, its takeaway business revenue in 2020 was 718 million yuan, although the proportion of total revenue was still low, only 2.51%, but the year-on-year growth rate reached 60%; while the restaurants under jiumaojiu group only opened takeaway business at the end of February 2020, but from June 30, 2020 to the same period of 2021, Revenue from this business has risen from $219 million to $302 million; in addition, Yum China's digital orders in 2021 have generated sales of more than $7 billion, accounting for 71% of total revenue...
However, from another point of view, the catering industry is suffering from a "cold winter", Haidilao announced the closure of nearly 300 stores in 2021, nearly 200 stores of sipping and feeding, and the new elements of light food net red restaurants have even gone bankrupt... When more and more dine-in food is turned to takeaway, the profits of merchants are indeed thinning. In this regard, Ms. Zhang said, "I still have to rely on myself to operate." ”
On the one hand, it is understood that Ms. Li is operating her own private domain, nearby one kilometer orders will be delivered by themselves, "will not invite people or find a third party, busy when mom and dad will come to help", so that the platform service fee will be lower. On the other hand, it is open source, and the single product is a routine operation, "For example, a cherry tomato and a green vegetable will bring two or three yuan of income, and the cost is only a few cents." ”
Mr. Yan also said bluntly that in order to ensure his own profits, he had to inflate the price. However, he also said that he would consider improving the quality and standard of catering, "so that even if the price is higher than the competitors, it will make customers feel that the extra money is valuable."
But in the final analysis, these measures are all consumer wool, can the platform still make profits?
Commission rate reductions are limited
Meituan started with group buying, in the "Thousand Regiments War" to break out of the siege, sit firmly in the boss position, continue to expand in the O2O field, into the film, hotel, takeaway, travel and community group buying and other subdivisions, the current business is divided into "catering takeaway", "to the store, hotel and tourism", "new business and other" three major plates, of which, catering takeaway is its core basic plate.
Titanium Media App reviewed the Meituan financial report and found that in recent years, the revenue of its catering takeaway business has been climbing steadily, from 38.1431 million yuan in 2018 to 66.265 billion yuan in 2020, accounting for more than 50% of the total revenue; by the third quarter of 2021, the single-quarter revenue was 26.485 billion yuan, an increase of 28% year-on-year, accounting for 54.3% of the total revenue, which can be described as firmly occupying half of the Meituan.
Among them, commission income accounted for the majority, taking the third quarter of 2021 as an example, the commission income from catering takeaway was 23.222 billion yuan, reaching 47.6% of the total revenue of meituan, from the quarter to a total of 4.01 billion takeaway orders, the average commission income per order can be obtained is about 5.8 yuan.
However, the profitability of Meituan takeaway is not very optimistic, in the third quarter of 2021, the net profit of the business was only 876 million, and the net profit margin was only 3.3%, which is equivalent to only two cents per takeaway, which is further reduced compared with 2020 - in 2020, Meituan takeaway created a profit of 2.82 billion yuan, with a net interest rate of about 4.3%.
Where did the money of the US group go? From Meituan's 2020 financial report, it was learned that the cost of catering takeaway riders was as high as 48.692 billion yuan, accounting for 73.48% of Meituan's takeaway revenue, in addition to corporate employee costs, user subsidy expenditures, server operation and maintenance costs, etc., most of which are rigid costs for takeaway business, which is difficult to compress. Moreover, the social security issue of takeaway riders is receiving more and more attention from regulators, and protecting the rights and interests of riders and improving the treatment of riders has been put on the agenda.
Image source: Screenshot of Meituan's 2020 financial report
This means that if Meituan wants to make profits to catering businesses, it can only deduct from 3.3% of the net profit, and it is conceivable that the space for reducing the takeaway commission rate will be very limited. And this is only feasible in the short term, which is probably a drag on the whole in the long run.
Despite this, Meituan responded to the policy call and issued commission preferential measures on March 1, the main contents of which are: for small and medium-sized catering merchants with operational difficulties in high-risk areas of the epidemic, the commission (technical service fee) is halved and capped at 1 yuan per single, which is valid for one month after the unsealing; from March to December 2022, the commission is capped at 5% for other difficult catering merchants who have completed the transparency of the rate; and the rate transparency will be covered nationwide in 2022.
However, from the adjustment object - technical service fee, and the above-mentioned merchant order shows that after Meituan fulfills the new tariff regulations, the performance service fee is the "big head" of the commission, as well as the beneficiary objects and the validity period of the measures, it can be seen that the limited nature of this offer.
Meituan's "money way" in the wine tour?
So, how much impact will this move have on the US group?
According to Tianfeng Securities' calculations, the impact of the bailout measure on the average revenue/OP (operating profit) of Meituan Takeaway in 2022 is 0.09 yuan -0.12 yuan /single, the impact on the company's overall revenue in 2022 is within 1% of the decline, the reduced revenue is 239.6-240 billion yuan, and the impact on the overall operating profit is down 11%-15%.
Tianfeng Securities said that in the long run, with the improvement of the epidemic situation and the recovery of consumption power, the Meituan catering takeaway business will return to the steady growth rhythm, and the profitability of the takeaway business will gradually cash in.
In addition, it is worth noting that Meituan is not only takeaway. Its playing method is high frequency to drive low frequency, that is, takeaway business with high frequency and low profit, in-store wine and tourism business with low frequency and high profit, and new business based on retail.
In the second quarter of 2021, the new business revenue exceeded the hotel's hotel and tourism revenue for the first time, becoming the second largest source of revenue for Meituan, and by the third quarter, the new business revenue continued to increase by more than 14% to 13.723 billion yuan. However, behind the business, there is a loss of up to 10.9 billion, and at present, including community group buying, instant retail, etc., there is no clear timetable for business profitability, and it also needs continuous blood transfusion.
In contrast, the on-site wine and tourism business is the main source of Meituan's current profit and cash flow. In the third quarter of 2021, the revenue of Meituan's in-store wine and tourism business was 8.621 billion yuan, less than one-third of the catering takeaway business, and nearly 40% lower than the new business revenue, but its net profit margin was as high as 43.9%, bringing Meituan a profit of 3.784 billion yuan, more than 4 times that of the catering takeaway business.
It is foreseeable that for a long time in the future, the performance of Meituan's hotel and tourism business will be related to the promotion of the company's entire strategy, so the company's layout in this sector will receive attention.
Specifically, the in-store section can be divided into in-store catering and in-store comprehensive, the latter including leisure/entertainment, beauty/hairdressing, etc. According to the analysis of CITIC Construction Investment Securities, although under the general trend of Internet supervision, the commission rate of in-store catering continues to rise and is under pressure, with the increase in online advertising penetration, the advertising realization rate is expected to further increase; in addition, in the post-epidemic era, benefiting from the continuous improvement of the online rate of local life services, the comprehensive market space for in-store is vast.
In terms of hotels, Meituan has built a direct contact with consumer traffic pool around the needs of life, with obvious advantages, and the future development direction is to continue to sink while entering high-end hotels; the tourism business plays a synergistic effect, and the current important point of strength is peripheral tourism, which will continue to enjoy the epidemic dividend in the short term and leverage more hotel and store income.
(This article was first published on Titanium Media App, author | Liu Mengmeng, editor| Tianpeng)