In 2021, Meituan's loss was mainly due to its new businesses of bets - Meituan Preferred, Meituan Flash Purchase and Meituan Buy, and the operating loss from the above three businesses expanded from 10.9 billion yuan in 2020 to 38.4 billion yuan
Luo Yi, a researcher at Investment Times
Following an operating loss of 11.1 billion yuan in the year of listing in 2018, Meituan once again recorded an operating loss of 23.1 billion yuan in 2021.
Unlike the losses caused by subsidies in the acquisition of Mobike and the "takeaway war" in 2018, in 2021, Meituan's losses were mainly due to its new businesses of betting on treasures - Meituan Preferred, Meituan Flash Sale and Meituan Grocery Shopping, and the operating losses caused by the above three businesses expanded from 10.9 billion yuan in 2020 to 38.4 billion yuan.
Overall, Meituan's basic takeaway business has stood out from the "takeaway war" for many years, with a 70% share of the catering takeaway market. However, due to multiple factors, the company is still in a state of low profit, with a full-year profit of 6.2 billion yuan. For example, the delivery service under the "1P model" is calculated separately, showing that in 2021, Meituan will post 13.98 billion yuan in the takeaway delivery business.
Meituan's "cash cow" business, the store and wine and tourism business, will maintain a high operating margin of 43.3% in 2021 and contribute 14.1 billion yuan in profit. But after Douyin entered the scramble for territory, whether the high-profit business can maintain growth has attracted the attention of investors.
Beach grab community retail
The US group, which is sitting firmly in the first position in the field of takeaway, has entered the new track this time, and the fierceness of the competition has not diminished the "takeaway war" of that year.
According to the data of Meituan's 2021 annual report, the company achieved operating income of 179.128 billion yuan for the whole year, an increase of 56% year-on-year; operating net profit of -23.127 billion yuan, operating profit of 4.33 billion yuan in 2020; annual profit of -23.536 billion yuan, compared with 4.708 billion yuan last year.
Judging from the annual report, Meituan's takeaway and in-store hotel and tourism businesses, which have been fighting for many years, have shown a positive upward trend in profits. Among them, the profit of the takeaway business increased by 117.9% from 2.833 billion yuan in the previous year to 6.175 billion yuan, and the hotel and tourism business in the store is still the main source of profit for Meituan, up 72.3% from 8.181 billion yuan in 2020 to 14.093 billion yuan.
The operating loss was mainly due to the widening of losses in new business. The data shows that in 2020, the company lost 10.855 billion yuan in new business, and in 2021, the loss expanded by 253.7% to 38.394 billion yuan.
"Investment Times" researchers noted that meituan has invested heavily in new business in recent years, mainly focusing on community retail. The company revealed in the earnings report that Meituan's 2021 strategy has been upgraded from "Food+Platform" to "retail + technology", and strives to further expand products and services to a wider range of retail fields. Judging from the data in the financial report, in the early stage of strategic upgrading, Meituan focused its core on the most incentivized community e-commerce field in recent years, and opened up three paths: Meituan Preferred, Meituan Flash Purchase and Meituan Grocery Shopping.
Among them, Meituan prefers the main food fresh and daily necessities, with high cost performance, next-day delivery and other characteristics to occupy the market, Meituan flash sale to the same day delivery and all categories as the features, Meituan to buy vegetables is mainly fresh food, rapid arrival as a feature. Meituan achieved 50.29 billion yuan in the community new retail business based on preferred choice, an increase of 58.7% year-on-year, and since its revenue scale exceeded the hotel-to-store business for the first time in 2020, it has once again become meituan's main business second only to the takeaway business.
According to the data, the daily single volume of Meituan Preferred in December is about 45 million pieces / day, and the average daily single volume in the fourth quarter is between 40 million and 45 million pieces / day, the unit price of the piece is about 8-9 yuan, and the quarterly GMV is expected to reach 35 billion yuan. From the perspective of the growth rate of new business revenue in the fourth quarter, it looks better than other peer data, and the leading position of Meituan Preferred looks more and more stable.
Increase the intensity of "burning money"?
However, in order to achieve the above achievements, the US group has also paid a high "price". According to the financial report data, the company's loss in 2021 was mainly due to the employee benefit expenses brought by research and development increased by 6.14 points to 13.2 billion yuan, an increase of 110.3% in promotion, advertising and user incentive expenses to 12.2 billion yuan. In addition, outsourcing and depreciation expenses for property and plants increased by 18.32 billion yuan, an increase of 148.6%.
Many of these expenses are due to the expansion of new businesses. Such as promotion, user incentives, outsourcing costs and property depreciation, group buying in the community and buying vegetables are related. Among them, Meituan Preferred invests heavily in user incentives, while outsourced warehousing in the fulfillment supply chain is mainly spent on Meituan Preferred, while the depreciation of self-built warehouses is mainly spent on Meituan's purchase of vegetables.
Judging from the quarterly financial report data, meituan's sharp burning of new retail in the community began in the third quarter of 2020, but fortunately it began to slow down from the second quarter of 2021. According to the Q4 data of 2021, the loss of the business narrowed from 10.9 billion yuan in Q3 to 10.2 billion yuan, and the loss ratio narrowed from 79.5% to 69.5% month-on-month.
However, in the context of regulatory policies and weak consumption, there are greater doubts about whether continuing to burn money can be exchanged for future profits of community retail.
First of all, as of now, whether it is the new business of Meituan or other participants in the same industry, they are still in the stage of building business models, and there is still great uncertainty about the final direction.
In addition, it is worth noting that QM data shows that 94.2% of the 207 million deduplication users of Meituan Preferred come from WeChat Mini Programs, and only 7.2% from the Meituan Preferred APP itself. Platform entry is highly dependent on platforms other than itself, or is detrimental to subsequent competition.
In addition, the risks from regulation are also increasing. As a new generation of "traffic password" field, community new retail has allowed almost all Internet giants to enter the market, including Tencent, Ali, JD.com, Pinduoduo, etc. Because of the "vegetable basket", the competition of giants has also caused a strong market wave.
Since the beginning of this year, information about the layoffs of large factories has continued, and the hardest hit areas include innovative businesses such as community group buying. It is worth noting that on January 29 this year, Meituan Preferred made a major internal personnel adjustment, and Chen Liang, senior vice president of Meituan Preferred Division, was announced to leave the front line of business and become a consultant of the company.
Meituan's revenue and profit from various businesses in 2021
Source: Company 2021 Annual Report
The main takeaway business slowed down growth
Meituan's heavy investment into the community's new retail may stem from Meituan's concern that the penetration rate of the main takeaway business has gradually peaked.
According to the National Bureau of Statistics, the size of China's catering market in 2021 is about 4.69 trillion yuan, an increase of 736.8 billion yuan over 2020, of which the takeaway market size is 934 billion yuan, an increase of 269.4 billion yuan over 2020; the online penetration rate is 19.92%, an increase of 3.02 percentage points over 2020.
According to the 2021 Meituan financial report data, the annual transaction amount of catering takeaway increased by 43.6% year-on-year to 702.1 billion yuan. If calculated according to the above data, Meituan's market share in the entire catering takeaway market has exceeded 75%. Previous research reports show that according to the existing catering industry takeaway penetration rate of Japan as an example, its catering industry takeaway form accounted for 20%. If this is used as a reference value, the speed of online penetration rate will continue to rise in the future or will slow down, and the competition in the catering and takeaway industry may turn to the competition and development of stock.
Specifically looking at Meituan's catering takeaway data, in 2021, the catering takeaway revenue increased by 45.3% year-on-year to 96.212 billion yuan, slowing down the growth rate from the previous month. From 2018 to 2020, the year-on-year growth rate fell from 63% to 37%.
The financial report shows that under the 1P model, Meituan's takeaway delivery is still losing money. Meituan's delivery service revenue from merchants and consumers in 2021 was 54.2 billion yuan, but the cost of obtaining the above income was 68.18 billion yuan, and Meituan posted 13.98 billion yuan, which is equivalent to each takeaway delivery order, and Meituan needs to subsidize more than 1 yuan. Among them, in the fourth quarter, the company posted 4.05 billion yuan in catering takeaway delivery. The annual cost of catering delivery accounted for 70% of the catering takeaway revenue.
After the release of Meituan's 2021 financial report, Wang Xing also said on the conference call that the delivery service fee was not enough to offset the cost of delivery for riders, the average did not deliver a single, the platform lost a dollar, and could only use takeaway commission income to fill the "hole".
Although the delivery business is discounting money, after deducting the remuneration of 5.27 million riders of 68.183 billion yuan and other costs, Meituan's operating profit in the catering and takeaway business increased from 2.8 billion yuan in 2020 to 6.175 billion yuan in 2021. At the same time, the operating net profit increased from 4.3% to 6.4%.
In the context of repeated regulators requiring the takeaway industry to set a reasonable commission ratio, Meituan has still maintained the growth of profit margins. The company said in its annual report that the increase in operating profit was mainly due to the increase in revenue from online marketing services, the reduction of motivation subsidies for riders and the improvement of operational efficiency. In addition, Meituan maintained profitability by cutting subsidies on the user side, and in 2021, the user side cut 200 million yuan of transaction subsidies.
However, the weakness of the entire catering industry brought about by the ongoing epidemic may continue this year, and Meituan, as a takeaway leader, may expand subsidies. On March 1, Meituan issued a commission preferential measure for merchants, saying that from March to December, for small and medium-sized catering merchants with difficulties in operating at the risk of epidemic advice and an average daily transaction volume drop of more than 30%, the technical service fee (commission) will be halved, and the maximum amount of 1 yuan per single after the halving will be implemented, and the preferential time will be from the date when the local area is listed as a medium- and high-risk area to one month after the risk control is lifted.
The market size and online penetration rate of China's catering and takeaway industries
Source: National Statistical Office
Competitors in the "cash cow" business have increased
Meituan's store, hotel and travel business has always been an important support for Meituan's profits. Although the proportion of business ranks last among the three main businesses, it has always been the business with the largest contribution to Meituan's profit because it often exceeds 90% gross profit margin.
In 2021, Meituan's revenue from in-store and wine and tourism reached 32.530 billion yuan, an increase of 53.1% year-on-year, and profit increased by 72.3% from 8.181 billion yuan in 2020 to 14.093 billion yuan.
However, meituan will face more and more fierce competitors for in-store and hotel tours in the future. Douyin has previously publicly declared that the local life, e-commerce and knowledge sectors will be its focus in 2022, of which the GMV of local life in 2022 is 40 billion yuan. Douyin tries to start from meituan's starting business - group buying, and attack the territory with live broadcasting, algorithms and traffic advantages.
Prior to this, in July 2020, the old rival Ali connected the store business to Ele.me, and in less than a year, Ele.me added more than 1 million new users.
Although the new entrants are considered by relevant analysts to be "not yet a threat", such as the lack of infrastructure and distribution networks of Douyin. However, although Meituan's in-store and wine and tourism business has basically recovered to the pre-epidemic level in 2021, the growth rate is indeed decreasing month-on-month.
According to the financial report data, from Q1 to Q4 of 2021, meituan's store-to-store and hotel tourism revenue was 6.584 billion yuan, 8.602 billion yuan, 8.62 billion yuan and 8.722 billion yuan, and the operating profit was 2.75 billion yuan, 3.7 billion yuan, 3.784 billion yuan and 3.897 billion yuan, respectively.