Meituan-Dianping Study Shows Technology and On-Demand Delivery Are Reshaping China's Dining Industry

Key trends in China's burgeoning dining industry and insights into how to survive and thrive in a highly competitive environment revealed in Meituan-Dianping whitepaper

At the helm of a dining industry transformation, Meituan-Dianping's global leading on-demand delivery platform reaches a new record of processing more than 13 million orders a day in China

BEIJING, July 11, 2017 /PRNewswire/ -- Meituan-Dianping, China's largest service-focused e-commerce platform, released the first comprehensive whitepaper and report on China's dining industry, delivering insights into trends and opportunities based on data drawn from its 260 million active users.

According to the report, the dining industry in China has become a major driver of domestic economic growth, with total revenue reaching RMB3.5 trillion in 2016, up from RMB2.3 trillion in 2012. The dining market grew 11.3% in 2016, significantly higher than the country's 6.7% GDP growth, and double-digit annual growth is expected to continue in the coming years, presenting tremendous business opportunities for all in the dining industry ecosystem.  At the same time, intense competition and fast-changing customer preferences highlight the significance of embracing technology and accelerating digitalization to tackle the challenges of meeting evolving demands.

Key findings from the Meituan-Dianping whitepaper and report include:

• New entrants concentrating on a few similar offerings flood the market and failure rates are high.  More than 100 new restaurants are opening each day in Tier One cities around China but more than 70% of these are closed within a year. This highlights the low barriers to entry but high operational costs and turnover rates. The top five categories of the new openings are fast food, bakery, hot pot, Sichuan cuisine, and barbecue.
• On-demand food delivery is reshaping China's dining industry which is experiencing high levels of growth.
• Revenues from on-demand food deliveries tripled in 2016, with the market expected to reach RMB300 billion in 2018 from RMB130 billion in 2016. Tremendous growth potential of delivery is anticipated with its contribution expected to expand to 10% of the total dining revenues in 2018, up from 4% in 2016.
• Delivery services have also proved sticky with Chinese consumers as 79% order more than once a week and 47% more than three times a week, with an average of more than RMB40 per order.
• On-demand delivery has effectively extended restaurant peak business hours and broadened customer reach. In-store dining peak hours usually run from 12 noon to 1:30 PM while on-demand lunch order peak hours recorded at 10 AM to 12 noon. With on-demand delivery, restaurants can cover customers within 3-5 km while in-store dining customers usually come from within 1 km distance.
• Restaurants in China are benefitting from efficiency gain and increased number of orders processed by adopting online delivery platforms. Beijing restaurant Jinbaiwan Wangjing has recorded a significant revenue increase and cost reduction after switching to an online delivery platform. Further, the average revenue generated for delivery-focused employees is five times that of their in-store dining focused equivalents, driving a higher return on investment in delivery services for Chinese restaurants.
• Millennials are driving the growth and development in the industry. Middle class consumers born in the 1980s and 1990s contribute to more than 70% of dining consumption. This emerging socioeconomic group is willing to pay more for quality, health, food safety, design, and new social experiences.
• The online platform has brought significant benefits to the industry through economies of scale.
• The adoption of more intelligent resource planning (ERP) solutions with cloud connection to an integrated platform helps restaurants create more valuable and efficient services to customers such as table reservation, digital menu, and queue management at lower costs.
• Higher digitalization rate of the dinning industry through the online platform brings not only standardization of fundamental products and services but also enhances transparency with customers, driving the industry towards environmentally friendly operations and food safety protocols.
• Restaurant owners and investors can make smarter decisions on location, menu, and offerings based on the platform's analytics.

"At Meituan-Dianping, we are committed to empowering dining businesses to operate more efficiently by providing valuable data analytics and innovative solutions to help the industry advance to its full potential," said Mr. Huiwen Wang, Head of Dining Platform and On-demand Delivery at Meituan-Dianping. "Our mission is to enable deep industry integration by developing digital, financial, marketing and business tools for merchants, while helping consumers eat better, healthier, and more safely."

Meituan-Dianping's on-demand delivery platform recently reached a new milestone for the dining industry, handling more than 13 million delivery orders on a single day, corresponding to RMB555 million daily Gross Merchandise Value (GMV). In covering more than 6.5 million restaurants across China, Meituan-Dianping's online dining platform is spearheading China's dining industry transformation by re-defining the industry's cost-structure and empowering restaurants through technology and innovation. The online dining platform provides IT system construction, standardized and internet solutions to promote industry upgrades, cost reduction, and efficiency improvements. The comprehensive range of solutions covers reviews, CRM, deals, advertisement, on-demand delivery, reservation, payment, queue management, digital menu, ERP platform, and procurement.

About Meituan-Dianping

Meituan-Dianping is China's largest service-focused e-commerce platform, connecting more than 260 million young active buying consumers with more than three million active local merchants across the whole China, from tier one cities to minority counties, processing 20 million orders on a single day.

Under its "Eat Better, Live Better" mission, the Company offers a one-stop daily life services platform aiming to improve overall way of life for consumers through its dominant leadership in more than 200 service and product categories, including dining, on-demand delivery, beauty, family & kids, and travel & leisure.

Meituan-Dianping leverages its platform strategy to address consumers' aspirations across the whole local life services chain, driving constant product upgrades through technology innovation and empowering local businesses by boosting industry efficiency through digital, internet and mobile solutions.

Meituan-Dianping is the industry leader across its four major business units: In-Store Dining, the largest and most comprehensive online dining platform in China; In-Store Others, the online market leader across multiple verticals, including weddings, beauty, mom & kids, KTV, renovation, and other leisure and entertainment services; On-Demand Delivery, the world's largest and most efficient delivery platform; and Hotel & Leisure, with offerings covering accommodation, domestic travel, outbound travel, and transportation.

As of April 2017, Meituan-Dianping is posting three digit year-on-year increases in revenue and is operating profitably. The Company currently has more than USD3 billion free cash.

For enquiries, please contact:

Meituan-Dianping
Jane Zuo
Investor Relations
Email: zuozhen@meituan.com

FTI Consulting
Daniel Wong
Phone: +852 3768 4549
Email: daniel.wong@fticonsulting.com  

Marie Peterson
Phone: +86 21 2315 1131
Email: marie.peterson@fticonsulting.com  

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