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Interface News Reporter | Xiao Fang

Interface News Editor | Liu Fangyuan

As early as the beginning of 2023, news that Meituan Waimai would enter Hong Kong had begun to circulate in the local catering circle.

Nelson, head of Liansheng Catering, knew long ago that "Keeta" was coming. This is a new brand launched by Meituan outside of mainland China. Is it a sure win for the Internet giant with a lot of money and rich experience to "take over" the Hong Kong takeaway market? In fact, restaurant owners including Nelson were not optimistic about Meituan at first.

At that time, the food delivery market in Hong Kong was already dominated by two giants, Foodpanda and Deliveroo, which were from Germany and the UK, with market shares of about 64% and 36% respectively. Moreover, many chain restaurants had signed exclusive entry agreements with them, which had formed a certain barrier. Therefore, Nelson's first reaction when he heard about Keeta was to wait and see, because he himself had a restaurant that had signed an exclusive agreement with Foodpanda.

Many merchants said "no" directly to Keeta. A merchant development staff member who joined Keeta early told Jiemian News that from June to October last year, she had been scolded by merchants many times and scolded for more than half an hour when she called the store clerk. "At that time, I was almost working non-stop. I had no choice but to continue to negotiate with each store one by one."

The first batch of merchants who joined Keeta were also unsure, and most of them were just trying it out. Most of them were small and medium-sized merchants who thought they had nothing to lose by joining.

However, to everyone’s surprise, in just a few months, Keeta has grown from zero to a platform with service coverage across Hong Kong and order volumes comparable to Foodpanda and Deliveroo.

Keeta originally planned to complete coverage of the entire Hong Kong area by the end of 2023, but with the surge in order volumes, by October 24, 2023, Keeta further expanded its services to the Southern District of Hong Kong Island and the entire New Territories, completing coverage of all areas of Hong Kong in less than half a year.

According to data from Measurable AI, in the first quarter of this year, based on the number of food delivery orders, Keeta's market share in Hong Kong has reached 44%, Foodpanda's is 35%, and Deliveroo's is 21%. Keeta has become Hong Kong's largest food delivery platform.

The exploration in Hong Kong has special significance for Meituan. Among the well-known Internet giants, only Meituan has few actions abroad. Especially compared with ByteDance's TikTok and Pinduoduo's Temu, Meituan can almost be described as unknown overseas.

On August 23, Meituan CEO Wang Xing released an internal email titled "Company Organization Continues to Iterate", announcing new progress in the organizational structure adjustment. According to the email, Meituan's SaaS, cycling, power bank and other businesses were merged into "software and hardware services", which will be managed by Zhang Chuan; Kuaidi, Xiaoxiang, Youxuan and other businesses were merged into "grocery retail", which will be managed by Guo Wanhuai; and the overseas business was officially renamed Keeta, which will be managed by Qiu Guangyu.

According to Jiemian News, Hong Kong is Meituan's outpost for testing cross-border expansion. The next step for Meituan is to enter the Middle East market, and it has already started recruiting people and deploying teams. Food delivery is a heavier service than online businesses such as short videos, and it needs to be expanded city by city and region by region. Reviewing the Hong Kong experience will also help us see how Meituan will enter a brand new market and how to deal with competition from international rivals.

1

In the past, Hong Kong food delivery platforms were not friendly to single-person orders. For example, Foodpanda's minimum delivery price per order was HK$120, and the delivery fee was HK$15, while Deliveroo's minimum delivery price was HK$75, and the delivery fee was HK$7. After calculating various costs, the cost of a user's takeaway order was basically more than HK$100.

The high minimum delivery price and delivery fees discouraged many people from ordering takeout, and also meant that at the time, Hong Kong’s takeout transaction volume accounted for only 8.3% of the catering industry, far lower than the 21.9% of the mainland market.

As soon as Keeta arrived, it lowered the minimum delivery price to HK$50-60, and cooperated with local chain brands Tam Tsai and Sam Ge Rice Noodles to launch a promotion of free home delivery for HK$29. The normal price of this package is around HK$70.

HK$29 is not only the lowest price ever for takeout, but it is also hard to find such a favorable price even for offline dining. This alone has made many Hong Kong users who have never ordered takeout in the past start to try it.

The low price mainly comes from platform subsidies. Keeta's strategy is to invest most of its marketing budget in user subsidies and launch a "1 billion incentives" plan for new users. In the past, Foodpanda and Deliveroo invested most of their marketing budget in advertising.

Whether from Meituan’s internal strategic planning or from the overall situation of Hong Kong’s food delivery in the past year, Hong Kong Island is the key to Meituan’s opening up in Hong Kong.

According to a Meituan insider, although the food delivery war in mainland China started on university campuses a few years ago, the real victory was still in office buildings. Hong Kong Island is the area with the most office buildings in Hong Kong, with strong consumption power. Taking over this area means that Keeta has basically established a foothold in the core area of ​​Hong Kong.

Subsidizing in exchange for market share was a common strategy used in the early stages of competition in the mainland market. However, Meituan’s investment in the Hong Kong market is not comparable to the investment during the fierce competition in the mainland market. According to a Meituan insider who revealed to Jiemian News, “Keeta is very meticulous in its investment. It does not spend money that should not be spent. User subsidies have clear ROI (return on investment) assessments.”

Despite this, the Hong Kong market soon saw the “destructive power” of Keeta. After Tam Tsai Rice Noodles and Keeta jointly launched low-priced meal packages, all of its stores in Central were overwhelmed with orders, and Keeta’s number of users and order volume also increased rapidly.

Data from market research firm Measurable AI also reflects this change: Keeta's order volume has grown exponentially since September last year, quickly approaching Foodpanda and Deliveroo within a few months.

Nelson has been closely following the developments of Keeta. He found that this newcomer is completely different from Foodpanda and Deliveroo. His intuitive impression is that Keeta is more flexible, doing things first and then making changes when problems arise. Foodpanda and Deliveroo are more conservative, and they need to do research first and make careful plans before doing anything.

Last September, Nelson was determined to have Bengo Rice Noodles terminate its exclusive agreement with Foodpanda and officially enter Keeta. Nelson said that the HK$60 per person meal was exactly the price range he wanted for takeaways. "The first thing about takeaways is that they have to be cheap, and the second is that they have to be fast. Otherwise, consumers can go downstairs and eat, so why would they order takeaways?"

In the first month after entering Keeta, the four stores of "Ben Ge Rice Noodles" received orders with a turnover of about 400,000. Later, Nelson also let another Thai food brand under the company enter Keeta. The orders of these restaurants have continued to grow, and the average monthly total turnover of the two brands has exceeded one million.

2

Howard, a Hong Konger, joined Keeta after graduating from university last year. Before that, he didn't know much about Keeta and Meituan, but because he really likes working with people, he decided to give it a try.

Although he was familiar with Hong Kong’s customs and culture, Howard’s understanding of the catering industry was almost built from scratch. Many of the merchants he had to deal with every day didn’t even understand smartphones, and it was difficult for them to understand the value of takeout. Not long after joining the company, Howard was sent to the New Territories to tackle the most difficult tasks.

Compared with Hong Kong Island, the population in the New Territories is more sparsely distributed, so takeaway merchants need to have a larger delivery radius and greater operational difficulty. It is the last area covered by Keeta in Hong Kong.

Howard is responsible for an area with hundreds of small businesses, and a large number of them have never done takeout. The process of signing his first merchant was quite difficult. The owner of this restaurant was old and was very impatient with Keeta's merchant development staff. He kept saying "go away" before he finished listening to their introduction.

But Howard still shamelessly insisted on going, taking a few minutes to introduce Keeta's promotions and preferential rates when the other party was busy. After repeatedly "showing face" to the restaurant owner, the owner was also moved by his sincerity and finally agreed to give Keeta a try.

The person in charge of Howard's team was transferred from the mainland to Hong Kong by Meituan, and he had experienced the "Thousands of Groups War". He often shared with his team members the experience of Meituan in expanding merchants during the "Thousands of Groups War". Although some of the experience could not be directly reused in Hong Kong, the most important thing Howard learned was that it was very important to establish a trusting relationship with merchants. Only with a trusting relationship can subsequent cooperation become possible.

Some local merchants told Interface News that, in comparison, Foodpanda and Deliveroo staff communicate more through phone calls, but it is difficult to build trust with merchants through phone calls.

The reason why some merchants initially resisted food delivery was actually very simple. They had previously settled in Foodpanda and Deliveroo, but did not receive many orders. Even for simple requests such as changing the menu, they had to wait for several months because they could never get through to the platform by calling it.

But at Keeta, Howard is not only responsible for signing contracts with merchants, but also for all kinds of trivial matters that merchants encounter in the later stage. Howard also teaches these merchants who are less aware of the Internet some takeaway thinking, such as how to select items for meals, how to choose the time to go online, and other small operational skills.

Compared with the other two platforms, Keeta's business development staff is generally younger. In addition to some people with catering experience, there are also a large number of young people like Howard who have no experience. However, under the guidance of senior BD transferred from the mainland by Meituan, they quickly learned and grew up, forming a new iron army of ground promotion.

Thanks to the efforts of these people, many small shops in Hong Kong that have never had any takeout business have achieved revenue breakthroughs. For example, a low-priced sushi restaurant achieved an average daily sales of more than HK$10,000 in the first week of Keeta’s launch.

3

If small businesses resist food delivery mainly because they don't understand it, the reasons why many medium-sized chain businesses are not very interested in food delivery platforms are more complicated.

Jin Da Pan, a chain of Hong Kong-style tea restaurants that has been operating in Hong Kong for 30 years, has an average of more than 10,000 dine-in orders per store per month, making it a relatively good business restaurant. Isaac, general manager of Jin Da Pan, told Jiemian News that they had settled in Foodpanda and Deliveroo before the epidemic, but the effect has not been very good.

A big problem that bothers Isaac is that these two platforms have been reducing the delivery range due to delivery time issues, and eventually it was reduced to a very small area near each Jin Daban store. The consumers in this area are already frequent customers of Jin Daban's offline stores.

In Isaac's opinion, the original purpose of food delivery was to attract new customers who lived far from the restaurant. The smaller and smaller delivery range not only failed to achieve the goal of attracting new customers, but also affected the volume of offline dine-in orders. Therefore, he was unwilling to spend too much energy on food delivery operations.

When Isaac joined Keeta, he didn't have high expectations for the number of takeaway orders. But the Keeta merchant development staff who contacted him gave him a lot of advice. In addition to making product pictures for each of Jin Da Ban's takeaway dishes, after understanding the store's menu and food delivery speed, they also suggested that Isaac make Yangzhou fried rice the main item, with an online price of HK$49, which is lower than the dine-in price.

After Jin Da Pan went online on Keeta, Yangzhou fried rice became a hot product, and the restaurant's takeaway orders began to rise rapidly. Currently, Jin Da Pan's monthly orders on Keeta have increased several times compared to the initial period, and takeaway accounts for about one-third of all restaurant orders.

Among all Jindaban’s takeaway orders, Keeta accounts for about 90%. In addition to the price of the order, Isaac also noticed that there were often no orders for Foodpanda and Deliveroo, which to some extent affected the merchants’ takeaway orders and the consumer experience.

In terms of delivery, Meituan uses a crowdsourcing model to recruit riders, who are trained before taking up their posts. According to the Hong Kong Consumer Council's 56 order evaluations in 11 districts of Hong Kong in December last year, Foodpanda had the largest number of late orders, with 4 late orders, the longest of which was 19 minutes late; Deliveroo was late twice; and Meituan Keeta had the highest punctuality, with all orders delivered on time and 0 late orders.

The faster delivery time is due to the attention Keeta paid to operational details.

Tegbir Singh, a Keeta rider who takes orders in the Central and Western District of Hong Kong Island, has previously worked as a rider for Foodpanda and Deliveroo. In his opinion, Keeta's delivery efficiency is higher. On the one hand, the platform allows riders to contact users by phone, while the other two platforms can only contact users through the chat room function. In the case of being unable to find the way, telephone contact is more efficient; on the other hand, after the user places an order, Foodpanda and Deliveroo will send the order to the merchant and the rider at the same time. It often happens that the rider arrives at the store, but the merchant has not yet prepared the meal. This not only affects the delivery time, but also affects the number of orders received by the rider. Keeta will first send the order to the merchant to prepare the meal, and will send it to the rider about 10 minutes later.

A Keeta Hong Kong rider operator also told Interface News that Keeta has borrowed a lot of mainland practices in delivery efficiency management, and has also localized it based on Hong Kong's actual situation. Many seemingly small changes have made the experience better for merchants and users.

After seeing the rapid growth of Jin Daban's orders on Keeta, a senior manager of Foodpanda could not sit still. He invited Isaac to have a drink together. During the drinking party, Isaac repeatedly emphasized that the platform should be more humane, "Don't ask customer service to solve problems. They always call Malaysia."

In the past, Isaac, who was not very proficient in food delivery, often encountered various problems. When he called the customer service of Foodpanda and Deliveroo, the call either could not be connected for a long time, or the person who answered the phone was in Malaysia and was not familiar with the situation in Hong Kong, and the communication process was also very long.

But Isaac said in an interview with Interface News that the other party has not changed until now.

4

Being number one in terms of order volume does not mean that Meituan has won the war for takeout in Hong Kong, but rather that it is about to face the beginning of a more complex competitive situation.

At present, the catering takeaway market in Hong Kong has shown a three-legged pattern, and each platform has also shown different characteristics: Keeta and Foodpanda's main delivery forces are "infantry" and "riders" (walking and riding bicycles), and there are more merchants. Among them, Keeta focuses on single-person meals, with a low average customer price and a high proportion of small and medium-sized merchants, while Foodpanda has a high starting price for delivery and focuses on multi-person scenarios such as family and friends gatherings. There are fewer merchants on Deliveroo, and more deliveries are made by motorcycles and private cars. Its advantages are more obvious in areas with low merchant density and long-distance delivery.

Moreover, in terms of the total transaction volume of the platform, Keeta still lags behind Foodpanda because in addition to meals, Foodpanda and Deliveroo also provide grocery delivery and pickup services, which have higher average order value.

Since July, Keeta has expanded its delivery service to convenience stores, but currently only supports users to place orders for some food and beverage categories such as hot food, snacks and beverages. Jiemian News learned from an insider that although Keeta will definitely expand into more categories in the long run, in the short term, Keeta's main focus in Hong Kong will still be on food and beverage delivery.

Allen is a business development staff in Keeta Hong Kong Island. After nearly a year of intensive work, he has managed to sign contracts with many very difficult businesses. However, Allen found that his next job would be even more arduous.

According to Jiemian News, Keeta is doing well in signing contracts with small and medium-sized merchants and super-large chain merchants, but the signing rate of medium-sized and large "KA merchants" is not high enough. A large proportion of these merchants have already signed exclusive agreements with Foodpanda, and "breaking the exclusive agreement" is the problem that Keeta must face next.

As Keeta's orders grew, Foodpanda's defensive strategy became more aggressive. A dumpling restaurant manager said that they had not signed an exclusive agreement with Foodpanda before, but they encountered pressure from Foodpanda after Keeta went online at the end of last year. If his restaurant did not remove Keeta, its commission rate on Foodpanda would increase from 25% to 30%~40%.

In order to avoid the "choose one of two" pressure from Foodpanda and Deliveroo, some small and medium-sized merchants even choose to use different names on different platforms.

However, Hong Kong has not explicitly banned such practices like the mainland. In the Competition Commission's multiple rounds of consultation, Foodpanda and Deliveroo proposed that in the face of competition from food delivery platforms with a market share of more than 10% in Hong Kong, other platforms can still use exclusive terms.

This clause is very unfavorable to Keeta. It is also the first challenge that Meituan has encountered when going overseas due to cultural environment, regulatory differences and other reasons.

5

Recently, Keeta's team in Hong Kong is undergoing a large-scale replacement.

According to Jiemian News, when Keeta was first launched, its merchant development team was mainly composed of Hong Kong locals, including fresh graduates with no experience, as well as people with experience in the catering industry and Foodpanda and Deliveroo. After the Hong Kong business made phased progress, Meituan transferred some personnel to Riyadh to prepare for Keeta's launch in Saudi Arabia, and at the same time transferred personnel from the mainland to supplement the Hong Kong team.

According to Jiemian News, Keeta's ground promotion, rider training and restaurant cooperation access in Riyadh are now ready, and a small-scale test has been carried out recently. The platform may be launched in Riyadh, the capital of Saudi Arabia, in September or October.

The food delivery market in the Middle East has some similarities to the Hong Kong market. The main food delivery platforms currently include Talabat, Careem, and Deliveroo. Among them, Deliveroo is one of Keeta's competitors in Hong Kong. Talabat was founded in Kuwait in 2004 and acquired by Delivery Hero in 2016. It is also the largest food delivery platform in the Middle East. Careem was founded in Dubai in 2012. It was originally intended to solve the taxi problem for local users. Later, it developed into a comprehensive application that integrates taxi, food delivery, department store delivery, express delivery and payment services, which is equivalent to the Middle East version of "Didi+ Meituan + Alipay".

Unlike Hong Kong, the ARPU (average payment per capita) of users in the Middle East is higher, the market space is large, and the proportion of late-night snack consumption is high. According to Statista's estimates, the total revenue of Saudi Arabia's food delivery market is expected to reach US$11.74 billion in 2024, and the user penetration rate of the food delivery market will reach 44.2%. As the world's largest food delivery market, China's user penetration rate is expected to be 54.5%.

Compared with the Hong Kong market, where the total daily order volume is only comparable to that of some stations in Beijing, Shanghai and Guangzhou in the mainland, the Middle East market has a higher room for imagination.

From the perspective of overall revenue, the revenue growth brought to Meituan by Keeta's rapid growth in Hong Kong is negligible. Keeta's operation in Hong Kong over the past year is more like a roadshow for Meituan to go global, and the upcoming Middle East market is the real beginning of Meituan's overseas campaign.

As an experienced merchant development staff,AllenIn the first half of this year, he was temporarily transferred to the Middle East team to provide business support. Now his main focus has returned to the Hong Kong market. I don’t know what his next move will be.How else will work change?

However, it is foreseeable that Meituan will continue this efficient, flexible and changeable approach in the Middle East, which is also the key to its rapid gain of market share in a new market. With the previous battle in Hong Kong, Saudi Arabia, which has greater policy and cultural differences and a larger market space, will be a new battlefield to test the effectiveness of Meituan’s overseas expansion.