Recently, Meituan Waimai made its debut in Al Khobar, Saudi Arabia, marking a significant expansion into the international food delivery service marketThis strategic move comes on the heels of a dedicated effort that began earlier this year when Meituan opened multiple job positions, hastily assembling a diverse team of talentsThis team includes local professionals fluent in Arabic, as well as expats who are well-versed in the nuances of the Saudi market.

In conjunction with its launch, reports indicate that Meituan has engaged in negotiations with a variety of international food service operators alongside local restaurantsFurthermore, they have formed partnerships with local courier services, positioning themselves strategically in an increasingly competitive field.

However, the Saudi food delivery market is not devoid of competition; industry giants already control over 70% of the market share

This raises the poignant question: Can Meituan replicate its ‘legendary’ success from Hong Kong in the sands of Saudi Arabia?

Successful Trials in Hong Kong

Before venturing into Saudi Arabia, Meituan tested its overseas growth model through its Hong Kong-based brand, KeeTaUpon entry, KeeTa received an enthusiastic welcome by employing a robust promotional strategyNew users were greeted with incentives, including significant discounts totaling HK$300 for both order and delivery fees, as part of their ‘billion dollar rewards’ initiative.

Furthermore, KeeTa’s strategy extended to its delivery personnel, offering New Rider Rewards, where completing a targeted number of deliveries within 14 days would net an additional HK$2,500. Such initiatives quickly improved the delivery efficiency, significantly enhancing the overall user experience.

From the get-go, KeeTa’s impact was palpable

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Upon its launch on May 22 of last year, the app skyrocketed to the top spot on Hong Kong’s App Store within mere hoursBy 8 PM, there were nearly 2,000 orders in just the Mong Kok district alone, leading to frantic notifications from partners like McDonald's and Yoshinoya, who reported record-breaking sales.

Recent data from Measurable AI disclosed that by May 2024, KeeTa had successfully captured a commanding 44% share of the Hong Kong food delivery market, dwarfing Foodpanda's 35% and Deliveroo’s 21%. This rapid ascent within a year is not just a victory but a robust statement of KeeTa's competitive viability in a previously duopolistic market dominated by Foodpanda and Deliveroo.

Prior to KeeTa's entrance, these two platforms held a staggering market share of 63% and 37%, respectivelyKeeTa broke this oligopoly through innovative strategies that addressed concerns such as high pricing and unpredictable delivery times.

Its geographic expansion strategy involved progressive region testing starting in Mong Kok and Tai Kok Tsui in May 2023, and subsequently expanded to cover almost the entirety of the Kowloon and Hong Kong Island areas by the end of the year.

KeeTa took head-on price issues by introducing an affordable “single-person dining” option, which requires a minimum spend of only HK$50-60, significantly lower than its competitors

On top of that, the app continually introduced a plethora of cost-reduction measures aimed at lowering delivery fees, which averaged around HK$45 per order.

Delivery times also saw marked improvement; leveraging Meituan’s operational experience and refined algorithms, KeeTa managed to enhance delivery efficiency, compressing average delivery times from over 30 minutes to roughly 27 minutes.

While KeeTa has witnessed exceptional growth metrics in terms of order volume and GMV, Foodpanda’s GMV still remains aheadThe overall penetration of food delivery services in Hong Kong remains relatively low compared to traditional dining, though data indicates a healthy growth trajectoryNotably, KeeTa saw tremendous growth in the latter half of 2023, and by Q1 2024, it became the leading provider by order volume, although GMV still trailed Foodpanda.

Beyond the immediate profit gains, the operational experiences gleaned from KeeTa's growth are invaluable to Meituan as it seeks to navigate international waters

In February, a corporate restructuring placed CEO Wang Xing directly in charge of overseas initiatives, reinforcing Meituan’s commitment to expansion.

Aiming at the Middle East

Meituan’s choice to enter the Hong Kong market first provides significant insightsHong Kong’s small size—comparable to Daxing in Beijing—and mature digital infrastructure offered a manageable testing environmentThe similarities in consumer tastes further eased the integration of food delivery servicesHowever, Meituan was also able to anticipate regulatory challenges and market competition, giving it a head start in adapting to different cultural landscapes.

The ambition to replicate the KeeTa experience in the Middle East has been evident since October 2022. Multiple senior executives, including Wang Xing, have visited the Middle East to explore the local business landscape and engage in competitive analysis of the food delivery sector

It was during this period that team members began forming a dedicated effort towards establishing operations in Saudi Arabia, focusing on Riyadh as a potential pilot city.

The food delivery landscape in the Middle East, particularly in Saudi Arabia, shows a notable concentration of market power, similar to that observed in Hong KongMajor players HungerStation and Jahez command a collective market share exceeding 70%. Yet, the distinct consumer preferences and behaviors in various urban centers present Meituan with tailored approaches to tap into these specific segments.

Furthermore, Saudi Arabia displays unique traits that differentiate it from the Hong Kong experienceFor one, the average revenue per user in the Middle East is significantly higher due to increased disposable incomes, leading to a promising market environment where the total revenue is expected to reach US$11.74 billion in 2024. The region’s demographic trends also favor an expanding food delivery market, with a youthful population comprising 45% aged under 30.

Additionally, the infrastructural innovation in the region is striking; Saudi Arabia boasts a staggering internet penetration rate exceeding 99%, facilitating the adoption of digital services, including food delivery systems