Faced with sluggish growth, meituan needs a new approach. On June 2, meituan released its financial report for the first quarter of 2022. The bad news was that meituan continued to lose money: the adjusted net loss in the quarter was 3.58 billion yuan. The good news is that meituan's loss status has improved: it has decreased by 7.8% year-on-year and 8.9% month on month respectively.
After experiencing the multiple negative effects of a fine of RMB 3.443 billion in 2021, rising rider costs and changes in community group purchase policies, meituan started "layoffs" in the first quarter of 2022. An insider told Huxiang that the "scale of layoffs" in the first quarter of 2022 was the largest in the past two years, and the key taxi and community group purchase businesses from 2020 to 2021 were the hardest hit areas for layoffs. However, the results of personnel and business optimization in the short term will be reflected in the financial report of meituan in this quarter. In the first quarter, meituan lost 5.6 billion yuan, an increase of 16.6% year-on-year.
The impact of the epidemic on meituan is complex. On the one hand, "Limited Logistics" and "weak consumption market" have affected meituan's business. In the quarter, meituan's "catering takeout transactions" fell 14% to 3.361 billion, and its catering takeout revenue fell 7.2% to 24.2 billion yuan. (considering that the first quarter is the off-season for meituan takeout under normal circumstances, excluding the off-season factors, the decline is also greater than that in previous years.)
However, the "home state" and "Spring Festival in place" in economically developed cities such as Shanghai have also brought another impact to meituan. The financial report shows that high-quality consumers with high consumption power have increased significantly in customer unit price and consumption frequency in the quarter. The "home effect" boosted meituan's revenue, which increased by 25% year-on-year to 46.3 billion yuan in the quarter.
If the impact of the epidemic on meituan is "short-term", the long-term challenge that meituan needs to consider is user growth: after about a year of "explosive growth of users", meituan's user growth has fallen into "stagnation".
As of March 31, 2022, meituan had 692million transaction users in 12 months, compared with 690million by the end of 2021. In short, meituan has added less than 3million transaction users in the past three months.
"Community group buying is the method meituan found from 2020 to 2021. With the disappearance of community group buying bonus, meituan has not found a new growth secret." A China concept stock analyst told Hu olfactory that repeated epidemics, weak consumption, new policies for riders and commissions are the "new elements" that meituan will face in the "medium and long term". Under such a situation, it is very important for meituan to find new ways to achieve user growth. "Meituan has not been able to break through the 700million user mark."
Meituan is trapped in spring
From the second half of 2021, "cost reduction and efficiency increase" is the high-frequency word of meituan senior management.
According to the quarterly financial report, meituan's core business is facing the challenge of epidemic situation and other factors in terms of cost reduction and efficiency increase. The operating profit margin of the catering takeout business supporting the survival of meituan decreased by 0.1% to 6.5% month on month. This is the first time since the second half of 2021 that meituan's operating profit margin has decreased month on month in this business segment.
It is worth noting that. The operating profit (after tax profit) of the catering takeout sector in the quarter was 1.6 billion yuan, compared with 1.7 billion yuan in the fourth quarter of 2021. In the first quarter, the high cost of raw materials and logistics in the field of food and beverage increased the pressure on meituan, and the high "subsidies" of meituan in the first quarter also eroded the profits.
During the quarter, meituan continued to stimulate consumption through more activities and subsidies in some core cities. Its sales and marketing expenditure reached 9.1 billion yuan. Although it decreased month on month, its year-on-year growth was still as high as 26%. Under the dual influence of the home effect and the subsidy stimulus, the consumption frequency of meituan catering takeout users has increased, "the average number of transactions per transaction user per year" has reached 37.2, which is one of the few data in this financial report with year-on-year and month on month growth. In the fourth quarter of 2021, meituan's data was 35.8.
However, the pressure behind the growth of this data can not be ignored: marketing spending has increased by more than 25% year-on-year for consecutive quarters, which is not good news for meituan. In the first quarter of 2020, meituan's investment in sales and marketing expenditure was only 3.19 billion yuan. Burning money for growth is the core logic behind the data. An obvious trend is that meituan has gradually resumed its subsidies in the catering takeout sector after the community group buying has cooled down. In the final analysis, meituan is still worried about growth.
Visiting stores, hotels and tourism should have been the highlight of meituan in the quarter, but the high growth rate in January and February "hit the ice" in March: the financial report shows that in January and February 2022, meituan's revenue and operating profit of this business increased significantly, but in March, it was negatively affected by the epidemic. It is worth noting that, despite the "lag" of the data in March, the meituan sector still showed strong growth - the operating profit margin reached 45.6%, higher than 44.7% in the fourth quarter of 2021.
The new business is still the money burner of meituan, and the loss of community group buying and other businesses reached 9billion yuan in the quarter. The good news is that the operating loss rate of the business narrowed to 62.3%, compared with 69.5% in the previous quarter.
The source told Hu olfactory that meituan optimized the preferred business locations in some cities in the first quarter and adjusted the business structure. Meituan preferred business even withdrew from some cities where it is difficult to achieve balance of payments in the short term. In the second quarter, the business even withdrew from Beijing.
The new business is regarded as the core area of meituan's "cost reduction and efficiency increase": Wang Xing readjusted the high-level structure and gave the new helm greater voice. From the financial report, the reform started in November last year has achieved results, with a quarterly revenue of 14.5 billion yuan, compared with 14.7 billion yuan in the fourth quarter of 2021 - in a sense, meituan is entering a "stable stage" in new business. But the other side of the coin is that the new business entering the stable period will focus on "cost reduction", and the original "growth" mission will change.
At the end of May this year, a person familiar with the matter told Hu olfactory that the balance of payments will be the key indicator for new businesses such as optimization. For some cities with better business development, meituan executives hope to achieve small profits within the year.
The home effect has benefited the "flash purchase" and "vegetable purchase" in meituan's new business. The financial report shows that the number of users and transaction frequency of this business have increased significantly. The orders for flash purchase have increased by about 70% year-on-year, while the orders for vegetables have increased by 120% year-on-year. However, flash shopping and shopping for vegetables did not seem to bring about explosive growth of new users to meituan. With the same frequency as the surge in order volume, meituan's "number of trading users within 12 months" increased by only 0.28% in the quarter.
"Old methods" fail
An insider told Hu olfactory that meituan was giving up "OKR" from the end of 2021 to the beginning of 2022. Since 2019, OKR has been gradually upgraded to the most important management tool within meituan. Wang Xing has promoted the "OKR method" at internal meetings for many times. Even up to the beginning of 2021, OKR was still the "soul" of meituan's core business - at that time, the head of the core business line would take the OKR indicator adjustment as an "important example" of sharing when communicating with others.
After recruiting more than 50000 people in 2021, OKR is "falling out of favor" within meituan: meituan executives realize that the existing OKR model is not enough to solve all the problems meituan faces.
"Meituan is replacing OKR with op." A person familiar with the matter told Hu sniff. (OP：Operating Plan)
Compared with OKR, Op puts more emphasis on management granularity (fineness), target tracking, timely feedback and internal information flow efficiency. A management scholar told Hu olfactory that meituan, with tens of thousands of employees, pays more attention to its employees' execution. "OKR is conducive to encouraging employees to achieve higher goals. However, for meituan, which is eager to achieve market coverage, win key new businesses and complete the integration of new employees, it needs to achieve immediate goals, not just a process of effort."
In April this year, a relevant person described the problems encountered by the business line to Hu olfactory: for example, in the optimization business, BD did not consider the "internal friction" of the nearby points in the same city when implementing, and blindly pursued the quantity of the won orders in order to complete its key KR indicators. There are even different BDS "launching offensives" against the same target at the same time.
What has changed at the same time with the "management method" is the failure of meituan's growth method: since 2020, the community group purchase business has been regarded as the most important user growth means of meituan. According to public information, meituan has obtained more than 100million new users in less than two years through the community group purchase business.
However, with the impression of multiple factors such as the change of community group buying policy, weak consumption and the impact of the epidemic in 2021, the user growth rate brought by community group buying to meituan is declining precipitously.
"Community group buying is no longer the most cost-effective way to get customers." Jeffery, an analyst at China capital stock, believes that meituan has been achieving customer acquisition and improving "repurchase rate" and "customer unit price" through increasing and expanding scenarios. Community group buying has indeed provided meituan with strong user growth in the 20 months from 2020 to August 2021, but the situation has changed today.
In the view of some analysts, in some regions, meituan's community group purchase business has even become a "hot potato": the cost of investment is high, and it needs to continue to burn money if it wants to continue to grow; If we only want to maintain the status quo, it will be difficult to achieve balance of payments in the short term. What is disadvantageous to meituan's "financial report" is that the separation itself also means the cost. "The first quarter financial report is not obvious, and the second quarter may be more obviously reflected in the financial report."
A rather embarrassing problem is facing meituan: most of the users focused on new businesses such as meituan flash shopping and meituan buying vegetables are in high-speed cities and are already users of other "scenarios" of meituan. It is difficult for meituan to obtain new products directly through these "new businesses". The core value brought by these new businesses to meituan is to increase the consumption frequency and customer unit price, but the relevant values also have theoretical boundaries. It is unrealistic to expect the explosive growth of customer unit price and other indicators through these businesses.
Subsidies have become an "emergency" strategy, but at a time when the traffic cost is high and the existing user base is gradually stable, subsidies can not solve the key problems encountered by meituan. "From 2021 to now, meituan has encountered a situation that once the subsidies are reduced, the performance will fluctuate significantly, and the increment of new users that the subsidies can bring is limited."
At present, the new challenge faced by meituan is that meituan is under greater pressure in the second quarter of 2022 when the once effective management tools and growth strategies are gradually "magic failure".
A person familiar with the matter told Hu olfactory that the performance of core cities such as Beijing and Shanghai was under significant pressure in the second quarter due to the impact of the epidemic; However, the tourism economy of several high-speed cities failed to recover, and the overall performance of meituan in the second quarter was "not optimistic" under the comprehensive effect. The "financial pain" caused by the optimization of personnel and business lines in the first quarter will be partially reflected in the financial report of the second quarter, which may further lead to the ugly financial report of the second quarter.
The bigger challenge is that after the user increment in the first quarter is less than 3million, the relevant data in the second quarter may show a weaker trend. These people said that in some cities in the northwest, meituan's community group purchase business is almost in the "withdrawal state", and the number of relevant users may fluctuate due to this impact. "From the perspective of growth, no business line can bring tens of millions of new users every month; from the perspective of retention, the adjustment and optimization of business structure is leading to the loss of existing users."
It is reported that meituan executives are shifting their attention from "user growth" to the indicator growth after more refined operation, which includes the repurchase rate, customer unit price, consumption frequency of existing users and the consumption power in key new categories. A key message hidden in meituan's financial report is that in the first quarter, under the influence of multiple pressures, the number of active businesses in meituan increased by 26.6% year-on-year to 9million, which was also higher than the 8.8 million in the fourth quarter of 2021.
However, meituan may need to invest more resources if it wants to maintain the number of businesses or even maintain the growth trend. On the one hand, under the impact of the epidemic, the operating pressure of some businesses increased sharply in the second quarter; On the other hand, some non catering takeout merchants need greater "confidence incentives" before they are willing to try flash shopping and other business models.
This is exactly the test paper before meituan: in the next six months, meituan needs to find a new growth logic as soon as possible and maintain its existing users and merchants in the most cost-effective way. However, this is by no means an easy task. Some analysts said that meituan has fewer human and financial resources to invest in the "market", but the market is eager for higher incentives. "There is another way, that is, to stabilize the status quo, temporarily forget the growth myth, and temporarily satisfy the range of 600million to 700million users." An analyst believes that meituan needs to resist "boundless expansion ambition" and try to optimize the cost model of existing business lines in the remaining six months of 2022. For Wang Xing of meituan, this is not a strange script. He has repeatedly "folded his wings" in adversity and watched "the opportunity".