KeeTa, the food delivery service, made its debut on May 22 in two residential areas: Mong Kok and Tai Kok Tsui. Meituan, its launching platform, announced that it was aiming to spread into the whole of Hong Kong by the end of the year. Shawn Yang, the Managing Director of the Blue Lotus Research Institute, was sceptical of Meituan’s expansion into the Hong Kong market. "I'm doubtful about the scale of investment that Meituan will put in," he said.
Meituan, a Chinese food delivery giant, has expanded beyond mainland China with the launch of a sister app called KeeTa in Hong Kong. Yet, Shawn Yang from the Blue Lotus Research Institute expressed uncertainties on the app's potential to rapidly acquire a competitive market share in the territory. The service was initially available in two districts, but KeeTa later declared, in a statement provided to CNBC, that it had extended its reach to Sham Shui Po and Yau Tsim Mong after its very first market debut was a success. Meituan has declared that they are on target to secure the entire Hong Kong market by the finish of this year.
As Meituan's home market faces heightened competition from players such as Douyin and with the hope of a strong post-Covid recovery in China diminishing, the market leader in China's food delivery sector is expanding. Taking nearly 70% of mainland China's market share, according to industry research firm ChinaIRN, Meituan has received a large number of requests to provide its services outside of Mong Kok and Tai Kok Tsui. A KeeTa spokesperson told CNBC the company intends to extend its services to more parts of Hong Kong in the near future. However, Morningstar Asia senior equity analyst Kai Wang does not believe this expansion into Hong Kong will have much of an affect on the company's earnings, as an additional 7 million potential users would amount to just a drop in the bucket compared to the 678 million users Meituan has already established in China.
Wang opined that KeeTa did not have a big impact on Meituan's revenues and the company opted not to comment on the analysts' opinions. Yang from Blue Lotus suggested that Meituan may be looking to Hong Kong as a potential base to launch their international expansion, in order to explore any potential market opportunities.
The adoption rate of food delivery in Hong Kong is comparatively low. As per a report from Momentum Works, 10% of the restaurant industry is taking up food delivery services, while the average rate of utilization two years ago in China was 21%. This discrepancy is because "ordering food delivery is not a common habit in Hong Kong like it is in mainland China," as per the same report, mentioning that the Asian financial hub has a plethora of food and beverage establishments around every corner.
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The food delivery market in Hong Kong is largely controlled by Foodpanda and Deliveroo, holding 64% and 36%, respectively, as shown by Measurable AI in May prior to KeeTa's emergence. Figures in this report are grounded on delivery and pickup orders. While KeeTa does not offer pickup services, Uber Eats chose to cease its operations in the region at the end of 2021, having held approximately five percent of the market based on Measurable AI's analysis.
Yang of Blue Lotus Research stated that it is quite hard to sway customers' attitudes if there have already been two or three main entities in the market, unless they carry out numerous incentive programs. According to Wang of Morningstar, the entry of KeeTa into Hong Kong should result in more vouchers and discounts for customers, which should be beneficial to them in the end. Additionally, Hong Kong recently started an examination into anti-competitive behavior from Deliveroo and Foodpanda. This could mean that smaller players including KeeTa could potentially expand their market share, seeing as such practices such as restricting restaurants or punishing them for collaborating only with other platforms are not allowed.
KeeTa is attempting to draw in new users with 300 Hong Kong dollars ($38.30) worth of vouchers that can be used to pay for meals and delivery fees. The business intends on expanding their marketing activities in a new district, such as providing free delivery as well as referral discounts and food deals. In addition to this, KeeTa has set meals priced from HK$60 inclusive of delivery fees to accommodate customers who eat alone. Reports from CNBC have proved that Foodpanda and Deliveroo's minimum order requirements are usually between HK$50 to HK$80 not including delivery fees. Moreover, KeeTa has put in place an "on-time promise" policy, under which customers are compensated with vouchers if their orders have been more than 15 minutes later than expected. Ryan Lai, managing director of Foodpanda Hong Kong, stated that short-term promotions are inadequate to create customer loyalty for the long haul. He also mentioned that the development of a new player in the local delivery industry demonstrates the significant potential of this sector in the market. As such, Foodpanda is looking to provide their customers with a better service.
A Deliveroo Hong Kong spokesperson commented on the new entrant, expressing their optimism about the potential of the local food and grocery industry, attributing growth to healthy competition. They added that recently, the platform launched the "on-time promise" policy to compensate users with vouchers when orders are late by 15 minutes or more. However, Momentum Works' report suggested that despite this, the food delivery market in Hong Kong remains lukewarm. On the other hand, they noted that KeeTa may benefit from its parent company's experience in China, with the right leadership, personnel, and internal structure, they should be able to handle the two incumbents.
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