On April 10, Guangdong Restaurant Association issued a negotiation letter to Meituan, a Chinese O2O delivery platform, criticizing that it charges excessive commissions from catering merchants. The exclusive terms also bar the restaurants from selling food on other platforms, which make it hard for them to survive amid COVID-19.
On April 13, according to Jiemian, Puzhong Wang, senior vice president of Meituan, responded, “Meituan has been losing money for 5 years since it was founded. Even in the barely break-even 2019, the average profit per order was less than RMB 0.2 in the fourth quarter, accounting for 2% of revenue. The majority of the platform’s money is invested in helping merchants with professional distribution, order acquisition and digital construction.”
Wang also said that Meituan firmly believes in long-term benefits. It has built a future-oriented distribution network exerting greater social values while delivering things beyond food. “To Meituan, the customer experience comes first, followed by merchants’ value, delivery riders’ salary, and finally the platform’s revenue,” he said.
According to Meituan, over 80% of merchants’ commissions range from 10% to 20%, a number far lower than the current rumors. In 2019, more than 3 million merchants received orders from the platform, and nearly 4 million delivery riders made a profit.
During the pandemic, Meituan claims to have also suffered from losses despite striving for normal operation. At a time when most catering businesses can only count on the delivery platform, Meituan is working with them to increase income, decrease costs and help recover the industry.
Since the outbreak, Meituan has adopted subsidiary measures for merchants. It distributed a “network traffic package” worth RMB 500 million – 4/5 of the money goes to support newly-launched merchants and 1/4 to long-time restaurants – and a monthly subsidy of RMB 400 million. For high-quality merchants affected by the crisis – more than 600,000 across the country – the platform will return the commissions at a rate of 3-5%. Those in Wuhan have been exempted from commissions from February to March until the end of lockdown – April 8.