In-Store Profit Pool

In-Store Profit Pool

Figures converted from Chinese renminbi (RMB) at historical FX rates — see data/company.json.fx_rates for the rate table. Ratios, margins, and multiples are unitless and unchanged.

Meituan's profit has always concentrated in in-store, hotel and travel, not food delivery. In its last separately reported year, 2021, that business earned a 43.3% operating margin and about 70% of the two consumer segments' operating profit on a quarter of their revenue [1] [2]. Since April 2022 it has been folded into "Core Local Commerce" and no longer shown. It now faces a different contest — Douyin's content-led local-services push — that courier density does nothing to defend.

The high-margin business Meituan stopped showing

The density moat protects a profit pool, but the pool is not where the unit-economics work concentrated. Food delivery is the volume engine; the money has always been made in in-store, hotel and travel — restaurant group-buying, dining and lifestyle vouchers, hotel and attraction bookings — a marketplace that carries almost no delivery cost and monetises through commission and merchant advertising.

The last year Meituan disclosed it as a standalone segment lays the contrast bare. In 2021 in-store, hotel and travel earned $2.2bn of operating profit on $5.1bn of revenue — a 43.3% operating margin, up from 38.5% in 2020 [2]. Food delivery, on triple the revenue ($15.1bn), earned less than half as much operating profit ($1.0bn), a 6.4% margin [1].

Source: FY2021 Annual Report, segment financial information and Chairman's Statement [1] [2]; FY2020 comparatives from the same segment table [3].

Aggregate operating profit of the two consumer segments was $3.2bn in 2021 [4]. In-store, hotel and travel supplied $2.2bn of it — 69.5% — while accounting for 25.2% of the combined revenue. The proportions matter more than the level: the segment a professional investor would reflexively treat as Meituan's identity, food delivery, was the low-margin traffic business; the profit sat in the marketplace next to it.

Source: derived from FY2021 segment operating profit and revenue [1] [4].

Source: FY2021 Annual Report, segment financial information [1].

Folded into one line

From April 1, 2022 Meituan changed how it reports. Food delivery and in-store, hotel and travel — plus Instashopping, accommodation and ticketing — were combined into a single "Core Local Commerce" segment, on the stated grounds that these businesses "have proven economics or similar business models" [5]. Whatever the merits of that rationale, the practical effect is that the 43.3% in-store margin was the last the market ever saw. Since then, a business with roughly 6% margins and a business with 40%-plus margins report as one blended number.

That blended Core Local Commerce margin ran 18.4% in 2022 and 18.7% in 2023 [6], reached 20.9% in 2024, then collapsed to negative 2.6% in the 2025 subsidy war [7].

Source: FY2023 and FY2025 Annual Reports, segment operating profit and margin [6] [7].

The blended number lends itself to a specific misreading. A reader who sees Core Local Commerce swing to a loss in 2025 will attribute it to the food-delivery war covered earlier — correctly, as far as it goes. But the same blended line also hides the more valuable business inside it. If in-store still runs anywhere near its historical margin, it was carrying the segment through the war, which means the food-delivery-only loss in 2025 was deeper than the headline negative-2.6% suggests. The disclosure that would settle this — a standalone in-store margin — is precisely what Meituan stopped providing.

A contest fought on traffic, not logistics

The in-store profit pool has its own competitive story, and it is not the one told in the density moat chapter. Food delivery is contested on logistics cost, where Meituan's courier network is the barrier. In-store is contested on traffic and content, where it is not. The entrant that mattered here was Douyin, whose short-video and livestream feed sends users to discounted local deals without any delivery fleet at all.

Meituan's response, visible across the filings from 2023, was to trade take rate for defence. It pushed "Special Deals" group-buying and platform, merchant and sales-team livestreaming, lowered the subscription threshold to onboard merchants faster, and leaned on an "Everyday Low Price" positioning [8], extending the same playbook through 2024 [9]. The volume response was real: in-store order volume rose more than 50% year over year in the third quarter of 2024 and more than 65% for the full year [10] [11]. Meituan held its ground on volume by discounting the offer.

What management would not do is put a margin on it. Asked directly on the third-quarter 2024 call about the in-store operating margin, the company declined to guide, saying it now focuses "on operating profit growth rather than operating margin since the blended operating margin is impacted by various GTV competition across categories and city tiers" [12]. The shift from margin to profit-growth framing coincided with the period of heaviest competition. It may be an honest description of a genuinely mixed segment; it also removes the standalone in-store margin that would show how much of the historical 43% margin remained through the competition.

The reassuring reading has support. Meituan defended its position — through the 2025 delivery war, management described its "market position in core in-store categories" as stable and both order volume and GTV as growing [13]. Trade-press estimates put Douyin's local-services gross transaction value near $120bn with its growth strategy shifting to "measured" expansion, consistent with an attack that has slowed rather than a share rout. The in-store moat — a decade of Dianping reviews, merchant relationships and consumer mindshare in local services — is a genuine barrier, even if it is a softer, more contestable one than a physical delivery network.

The read this chapter reaches is narrower than either bull or bear. Meituan's profit engine has always been the in-store marketplace, not food delivery; that engine is more exposed to a content-and-traffic competitor than the group's delivery-density story implies; and Meituan is no longer telling investors how well the engine is running. On the evidence, the segment was defended on volume at some cost to margin, and remains the likely profit centre of the group — but a professional investor valuing Core Local Commerce is valuing a margin they cannot see, against a content-and-traffic competitor the delivery network was not built to hold off. That unseen margin is where the group's valuation is ultimately decided. The ~US$13-per-share gap between Meituan's bear and bull valuations turns almost entirely on the normalised Core Local Commerce margin — a figure dominated by an in-store, hotel and travel business that earned a 43.3% operating margin and ~70% of the two consumer segments' operating profit in 2021 but whose margin Meituan has not disclosed since April 2022. [2] [1] [5] The strongest fact against reading the disclosure change as evasive is the operating logic Meituan gave for it: after integration, in-store, delivery and Instashopping genuinely share users and marketing, so a clean segment split is harder to draw than it was in 2021 [5]. What would change the read: a resumed standalone in-store margin, or hard third-party data on Douyin's local-services share, either of which would replace an inference with a number.