Industry Tailwinds

Industry Tailwinds

The recovery half of the case — the consensus that revenue reaccelerates to double digits and profit returns by 2027 — rests on the market itself still expanding. Meituan's own record supports that: platform transaction volume grew double digits even in the loss year, in-store orders rose over 65% in 2024, and on-demand retail over 40% in 2023. Demand is still expanding across frequency, quick commerce, and lower-tier cities. What 2025 also proved is that a growing market does not, by itself, protect the profit inside it.

The market Meituan was underwritten to grow into

The clearest independent measure of the opportunity is also the oldest one in the corpus. Meituan's 2018 listing prospectus commissioned iResearch to size the industry: China's food retail and service market was ¥8,735 billion in 2017 with an online penetration rate of just 13.4%, forecast to reach ¥14,132 billion at 29.5% online penetration by 2023 [1]. The broader consumer-service e-commerce market it sits inside was put at ¥2,705 billion in 2017, growing at a 19.8% CAGR to ¥8,011 billion by 2023 [2].

Sources: Global Offering Prospectus (2018), Industry Overview [3], competitive landscape [4] and business section [5].

What carries the tailwind is the low online penetration rate. A market that is only 13.4% online is one where growth comes from converting offline spending to online, not from stealing an existing online rival's share — a structurally easier tailwind, and the reason the prospectus expected the online-penetration rate to more than double in six years.

Source: Global Offering Prospectus (2018), Industry Overview [6].

Two honest limits apply to this data. It is 2018-vintage, and its forecast horizon (2023) has now passed; the corpus holds no equally rigorous, independently-sourced current market-size figure, and web research was unavailable for this run. The forward view below therefore leans on Meituan's own realized operating metrics rather than a fresh third-party TAM — which understates the independence of the evidence but not its direction.

The demand engine kept compounding

Even without a refreshed market study, the company's growth metrics show the market was still expanding right through the disruption. The prospectus itself set the pattern: transactions per user rose from 10.4 in 2015 to 12.9 in 2016 to 18.8 in 2017 — a platform whose users kept ordering more often as it added categories [7]. That same frequency-plus-breadth mechanism carried forward across the recent years, one vector at a time.

Sources: FY2023 Annual Report, Statement from the Chairman [8]; FY2024 Annual Report, Statement from the Chairman [9]; FY2025 Annual Report, Statement from the Chairman [10].

The FY2025 line speaks most directly to the through-line. In the worst operating year in the company's history, platform GTV and transaction volume still grew double digits, and annual transacting users, order frequency, and ARPU all reached historic highs [11]. The 2025 loss was not the market shrinking; the market grew. Management ended the year saying it remained "confident in the long-term growth potential and competitiveness" of the Core Local Commerce segment [12] — a claim the volume data supports even if the margin data does not.

Where the runway still sits

Three vectors carry most of the remaining upside, and all three are visible in the filings rather than asserted.

The largest is on-demand retail — quick commerce beyond food. Instashopping order volume grew over 40% in 2023, its active merchants almost 30%, and the prospectus-era "food in 30 minutes" habit has broadened into groceries, medicine, liquor, and appliances delivered on the same courier network [13]. The 2025 report shows this hardening into infrastructure — InstaMarts and Branded Flagship InstaMarts "flash warehouses," Xiaoxiang Supermarket front distribution centers accelerating city expansion in the fourth quarter, and expansion into medicine and health supply [14]. Meituan's own framing is that Instashopping users skew younger, stickier, and higher-spending than food-delivery users — a mix that lifts frequency and ticket size together [15].

The second is geographic. Meituan has been "deepening penetration into lower-tier cities" since at least 2021 [16], and in 2024 accelerated into the "county economy," streamlining onboarding for small merchants in markets where online penetration lags the tier-1 cities [17]. The third is the recovery and cross-sell of the high-margin in-store, hotel and travel category, where 2024 order volume soared over 65% and where a food-delivery user base is funneled into higher-value bookings [18].

What a tailwind does not do

A rising market is necessary for the recovery case; it is not sufficient, and two facts in the same filings bound it.

First, the macro drag is real and persistent. Some version of "despite challenges from the macro environment" appears in every recent annual report; in 2022 the Core segment grew 17.6% "despite negative impacts from the macro environment" [19]. That phrasing cuts both ways: the platform kept growing through weak Chinese consumption, but the demand tailwind has been running into a consumption headwind for years, and value-oriented formats like Pin Hao Fan exist precisely because consumers are trading down.

Second, a growing market did not defend the profit pool in 2025. Platform volume grew double digits while the Core segment swung from a ¥52.4 billion operating profit to a ¥6.9 billion loss. The tailwind and the loss coexisted in the same twelve months. That separates two questions the recovery case tends to blur: whether the market grows (the evidence says yes) and whether Meituan keeps the profit on that growth (unresolved, and the subject of Order Density). A larger addressable market raises the ceiling on the recovery; it says nothing about the floor, which competition sets.

The read that follows from the evidence: the industry tailwind is genuine and multi-vector — frequency, on-demand retail, lower-tier penetration, in-store recovery — and it is the demand-side support under the double-digit forward revenue consensus. The main fact against leaning on it is that the hard independent sizing is 2018-vintage and that 2025 showed volume growth and profit collapse can happen at once. What would sharpen the read: sustained double-digit on-demand-retail GTV growth in the 2026 quarterly disclosures, continued gains in order frequency and ARPU, and — the piece the tailwind cannot supply — evidence that the growth is again converting to segment profit as subsidies normalize.