DOMESTIC food delivery giant Meituan reported Friday a better than expected 30.6% rise in fourth-quarter revenue at the same time as investment in new initiatives increased losses and costs related to regulatory scrutiny rose.

Meituan, whose services also include restaurant reviews and bike-sharing, posted revenue of 49.52 billion yuan (US$7.78 billion) in the final three months of 2021, thanks to a 21% rise in its food delivery business, which accounts for over half of Meituan’s revenue. An extra boost came from its 59% jump in revenue from new businesses, including grocery delivery and group-buying offerings.

The company also for the first time disclosed its commission revenue, which made up about 30% of its food delivery sales in the quarter.

Meituan said earlier this month it would lower commission charged to some merchants. That includes halving technology service fees for vendors in pandemic-affected areas, capped at one yuan per order, after regulators asked food delivery companies to reduce fees to help lower costs for catering businesses hit by the pandemic.

But Meituan’s growth came at the expense of heavy investments that weighed on profitability. The firm’s quarterly net loss widened to 5.34 billion yuan from a loss of 2.24 billion yuan in the same period a year earlier, as its sales and marketing expenses surged 46%.

This marked Meituan’s fifth consecutive quarter in the red, after the firm embarked on a spending spree since late 2020 to build up new business lines.

Meituan expects its operating loss from new initiatives to narrow in 2022, CEO Wang Xing said on a conference call.

(SD-Agencies)