Meituan's "Middle East Strategy": Opportunities in the $30 billion Takeout Market

China's internet giant Meituan is setting its sights on a new promised land—the Middle East.

On March 5th, a research report from Morgan Stanley revealed Meituan's "Middle East strategy," as a fierce competition around the $30 billion food delivery market is about to unfold.

Morgan Stanley's Gary Yu team pointed out that the online food delivery market in the Gulf Cooperation Council (GCC) countries, including Saudi Arabia, the United Arab Emirates, Kuwait, Oman, Bahrain, and Qatar, is expected to reach a scale of $30 billion by 2028, with a compound annual growth rate (CAGR) of up to 15% from 2024 to 2028.

In contrast, the growth rates of the food delivery markets in the UK, China, and the US are 5%, 8%, and 8%, respectively, making the GCC market undoubtedly a vibrant "new continent."

GCC Food Delivery Market: A New Continent Awaiting Development?

Against the backdrop of increasingly fierce competition in China's online food delivery market, Meituan is seeking new growth momentum by entering the Middle Eastern market, especially in GCC countries.

Morgan Stanley noted that by 2028, the online food delivery market in the GCC region is expected to reach $30 billion, with an annual growth rate of 15%. In this market, Meituan plans to capture a 20% market share in the coming years, which is expected to bring in an additional $1.5 billion in revenue.

Among them, Saudi Arabia is the largest food delivery market in the GCC region, expected to reach $16 billion by 2028, accounting for over 50% of the total GCC market. The UAE follows closely, with an expected market size of $7 billion by 2028. Although Kuwait has a smaller market size, it has significant growth potential. Morgan Stanley's proprietary assessment framework shows that Saudi Arabia, the UAE, and Kuwait are the most attractive markets in the GCC region.

The research report pointed out that not only is the market in GCC countries growing rapidly, but the penetration rate of online food delivery is also continuously increasing, expected to reach 31% by 2028. Additionally, the Middle Eastern market features high average order values, high profit margins, and low delivery costs, providing favorable conditions for Meituan's entry.

Meituan's Middle East Layout: Keeta's "Lightning Strike" in Saudi Arabia

Meituan launched its food delivery brand Keeta in Saudi Arabia in October 2024 and established operations in nine cities, including Riyadh, Jeddah, Mecca, and Medina, within three months, covering nearly half of Saudi Arabia's population. According to Morgan Stanley's estimates, Keeta currently holds about 10% of the food delivery market share in Saudi Arabia.

The research report predicts that Keeta will enter the UAE market in the second half of 2025, followed by expansion into Kuwait and other GCC countries. Under basic conditions, Keeta is expected to capture 20% of the GCC food delivery market by 2028, achieving a GMV (Gross Merchandise Volume) of $6 billion Under a high scenario assumption, Meituan's market share is expected to reach 27%, with GMV reaching $8 billion.

Meituan's "Secret Recipe": Can It Work in the Middle East?

What gives Meituan confidence? Research reports suggest that Meituan's core advantage lies in its successful experience accumulated in the Chinese and Hong Kong markets:

• Strong Technology Platform: Meituan has an AI-based intelligent scheduling system that optimizes delivery routes and shortens delivery times. It is reported that Keeta's average delivery time in the GCC region is 30-40 minutes, better than the local average of 40-60 minutes.
• Efficient Cost Structure: Meituan is known for its lean operations, achieving profitability even with lower average order values. This is thanks to its strict cost control and relentless pursuit of rider efficiency.
• Strong Marketing Capability: Meituan has rapidly increased user and merchant stickiness by offering substantial coupons for new users, price guarantee programs, and partnerships with large chain restaurants. Morgan Stanley estimates that Meituan's annual investment in the Middle East market will reach $600 million to $1 billion, mainly for marketing and rider costs.

Despite showing strong competitiveness in the Middle East market, Meituan still faces numerous challenges. Firstly, regulatory policies in countries like Saudi Arabia are relatively strict, such as the freeze on motorcycle licenses and licensing requirements for full-time riders, which may limit Meituan's expansion speed.

Secondly, the market competition in GCC countries like the UAE is fierce, with existing companies like Talabat already holding a significant market share, requiring Meituan to invest more marketing resources to gain share. Additionally, some competitors have a strong presence in the quick commerce sector, which may increase user stickiness to the Meituan platform, thereby hindering its market penetration.

Financial Forecast: Is Long-term Profitability Expected?

Morgan Stanley remains optimistic about Meituan's financial prospects. It is expected that the incremental revenue Meituan gains from its delivery business in the GCC market will reach RMB 1.15 billion (approximately $150 million) by 2028. Although the new business will face losses during the 2025-2027 period, it is expected to break even by 2028.

Morgan Stanley maintains a target price of HKD 200 for Meituan, based on a DCF valuation model, assuming a discount rate of 12% and a terminal growth rate of 3%. This target price corresponds to an expected price-to-earnings ratio of 18 times for 2026. Currently, Meituan is priced at HKD 184 per share, indicating an upside potential of 8.70% to the target price.