Date
24 July 2017
Food couriers assemble near a park in Beijing. Start-ups offering cheap food delivery services are giving western fast-food chains a run for their money. Photo: WSJ
Food couriers assemble near a park in Beijing. Start-ups offering cheap food delivery services are giving western fast-food chains a run for their money. Photo: WSJ

How Alibaba and Tencent are firing up food delivery start-ups

Chinese start-ups backed by the likes of Alibaba and Tencent are tucking into a growing urban appetite for delivered food.

They’re taking the fight to western food chains by offering door-to-door delivery of a wider range of dishes at lower prices.

The Wall Street Journal is reporting that big players such as McDonald’s Corp. and Yum Brands Inc., which owns KFC and Pizza Hut, are watching the trend even as they press on with their own delivery service.

For years, the fast-food chains got a leg up over rivals by speeding hamburgers and fried chicken to buyers’ homes and offices, building their own armies of bike-driving couriers who dash out orders that were phoned in or place online.

The Western chains became popular in China “because they were foreign and they delivered”, said Nathan Snyder, a research analyst at brokerage CLSA.

“That’s no longer an advantage,” he said.

Start-ups Ele.me and Meituan Waimai, which operate via mobile applications and are backed respectively by Tencent and Alibaba, are getting economies of scale by teaming up with tens of thousands of food outlets across China.

The surge in delivery firms is evident from the proliferation of uniformed couriers zipping around major cities on motorbikes with insulated bags.

Yan Shihui, who works for Ele.me, says he can deliver to five customers per hour on his motorbike in Beijing.

Yan, 19, who has been on the job for only a few months, hits the streets as early as 9:30 a.m. until as late as 11:30 p.m., hopping from mostly Chinese restaurant chains to homes and offices, earning money for each delivery, according to WSJ.

The trend for food delivery is boosting sales for smaller regional chains, too.

Beijing Weizhiwei Catering Ltd., which sells noodles and meat sticks from China’s southwestern Yunnan region, has 50 outlets in Beijing and the nearby city of Tianjin.

Employees in a Beijing branch of the chain say the shop pulls in an extra 1,000 yuan (US$161), a day from three different delivery firms, according to a manager at a branch in northeastern Beijing.

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