On with the discussion about the Guangdong/HK Tea Houses in Shanghai, with a focus on honest critique and analysis.
Firstly, the landscape is fiercely competitive. However, the competition does not translate into commensurate quality but rather inflated prices. This does not align with the typical characteristics of Bertrand competition. A cursory search on Meituan for “Tea Houses” within a 3-kilometer radius yields approximately 30 results, all claiming to offer authentic Guangdong or Hong Kong flavors. Regrettably, it’s fair to say that at least half of these establishments fall far from the mark of excellence.
As consumers, we bear the burden of search costs, which accompany every online delivery order or in-person visit to a restaurant. The accumulation of disappointing experiences gradually erodes our expectations. This cycle prompts us to reconsider and wonder, “Why didn’t I stick with my trusted choices?” Regret becomes a familiar companion, discouraging us from venturing into culinary experimentation in the future.
Turning to empirical observations, the top five recommendations on the Meituan App are often denoted as the “most popular Tea Houses in the district.” However, these establishments exhibit an average meal price ranging from ¥30 to ¥50, a common range within Shanghai but clearly surpassing their production costs. Moreover, the presented price does not encompass the entirety of expenses, as it conceals additional charges under the guises of “packaging fees,” “delivery fees,” and even supplementary charges for condiments.
The price is inflated, food quality barely satisfying but…packaging is fancy. They are really sabotaging the reputation of Guangdong Cuisine. What a disgrace.
For heaven’s sake why and where did the excessive revenue go? A substantial portion goes to Meituan’s special position in the delivery platform sector. As a market leader with an extensive array of restaurants and consumers, Meituan wields the privilege of determining prices, thereby maximizing its own revenue. The phenomenon of inflated prices is predominantly attributable to Meituan’s pursuit of profit, restaurants conforming to the industry’s overpackaging practices, and promotional fees. This capital seldom serves to enhance the quality of the food.
Furthermore, it remains an enigma how low-quality restaurants manage to do sponsor search and elevate their positions in search results. This scenario essentially shapes an all-pay auction wherein participants vie intensely for dominance, leaving consumers to shoulder the consequences.
Meituan’s recommendations to consumers are heavily influenced by individual purchasing and viewing histories, a strategy geared towards augmenting the perceived match value. While this approach aims to minimize search costs and increase engagement on the platform, it inadvertently fosters an environment of culinary homogeneity.
Taking a broader perspective, Indonesia’s decision to segregate social media from online retail through the ban on e-commerce services in TikTok merits recognition. These platforms have skillfully exploited users’ digital dependencies, ultimately diverting revenue towards themselves. While they may assert an overall enhancement of sales, the microeconomic implications remain, as yet, unsubstantiated.
It’s a topic to be researched, and I’ll bet $100 that the answer is negative. Meituan and its highly competitive restaurant business model have cast a shadow on the authenticity of Guangdong Cuisine. I am really taking it personal.