(Yicai) Dec. 15 -- Chinese on-demand services giant Meituan is hanging back on expanding into the Middle East, tech media outlet 36Kr reported.

Meituan is unsure whether the region’s takeout market is worth going after and whether it can be profitable in the short term, the report said today, citing an unidentified source. The Beijing-based firm has still to select which city and decide on what operations to start with, after studying a number of markets in the Middle East this year, the report said.

Chief Executive Wang Xing, Zhu Wenqian, head of strategic overseas investments, and Wang Puzhong, president of its home delivery business group, visited the region in May and met with government ministers and members of the Saudi royal family, the report said.

Then mid-year, Meituan tried to recruit a director of human resources to set up a Middle East team and considered making Riyadh the pilot city, but the plans were put on hold, 36Kr reported.

Dubai, a city in the United Arab Emirates known for luxury shopping and busy nightlife, already has major takeout platforms such as Talabat, Careem, and Deliveroo. Talabat is backed by Germany’s Delivery Hero, the parent company of Foodpanda.

Delivery Hero has not specifically said how much income its UAE business generates, but last year it had revenue of EUR2.2 billion (USD2.4 billion) from the Middle East and North Africa. It made a mere profit of EUR130 million (USD143 million).

Still, the Middle East has potential, 36Kr said, as each customer there spends an average of more than CNY200 (USD28) per takeout order, whereas in China each food and drink order placed through Meituan’s platform averaged CNY49 (USD7) in the third quarter. 

The UAE’s takeout market may have 5.5 million users and be worth USD2.8 billion by 2026, according to Statista. 

Meituan’s CEO has said several times that going overseas is a must and a huge opportunity, but the company will be cautious. On its third-quarter earnings call with investors, executives said Meituan does not rule out the possibility of seeking growth abroad.

Editor: Emmi Laine