The existing method is difficult to consider the actual state of geogrid ribs under loading, which could underestimate the settlement of the geogrid-encased stone column (GESC) composite foundation. In order to solve this problem, in this paper, the unit cell concept was employed as the objects in the analysis, while it was assumed that GESC together with soil was elastic materials and evenly deformed. Stone column was constrained by geogrid and earth ring at the same time, while the earth ring can be considered as a ring with earth pressure at rest provided by soil outside and bulging pressure caused by the stone column installed inside. Hook's law was then introduced to gain the stress-strain formula of the unit cell. Then, a different method of settlement calculation of GESC composite foundation was established. The rationality of the results of this method was verified by an engineering example and also compared with the existing method. The result demonstrates that the method agrees well with the engineering example. Through the comparison with the existing method, it is found that the relative error between the calculated value and measured value is +5.70%, which demonstrates the method presented in this paper is safer and more accurate as a result of the combined top loading and lateral deformation of GESC. The parametric study shows that the replacement ratio has a significant influence on the controlling settlement of composite foundation, and the increase of the replacement ratio can effectively reduce the pile - soil ratio and settlement of composite foundation when a certain level load is applied.