Meituan currently resembles walking a tightrope. On one side, it must use funds from its core business to fend off competitors, while on the other, it must invest in new ventures to bet on the future.
The company reported an annual loss exceeding 23 billion yuan. On March 26, Meituan released its 2025 financial report, showing a dramatic swing from a profit of 35.8 billion yuan to a massive loss of 23.4 billion yuan—a nearly 60-billion-yuan profit reversal.
To understand the true situation of this local生活 services giant, three key questions need answering: Where did the money go? Was the battle won? And what is the future foundation?
Where did the 23.4 billion yuan loss occur? An analysis of Meituan's financial report reveals that the losses accelerated then moderated: profits plunged in the second quarter, core business losses peaked at 14.1 billion yuan in the third quarter, and narrowed to 10 billion yuan in the fourth quarter.
This loss trajectory closely aligns with the intensity of the food delivery competition. The second and third quarters marked the peak of intense rivalry with JD.com's delivery service and Taobao's Quick Buy.
A notable concern is the collapse in the company's gross margin. In 2025, Meituan's gross margin fell from 38.4% to 30.4%, an 8-percentage-point drop that severely undermined its profit foundation.
Why did the gross margin decline so sharply? The primary reason is that the growth rate of sales costs far exceeded revenue growth: sales costs increased 22.2% year-over-year to 2.538 trillion yuan, while revenue grew only 8.1%. Cost growth was nearly 2.7 times that of revenue. Simply put, for every 100 yuan of revenue generated, the associated cost increased by nearly 8 yuan compared to the previous year.
While gross profit declined, marketing expenses surged dramatically. Annual marketing expenses skyrocketed from 64 billion yuan to 102.9 billion yuan, an increase of 38.9 billion yuan, or 60.9%. This expense now accounts for 28.2% of revenue, up from 19%. In other words, for every 100 yuan of revenue Meituan earns, 28 yuan is spent on subsidies, promotions, and user acquisition.
In 2024, Meituan's core business—comprising food delivery and local in-store services—contributed a profit of 52.4 billion yuan. By 2025, this segment turned into a loss of 6.9 billion yuan. A 59.3-billion-yuan profit evaporated. Meanwhile, losses from new businesses increased by only 2.8 billion yuan compared to the previous year.
The core business became the main contributor to Meituan's 2025 losses, with new businesses playing a secondary role. This can no longer be dismissed as the cost of expansion; it signals a dangerous erosion of the company's main stronghold in a competitive market.
Was the food delivery battle won? The food delivery war has been a disaster for China's tech retail sector. In 2024, Meituan's performance was relatively stable: food delivery was profitable, and in-store services grew. But in 2025, with JD.com's high-profile entry into food delivery and Alibaba's升级 of Taobao Quick Buy coupled with a subsidy war, Meituan was dragged into an unavoidable conflict.
After nearly a year of fierce competition, not only have the major players suffered losses, but the entire餐饮 industry and broader consumer spending have also been impacted to varying degrees.
According to Meituan's own statements, based on transaction volume, its market share in food delivery remains stable above 60%, with an absolute advantage in the mid-to-high price point restaurant segment.
Another institution estimates that market shares fluctuate within the following ranges: Meituan 55%-58%, Taobao Quick Buy 35%-37%, and JD.com Delivery 5%-8%.
Media reports suggest Meituan defended its market share with significantly lower losses than its competitors. In the fourth quarter of last year, the per-order loss gap between Meituan and Taobao Quick Buy narrowed to 1.5 yuan, but by the first quarter of this year, it widened again to 2 yuan.
Some observers believe Meituan stabilized its position with a lower cost of defense. Although its market share saw a slight decline, it has become harder for competitors to catch up, seemingly widening Meituan's moat.
By the fourth quarter of 2025, Meituan's marketing expenses decreased by over 2 billion yuan sequentially. The toll of the war has become unsustainable for all participants.
However, when this conflict will end does not seem to depend solely on Meituan. Late last year, Taobao Quick Buy率先 reduced subsidies, and Meituan followed suit. In the first quarter of this year, Taobao Quick Buy continued cutting subsidies in more regions. This might appear as a "win" for Meituan. But the problem is, Alibaba, behind Taobao Quick Buy, holds cash reserves several times larger than Meituan's. Meituan is waiting for Alibaba to make a mistake, but Alibaba may have greater staying power.
Internally, Meituan judges that if Taobao Quick Buy maintains its current pace of loss reduction, it could achieve monthly profitability by mid-year. However, this premise is fragile. The first quarter is typically a slow season for food delivery, and both sides have reduced their investments.
Particularly noteworthy is that Alibaba typically finalizes its annual strategic focus each year after March performance reviews. In fact, Alibaba management has already stated clearly at the beginning of the year that 2026 will involve continued heavy investment in Taobao Quick Buy, "until its market share surpasses Meituan."
More troublingly, while reducing subsidies, Meituan began seeking revenue from merchants. Merchants in multiple regions nationwide reported that per-order delivery fees have generally increased compared to the third quarter of last year.
How sustainable are these cost-shifting tactics?餐饮 merchants, who bear delivery and marketing costs themselves, generally prefer consumers to dine in rather than order delivery. From chains like KFC, Luckin Coffee, and Mixue Bingcheng to smaller restaurants, many are raising prices on delivery orders. There is a limit to how much "harvesting" merchants can tolerate.
The besieged in-store business: If food delivery is an overt battle of positions, then the in-store business is a guerrilla war with undercurrents. Currently, Meituan's in-store business faces a pincer attack from Douyin and Amap.
According to financial report data, in the last quarter, Meituan's commission income began to decline, and advertising revenue growth was a mere 2.3%. Meanwhile, the decline in delivery revenue, which is strongly tied to food delivery, is narrowing.
More problematic is that the growth rate of in-store revenue has consistently lagged behind the growth rate of transaction volume. This implies that Meituan's effective commission rate per transaction is decreasing.
The first competitor is Douyin. In 2025 full year, Douyin's local lifestyle services transaction volume grew 59% year-over-year, with this year's GMV growth target set around 50%. Douyin's local lifestyle goal is to surpass Meituan's in-store business transaction volume by 2026. In February, it launched the standalone app "Dou Shengsheng," moving directly from "video discovery" into "search and order" territory.
The second competitor is Amap. In September 2025, Amap officially launched the "Amap Street Guide." This ranking is generated based on user data for navigation, search, and in-store visits. Within 100 days of launch, the Street Guide user base exceeded 660 million, with 70 million daily active users. 860,000 merchants proactively joined, order volume increased over 330% sequentially, and transaction value grew over 270%. By user scale, it is potentially the world's largest lifestyle services ranking.
Two competitors, two battlefronts. Douyin targets users' "impulse consumption," while Amap targets users' "authentic trust." Meituan's proud "authentic review" system is being challenged simultaneously by opponents on two different fronts.
How is Meituan responding? In the first quarter of this year, the in-store business maintained a profit margin around 25%, but the代价 was revenue growth falling to single digits.
By transaction volume, Meituan remains the leader in the in-store market, but Douyin and Amap are steadily eroding this market from different angles. The in-store business was once Meituan's profit engine. In 2024, it contributed the bulk of the core business's 52.4-billion-yuan profit. If this profit pool continues to be eroded, Meituan's financial foundation will face a fundamental challenge.
New ventures under fire: In 2025, driven by the overseas expansion of Keeta and the self-operated retail growth of Elephant Supermarket, Meituan's new business revenue grew 19%, significantly outpacing the core business.
The financial report shows that in the fourth quarter, losses from new businesses expanded from 13 billion yuan the previous quarter to 47 billion yuan, burning an additional 34 billion yuan sequentially.
More noteworthy than the loss figures is whether the pace of AI investment has been disrupted by the food delivery war. In March last year, Meituan首次 disclosed its AI strategy, with CEO Wang Xing stating AI is for offense, not defense. One year later, Meituan's annual R&D expenditure reached 26 billion yuan, up 23.5% year-over-year, increasing its share of revenue from 6.2% to 7.1%. This indicates that the pace of AI investment has not slowed but accelerated.
Wang Xing said on the earnings call that, aside from cloud providers, Meituan is likely one of the Chinese companies investing the most in AI. His logic is that as human-computer interaction shifts from "search" to "conversation," whoever can truly "get things done" will become the next super gateway.
In Wang Xing's view, there is no real endgame in business competition, as "the board keeps expanding." With Alibaba, Douyin, and Amap attacking simultaneously from different directions, the challenge for Wang Xing is not whether to expand, but what resources to use for expansion.
Meituan's response has been a shift towards self-operated models. Waima Songjiū (Crooked Horse Alcohol Delivery) employs a self-controlled supply chain model, having cumulatively opened over 2,000 warehouses, with transaction volume exceeding 6 billion yuan. Elephant Supermarket carries the banner for self-operated retail, already covering 39 cities. Just before the Spring Festival, Meituan acquired Dingdong Maicai's Chinese operations for $717 million. This acquisition helped Elephant Supermarket conclude its battle in East China and prevented competitors from acquiring its warehouse and delivery network.
Reports suggest that after the food delivery war intensified, Wang Xing shifted more focus to Elephant Supermarket. This似乎暗示 that beyond food delivery and in-store services, instant retail might be Wang Xing's true bet on the future.
Such bets come at a cost. Today's Meituan requires funding for multiple fronts: defending against Alibaba in food delivery, defending against Douyin and Amap in in-store services, building out national grocery retail delivery infrastructure, overseas expansion, and AI development. With insufficient funds, retrenchment is inevitable.
Before the food delivery war escalated, Meituan had plans to attack the high-star hotel market, but these were shelved as the subsidy war intensified. Earlier, Meituan halted its community group buying business, Meituan Youxuan (Meituan Preferred), which had accumulated losses exceeding 100 billion yuan. In late February, Keeta's planned launch in Rio was abruptly halted just before commencement, leading to the layoff of the local 200-person team.
The current Meituan is like walking a tightrope. It must use core business funds to block competitors while betting on the future with new business investments. Savings from the food delivery front are quickly burned by overseas expansion; stability in in-store profits is challenged as Douyin and Amap adopt new offensive tactics.
The major battle may have subsided, but smaller skirmishes persist. Meituan has withstood the fiercest bombardment, only to face a more protracted war of attrition. The opponents have changed tactics, the battlefield has transformed, but one thing remains constant: Meituan's future is destined to be anything but smooth.
