Food delivery battle anniversary review: Meituan's intense competition resulted in a loss of 23.4 billion yuan, and Wang Xing revealed "continued loss reduction in the first quarter of this year"

Wang Xing revealed that the expected month-over-month improvement in the average loss per order for food delivery in Q1 will be better than in Q4 last year.

“Opportunities and challenges coexist, and industry competition is more intense than ever.” That is how Meituan CEO Wang Xing summarized the past year of 2025.

On March 26, Meituan (03690.HK) released its 2025 fourth-quarter and full-year results. The announcement showed that Meituan’s full-year revenue reached RMB 364.9 billion, up 8% year over year. Full-year net loss was RMB 23.4 billion, compared with a profit of RMB 35.8 billion in the same period of 2024 turning into a loss. Among them, the core local commerce segment recorded an operating loss of RMB 6.9 billion.

The food-delivery war that began in the second quarter of 2025 not only turned Meituan’s profitability trajectory, but also reshaped the competitive landscape in China’s local life services market. The once-stable duopoly structure in delivery was broken. With Alibaba and JD combining their e-commerce ecosystem resources to move into the fray, the industry fell into a close-quarters money-burning fight with subsidies and tactics such as commission-free merchant recruitment.

Looking back, after nearly a year of a delivery war, what has Meituan paid for this battle for a position that cannot be lost?

Marketing expenses up 60%, and a signal of narrowing losses by Q4

Behind a steadily escalating chain of regulatory signals, the food delivery industry in 2025 went through a long-running bout of fighting.

In February last year, JD.com boldly announced its entry into the food delivery market. Subsequently, platforms such as Meituan and Taobao Flash Sale joined in, launching a full-scale confrontation. Tactics kept coming—burning money for subsidies, commission-free merchant onboarding, and so on.

For Meituan, which has food delivery as its cornerstone, this has been a defensive war that it had to join.

But what followed was Meituan’s full-scale shift to losses, mainly because profits in the core local commerce segment fell. As Meituan’s basic foundation, in 2025 the core local commerce segment (including food delivery, on-premises dining, Flash Sale, and lodging and travel, among other businesses) recorded an operating loss of RMB 6.9 billion, versus a profit of RMB 52.4 billion in the same period of 2024. Operating margin plunged from 20.9% to -2.6%.

In its financial report, Meituan explicitly pointed out that the operating profit of the core local commerce business turned negative mainly due to a decline in gross margin, as well as increased spending on user incentives, promotions, and advertising-related expenses to boost user transaction activity and stickiness and to respond to fierce competition.

From the financial report, it can be seen that over the past year, to secure the core market position of its food delivery business, Meituan significantly increased investment in user incentives and marketing promotions. In 2025, Meituan’s full-year cost of sales reached RMB 253.8 billion, up 22% year over year; sales and marketing expenses reached RMB 102.9 billion, up 60.9% year over year.

But this financial report also released an important signal: the magnitude of losses has narrowed substantially, and the negative effects of industry competition may already be gradually peaking.

Caiying Times learned from reviewing the financial report that, on a single-quarter basis, in Q4 2025 Meituan’s core local commerce segment recorded an operating loss of RMB 10 billion, which narrowed sharply by 29% month over month compared with the operating loss of RMB 14.1 billion in Q3. The operating loss rate also improved further from 20.9% in Q3 to 15.5%.

Marketing subsidy intensity was also shrinking. In Q4, its cost of sales decreased from RMB 70.3 billion in the previous quarter to RMB 67.969 billion, while sales and marketing expenses fell from RMB 34.3 billion in the previous quarter to RMB 31.7 billion.

Caiying Times learned from the earnings call that evening that Wang Xing disclosed that it is expected that in Q1 the average loss per order for food delivery will improve month over month by a greater margin than in Q4 last year, and that the trend of narrowing losses for food delivery in the first quarter will continue. In addition, from the first quarter to date, Meituan continues to maintain a leading position in GTV in the mid-to-high price order market.

Earlier, however, Haitong International Securities had estimated that Meituan’s food delivery unit economics loss is expected to reduce from RMB 2.6 per order in Q3 last year to RMB 2 per order in Q4, mainly due to reduced winter subsidies.

But in the short term, competitive pressure in the food delivery industry remains. Wang Xing said that competitors increased investment in the near term, which will create some pressure on Meituan’s profitability, and he hopes the market can understand this situation.

Worth noting is that during Alibaba’s earnings call recently, Jiang Fan, CEO of Alibaba’s e-commerce business group, said plainly that in the next two years, it will continue to firmly invest in instant retail to maintain a leading market position; he also expected that the instant retail business segment in fiscal year 2029 will achieve overall profitability.

On the call, Wang Xing once again explicitly stated his stance against industry price wars. He believes that current regulatory guidance is already very clear: regulators firmly oppose “involution” behavior, and Meituan also hopes to create a healthy and orderly market environment. Wang Xing said that Meituan is currently reducing resource input into low-quality orders, while also working to defend market share to ensure it remains in a leading position in 2026.

Also, it was learned that on March 11, UBS, the international investment bank, published a research report indicating that in February 2026, based on average daily order volume, Meituan, Alibaba (Fengniao/Taobao), and JD’s market shares would be 51%, 42%, and 7%, respectively.

Overseas is still in the money-burning period—Keeta accelerates expansion

While working to hold onto its core food delivery base, in 2025 Meituan continued to “throw” resources into new businesses.

In 2025, revenue from Meituan’s new business segment grew 19.1% year over year to RMB 104.029 billion. This segment includes Meituan Youxuan, XiaoXiang Supermarket, and overseas foodservice brands such as Keeta.

However, at present the new business segment as a whole is still recording an operating loss, which widened year over year to RMB 10.1 billion, mainly due to increased investment in overseas businesses.

Last year, Wang Xing also repeatedly emphasized in investor communication meetings the “ten characters”: “Commit to internationalization, focus on internationalization.” Internationalization has become a business growth point Meituan is strongly cultivating. As early as May 2023, Meituan first launched the food delivery brand Keeta in Hong Kong and used it as a base to accelerate expansion of its global footprint.

According to the financial report, Keeta accelerated its global layout in 2025, including entering new markets such as Qatar, Kuwait, the United Arab Emirates, and Brazil. On the call that evening, Wang Xing said that Keeta is expected to achieve monthly UE (unit economics) profitability by the end of 2026 in Saudi Arabia. Previously, Keeta achieved profitability in Hong Kong in October.

“From a long-term perspective, Meituan will remain committed to investing in internationalization, but the direction of investment will focus more on the instant retail track where it can leverage core advantages,” Wang Xing said.

Also, Caiying Times learned from the call that in 2026 Keeta’s losses will still remain at a relatively high level, because multiple new markets that entered in the second half of 2025 are still in the cultivation stage. But Meituan’s efficiency in domestic new businesses continues to improve, and it is expected to offset overseas spending; overall, the new business segment’s loss size in 2026 will not exceed that of 2025.

Meanwhile, domestically, Wang Xing is also trying to find new growth points beyond the core food delivery base.

Over the past year, Meituan made moves in the retail segment: on one hand, it decisively scaled back non-core businesses like Meituan Youxuan; on the other, it concentrated resources on high-certainty strategic businesses, including XiaoXiang Supermarket accelerating its schedule of expanding into new cities in the fourth quarter, and on February 2026 announcing a $717 million acquisition of the controlling equity interests of Dingdong Maicai’s subject company.

At the earnings call, Meituan CFO Chen Shaohui said the most core reason for this acquisition is that Meituan firmly believes in the development prospects of China’s online-and-offline fresh grocery retail business, and that it will strengthen the supply chain capability for instant fresh retail, expand and improve coverage in the East China region, and make this transaction an important layout for the company’s long-term instant retail strategy. Currently, the acquisition is underway in accordance with relevant regulatory procedures.

With the Dingdong Maicai acquisition deal continuing to land, the transaction will bring chain reactions to Meituan’s fresh grocery segment and the competitive landscape in the industry; this will be the key focus for external observers going forward.

(Editor: Wen Jing)

Keywords:

                                                            Food delivery
                                                            Meituan