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 average loss per order for food delivery in Q1 is expected to improve more than in Q4 of last year.

“Opportunities and challenges coexist, and industry competition is unprecedentedly fierce.” This is how Meituan’s CEO Wang Xing summarized the past year of 2025.

On March 26, Meituan (03690.HK) announced its Q4 and full-year performance for 2025. The announcement showed that Meituan achieved an annual revenue of 364.9 billion yuan, a year-on-year increase of 8%; the full-year net loss was 23.4 billion yuan, reversing from a profit of 35.8 billion yuan in the same period of 2024. Among these, the core local business segment incurred an operating loss of 6.9 billion yuan.

This food delivery war that began in the second quarter of 2025 not only turned Meituan’s profit curve but also reshaped the competitive landscape of the domestic local lifestyle sector. The once-stable duopoly in food delivery was broken, with Alibaba and JD.com entering the market using their e-commerce ecosystem resources, plunging the industry into a cash-burning, close-quarters battle.

Looking back, what has Meituan sacrificed for this critical turf war after nearly a year of fighting?

Source of the image: Visual China

Marketing expenses increased by 60% year-on-year, with signals of reduced losses in Q4

Behind the layered regulatory signals, the food delivery industry experienced a prolonged period of intense competition in 2025.

Last February, JD.com announced its bold entry into the food delivery market, followed by full-scale competition from platforms like Meituan and Taobao Flash Purchase, employing strategies such as cash subsidies and no-commission recruitment.

For Meituan, whose foundation is built on food delivery, this was a defensive battle it had to join.

However, this resulted in a comprehensive reversal in Meituan’s performance, primarily due to a decline in profits within its core local business segment. As Meituan’s mainstay, the core local business segment (including food delivery, dine-in services, flash sales, and travel-related businesses) reported an operating loss of 6.9 billion yuan in 2025, compared to a profit of 52.4 billion yuan in the same period of 2024; the operating profit margin plummeted from 20.9% to -2.6%.

Meituan explicitly stated in its financial report that the negative operating profit in the core local business was mainly due to a decrease in gross profit margin, as well as increased expenses related to user incentives, promotions, and advertising aimed at boosting user transaction activity and stickiness in response to fierce industry competition.

The financial report indicates that over the past year, to secure its core market position in food delivery, Meituan significantly increased its investment in user incentives and marketing promotions. In 2025, Meituan’s total sales costs reached 253.8 billion yuan, up 22% year-on-year; sales and marketing expenses soared to 102.9 billion yuan, a substantial increase of 60.9% compared to the previous year.

However, this financial report also sent an important signal: the loss margin has narrowed significantly, suggesting that the negative impact of industry competition may have peaked.

According to Times Finance, in the quarterly view, Meituan’s core local business incurred a loss of 10 billion yuan in Q4 2025, a significant reduction of 29% from the loss of 14.1 billion yuan in Q3; the operating loss rate further improved from 20.9% in Q3 to 15.5%.

Marketing subsidy efforts are also decreasing. In Q4, its sales costs fell from 70.3 billion yuan in the previous quarter to 67.969 billion yuan, and sales and marketing expenses decreased from 34.3 billion yuan to 31.7 billion yuan.

During the earnings conference call that evening, Wang Xing revealed that he expects the average loss per order for food delivery in Q1 to improve more than in Q4 of last year, and that the trend of reduced losses in food delivery will continue into Q1. Moreover, in Q1 so far, Meituan has maintained its leading position in GTV in the mid-to-high price order market.

Previously, Haitong International Securities estimated that Meituan’s unit economic loss for food delivery would decrease from 2.6 yuan per order in Q3 of last year to 2 yuan per order in Q4, mainly due to reduced winter subsidies.

However, short-term industry competition pressure remains. Wang Xing stated that competitors have increased their investments in the short term, which will exert some pressure on Meituan’s profitability, and he hopes the market understands this situation.

It is worth noting that during Alibaba’s recent earnings call, Alibaba’s e-commerce division CEO Jiang Fan explicitly stated that the company will continue to invest steadily in instant retail over the next two years to achieve market leadership; he expects the instant retail segment to be profitable by fiscal year 2029.

During the call, Wang Xing reiterated his opposition to a price war in the industry. He believes that current regulatory guidance is quite clear, with regulators firmly opposing “involution,” and Meituan also aims to foster a healthy and orderly market environment. Wang Xing said that Meituan is currently reducing resource input into low-quality orders while actively defending its market share to ensure it remains a leader in 2026.

Additionally, on March 11, UBS released a research report estimating that by February 2026, based on average daily order volume, Meituan, Alibaba (Fengniao/Taobao), and JD.com would hold market shares of 51%, 42%, and 7%, respectively.

Overseas markets are still in a cash-burning phase, with Keeta accelerating expansion

While striving to maintain its core food delivery business, Meituan continued to allocate resources to new businesses in 2025.

In 2025, Meituan’s new business division revenue grew 19.1% year-on-year to 104.029 billion yuan, including businesses such as Meituan Youxuan, Little Elephant Supermarket, and the overseas restaurant brand Keeta.

However, the overall new business segment still recorded an operating loss of 10.1 billion yuan year-on-year, mainly due to increased investments overseas.

Last year, Wang Xing repeatedly emphasized during investor meetings the phrase “firmly pursue internationalization, focus on internationalization.” International expansion has become a key growth driver for Meituan; as early as May 2023, Meituan launched its overseas food delivery brand Keeta in Hong Kong and accelerated global expansion from there.

The financial report disclosed that Keeta accelerated its global deployment in 2025, including entering new markets such as Qatar, Kuwait, the UAE, and Brazil. During the earnings call that evening, Wang Xing revealed that Keeta is expected to achieve positive monthly user engagement in Saudi Arabia before the end of 2026. Previously, Keeta had already achieved profitability in Hong Kong in October.

“In the long run, Meituan will continue to invest steadily in internationalization, but the focus will be more on the instant retail sector where it can leverage its core strengths,” Wang Xing said.

Furthermore, Times Finance learned from the conference call that Keeta’s losses are expected to remain high in 2026, as several new markets entered in the second half of 2025 are still in the cultivation phase; however, domestic new business efficiency continues to improve, which is expected to offset overseas investments, and overall losses in the new business segment in 2026 will not exceed those of 2025.

Domestically, Wang Xing is also seeking new growth points outside the core food delivery business.

Over the past year, Meituan has cut back on retail operations, decisively shrinking non-core businesses like Meituan Youxuan, while focusing resources on high-certainty strategic areas, including accelerating expansion of Little Elephant Supermarket in Q4 and announcing the acquisition of a controlling stake in Dingdong Maicai for $717 million in February 2026.

Meituan CFO Chen Shaohui stated during the earnings call that the primary reason for acquiring Dingdong Maicai is strong confidence in the development prospects of China’s online and offline fresh food retail sector, as well as to strengthen instant fresh retail supply chain capabilities, expand coverage in East China, and support the company’s long-term strategic layout in instant retail. The acquisition is currently proceeding according to relevant regulatory procedures.

As the Dingdong Maicai acquisition continues to be implemented, its impact on Meituan’s fresh food segment and the industry landscape will be a key focus of external attention going forward.