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 Q1 food delivery is expected to improve quarter-over-quarter better than in Q4 last year.

“Opportunities and challenges coexist, and industry competition is unprecedentedly fierce.” Meituan CEO Wang Xing summarized 2025.

On March 26, Meituan (03690.HK) announced its Q4 and full-year 2025 results. The report showed that Meituan achieved total revenue of 364.9 billion yuan, up 8% year-over-year; full-year net loss was 23.4 billion yuan, compared to a profit of 35.8 billion yuan in the same period of 2024. Among them, the core local commerce segment operated at a loss of 6.9 billion yuan.

This food delivery war, which began in Q2 2025, not only turned Meituan’s profit curve downward but also reshaped the competitive landscape of the domestic local life track. The once-stable duopoly in food delivery was broken, with Alibaba, JD.com, and their e-commerce ecosystems entering the market, leading to a money-burning, close-quarters battle.

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

A 60% increase in marketing expenses over the year, with signs of reduced losses in Q4

Behind the layered regulatory signals, the food delivery industry experienced a prolonged fierce battle in 2025.

Last February, JD.com announced its bold entry into the food delivery market. Soon after, platforms like Meituan and Taobao Flash Sale joined the fray, engaging in continuous money-burning subsidies, commission waivers, and promotional strategies.

For Meituan, whose foundation is built on food delivery, this was an unavoidable defensive battle.

However, this led to a comprehensive decline in Meituan’s performance, primarily due to a drop in profit in its core local commerce segment. As a fundamental part of Meituan, in 2025, this segment (including food delivery, in-store dining, flash sales, and hotel and travel services) operated at a loss of 6.9 billion yuan, compared to a profit of 52.4 billion yuan in the same period of 2024; operating profit margin plummeted from 20.9% to -2.6%.

Meituan explicitly stated in its financial report that the negative operating profit in core local commerce mainly stems from declining gross profit margins and increased expenses related to user incentives, promotions, and advertising to boost transaction activity and user stickiness amid fierce competition.

From the financials, it’s clear that over the past year, Meituan significantly increased its investment in user incentives and marketing to secure its core market position in food delivery. In 2025, total sales costs reached 253.8 billion yuan, up 22% year-over-year; sales and marketing expenses soared 60.9% to 102.9 billion yuan.

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

According to Caijing, a quarterly view shows that in Q4 2025, Meituan’s core local commerce operating loss was 10 billion yuan, a substantial quarter-over-quarter improvement from 14.1 billion yuan in Q3, narrowing by 29%. The operating loss rate further improved from 20.9% in Q3 to 15.5%.

Marketing subsidies also contracted. In Q4, sales costs decreased from 70.3 billion yuan in the previous quarter to 67.97 billion yuan, and sales and marketing expenses dropped from 34.3 billion yuan to 31.7 billion yuan.

At the earnings call that evening, Caijing learned that Wang Xing revealed that the average loss per order for Q1 food delivery is expected to improve quarter-over-quarter better than in Q4 last year, and the trend of reducing losses in food delivery will continue in Q1. Additionally, since the start of the year, Meituan has maintained its leading position in the GTV market for mid-to-high-priced orders.

Previously, Haitong International Securities estimated that Meituan’s unit economics loss per order would decrease from 2.6 yuan in Q3 2024 to 2 yuan in Q4, mainly due to reduced winter subsidies.

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

It’s worth noting that during Alibaba’s recent earnings call, Alibaba’s e-commerce division CEO Jiang Fan 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.

On the call, Wang Xing reiterated his opposition to industry price wars. He believes that current regulatory guidance is quite clear, and regulators are firmly against “involution” phenomena. Meituan also aims to create a healthy and orderly market environment. Wang Xing said that Meituan is currently reducing resources allocated to low-quality orders while striving to defend its market share and ensure it remains a leader in 2026.

Additionally, on March 11, international investment bank UBS released a research report indicating that as of February 2026, based on daily order volume estimates, Meituan, Alibaba (Fengniao/Taobao), and JD.com hold market shares of 51%, 42%, and 7%, respectively.

Overseas, the money-burning phase continues, 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, revenue from Meituan’s new business division grew 19.1% year-over-year to 104.029 billion yuan, including Meituan Youxuan, Xiaoxiang Supermarket, and overseas restaurant brand Keeta.

However, the overall new business segment still recorded an increased operating loss of 10.1 billion yuan, mainly due to increased investment in overseas markets.

Last year, Wang Xing repeatedly emphasized in investor meetings: “坚定国际化，聚焦国际化” (“坚定国际化，聚焦国际化”). International expansion has become a key growth point for Meituan. As early as May 2023, Meituan launched its food delivery brand Keeta in Hong Kong, accelerating its global footprint.

The financial report disclosed that Keeta is speeding up its global expansion in 2025, entering markets such as Qatar, Kuwait, UAE, and Brazil. During the call that evening, Wang Xing revealed that Keeta in Saudi Arabia is expected to achieve monthly user engagement (UE) breakeven by the end of 2026. Previously, Keeta had already turned profitable in Hong Kong in October.

“Long-term, Meituan will continue to invest steadily in internationalization, but the focus will be more on instant retail segments where we can leverage our core strengths,” Wang Xing said.

According to Caijing, from the call, it was learned that Keeta’s losses in 2026 will still be at a relatively high level, 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. Overall, the loss scale of the new business segment in 2026 is unlikely to exceed that of 2025.

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

Over the past year, Meituan has made strategic cuts in retail, shrinking non-core businesses like Meituan Youxuan and focusing resources on high-confidence strategic areas, including accelerating expansion of Xiaoxiang Supermarket in Q4 and announcing the $717 million acquisition of Dingdong Maicai’s main equity in February 2026.

Meituan CFO Chen Shaohui stated during the call that the main reason for acquiring Dingdong Maicai is the firm belief in the development prospects of China’s online and offline fresh retail, as well as strengthening the supply chain capabilities for instant fresh retail, expanding coverage in East China, and supporting the company’s long-term retail strategy. The acquisition is currently under regulatory review.

As this acquisition progresses, its impact on Meituan’s fresh food segment and industry landscape will be a key focus for the market.