China’s food delivery giant “Meituan” reported a nearly 90% drop in net profit in the second quarter due to intense competition in the domestic market, following a similar trend seen in JD’s second-quarter earnings report. This has also led to reduced expectations for Alibaba’s financial report set to be released on Friday, August 29.
According to the financial report released by Meituan on Wednesday, revenue and profit fell below expectations. Meituan recorded revenue of 91.84 billion yuan in the second quarter, a 11.7% year-on-year increase, but lower than the market’s expectation of 93.68 billion yuan. Of particular concern is the significant 89% decline in adjusted net profit to 1.49 billion yuan in the second quarter, far below the analysts’ expected 9.85 billion yuan.
Yahoo Finance stated that this reflects the intense competition in China’s food delivery market, which has severely squeezed the platform’s profit margins.
During the financial conference call on Wednesday, Meituan’s Chief Financial Officer Chen Shaohui stated that they expect a “significant loss” in the third quarter for their core local e-commerce business (including food delivery).
“We expect fierce competition to continue in the short term,” Chen Shaohui said. “This will have a negative impact on our financial performance.”
Yahoo Finance analysis points out that Meituan’s decline in performance mainly comes from pressures on two major business segments: the core local e-commerce operating profit plummeted by 75.6% to 3.721 billion yuan, reflecting the impact of price wars on food delivery and dine-in businesses. The operating loss of new businesses, including Keeta’s overseas expansion, increased by 43.1% to 1.881 billion yuan, indicating that the internationalization strategy is still in the money-burning phase.
The Wall Street Journal reported that the disappointing performance in the second quarter has disrupted Meituan’s strong performance since achieving profitability approximately three years ago. Concerns arise about Meituan’s ability to defend its market share as competition intensifies.
Before the earnings announcement, Meituan’s stock listed in Hong Kong had dropped by 3.1%, accumulating a decline of over 20% since 2025. In comparison, the Hang Seng Index rose by approximately 26% during the same period.
Meituan has long been a leader in China’s food delivery industry but faces increasing competition from rivals like Alibaba and e-commerce platform JD.
Jamie Chen, a industry analyst at Third Bridge, a Chinese consultancy firm, cited experts saying that the food delivery industry is a battle that Meituan cannot afford to lose. He mentioned that Meituan’s competitors do not see food delivery as their core business but rather as a point to revamp their platforms.
Meituan previously warned that the “irrational competition” in the Chinese food delivery industry almost wiped out its profits in the second quarter. Bloomberg reported that this warning could further exacerbate investor concerns as they had predicted Meituan’s market value to evaporate by approximately a quarter by 2025.
Food delivery companies have been offering significant discounts to attract customers, seen as a necessary move to seize market share, but this practice also erodes their profits.
The food delivery battle heated up in April when JD announced the “Ten Billion Subsidies”, peaked in early July with Meituan’s surprise attack on Taobao’s flash sales, and eventually tapered off by the end of July. According to the latest financial report, JD announced a halving of net profit in the second quarter, while Meituan reported an 89% decrease in net profit. Alibaba has already announced slowing growth trends and will release their financial report on Friday.
Following the price wars in the food delivery market that drew the attention of Chinese regulatory authorities, these three companies have pledged to reduce discounting.
On August 1st, Meituan, Taobao’s Ele.me, and JD successively released statements, with Meituan describing the past month’s food delivery battle as “disorderly competition”, while Ele.me and JD labeled it as “malicious competition”. The platforms pointed directly at “zero-cost purchases” subsidies and stated they would not forcibly or indirectly require merchants to participate in subsidy activities, safeguarding merchants’ pricing autonomy and ensuring the rights of delivery riders.
Analysts believe that despite the commitments made by these three companies, the cooling of competition in food delivery seems slow and could continue to undermine future performance.
Meituan’s CEO of local core business, Wang Puzhong, stated in July, “Cutthroat competition is meaningless, and harms the industry.” However, he justified Meituan’s large subsidy distribution starting on July 5th as a response to competitors.
“If others attack you in an irrational way, you are forced to retaliate. If we don’t participate in the main business, we won’t even have the opportunity to transition into artificial intelligence (AI),” Wang Puzhong said.
According to a report by mainland Chinese media outlet “First Financial”, the fierce competition among the three major food delivery giants has hurt the lower-level businesses on their platforms the most.
The head of a leading tea drink brand’s delivery business expressed at a previous high-quality development forum hosted by Meituan that the irrational subsidies in the food delivery battle have brought about a “false prosperity”.
“We usually have a real price of around 20 yuan per cup, but now, with subsidies, users can buy a cup for only a few yuan. When the subsidies are gone, many people will either reduce their consumption or stop drinking altogether,” he stated that the ultra-low prices have changed consumption habits and perceptions. After the reduction in subsidies, both customer unit price and order volume have decreased, making it challenging to restore a normal pricing system.