The Beijing-based company now expects “significant losses” for its core local commerce business including food delivery in the current quarter, Chief Financial Officer Chen Shaohui told analysts on a post-earnings call on Aug 27.
“We expect there will be continued fierce competition in the near term,” Chen said. “That will bring a negative impact on our financial results.”
The three-way battle in the food arena has eroded profitability across the sector and forced Meituan to defend its core business on multiple fronts. This month, JD.com reported a halving in net income for the quarter. Alibaba has posted muted growth and is set to report earnings on Aug 28.
In past months, the trio has invested billions of dollars on incentives and hiring delivery riders. This strategy backfired with investors, who sold off shares in Meituan and JD.com, erasing roughly US$100 billion of their combined market value at one point.
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Following a warning from industry regulators, the three corporations in August pledged to cease their “disorderly competition” and avoid a self-destructive price war.
What Bloomberg Intelligence Says
Meituan’s core local commerce margin collapse to 5.7% in 2Q2025, well below the near-19% average of the past four years, heightens the risk that a lower “new normal” profitability is inevitable for the firm as competition from Alibaba and JD.com erodes its dominance in China’s food and on-demand delivery market.
Even if promotion and user incentives recede, which had earlier surged 49% year over year in 1H2025 and outpaced revenue growth of 15% during that time, Meituan will likely need to spend more on logistics to support non-food deliveries. Logistics costs jumped to 39% of sales in 1H2025 vs. 37% a year earlier.
