THE COST OF THE FOOD DELIVERY WAR

With Meituan’s quarterly report being published today, Latepost just produced a set of highly informative and revealing charts. We have run them through a machine translation and reproduced the article below.

Download the pictures and zoom in for better readability.

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Clausewitz stated in On War that every battle is a contest of material and spiritual strength between two sides, fought through bloodshed and destruction.

The torment inflicted on both sides by the food delivery war is fully reflected in their respective third-quarter reports. Meituan's operating profit plummeted by 19.8 billion yuan, resulting in its largest loss since its IPO. Alibaba, fueled by Taobao, saw its third-quarter operating profit drop from 35.2 billion yuan to 5.4 billion yuan, a decrease of 85%.

The loss was primarily due to a surge in sales expenses, mainly from food delivery subsidies this autumn. Meituan's third-quarter sales expenses exceeded those of Pinduoduo, whose transaction volume is nearly double its own.

In total, by the second and third quarters of 2025, Alibaba, Meituan, and JD will have burned through over 100 billion yuan in six months. Even with reduced investment in the third quarter, JD's operating profit turned from 12 billion yuan to a loss of 1.05 billion yuan.

Efficiency is fundamental to determining the sustainability of food delivery subsidies.

In Q2, Alibaba stated that increased scale would halve the losses in its economics model (UE), a claim largely achieved this quarter, driven by higher average order value, a 75% increase in non-tea beverage orders, and a 0.5 yuan decrease in average fulfillment cost per order. Meituan, on the other hand, emphasized quality, achieving a market share of over 70% for orders priced above 30 yuan.

Alibaba told investors that Taobao Flash Sale's food delivery GMV market share increased to 40% in November—but this figure is based on the top two players in the industry; if JD were included, its share would be lower.

At this week's earnings conference, Alibaba stated that investment in Flash Sale would be significantly reduced next quarter, while potentially increasing investment in AI infrastructure.

We have exclusively learned that Taobao Flash Sale will subsidize food delivery during key periods to wear down Meituan, and plans to launch another instant retail war next spring, focusing on subsidizing non-food items, rather than launching a full-scale war like this summer.

Meituan CEO Wang Xing stated that the food delivery price war is a low-quality, low-price "involutionary" competition, which he strongly opposes and considers unsustainable, but Meituan expects its operating losses to continue next quarter. According to our understanding, Meituan believes that the number of part-time delivery riders will decrease in winter, allowing it to regain some market share.

The food delivery war is also testing the efficiency of catering brands. Currently, most listed tea and coffee brands are listed on the Hong Kong Stock Exchange, with only Luckin Coffee and BaWangChaJi, listed on the US Stock Exchange, releasing their Q3 reports. Luckin Coffee's revenue increased significantly quarter-on-quarter, but net profit remained almost flat—it delivered more drinks but paid 2.9 billion yuan in delivery fees, without earning more money. Meanwhile, BaWangChaJi's transaction volume, revenue, and net profit are all declining.

Douyin and Pinduoduo, which haven't directly participated in the war, are quietly expanding. Douyin's in-store and e-commerce platforms are rapidly closing the gap with the top spot, while Pinduoduo's e-commerce and community group buying continue to grow, accumulating more cash reserves.

(Text & Images by Guan Yiwen and Huang Zhenxin; Edited by Huang Junjie)

Original article: mp.weixin.qq.com/s/ange…

Note: be careful with the charts that mention 'billion'. Chinese numbers work differently and Google mistranslated this: the Y-axis actually shows units of 100 million.