Meituan Posts First Loss Since 2022 as Fierce Price War Hits Its Bottom Line

Meituan, one of China’s largest food delivery and local services platforms, has reported its first quarterly loss in nearly three years. The company’s latest earnings reveal the impact of an aggressive price war that has intensified competition across the instant delivery and meal ordering market. After several consecutive profitable quarters, Meituan’s return to losses highlights how rising subsidies, slower consumer spending, and stronger rivals are reshaping the sector.

Heavy Discounts Push Profits Into the Red

The key reason behind the loss is the surge in subsidies Meituan has offered to stay competitive. Its instant delivery rival, especially those backed by major e-commerce players, has been offering deep discounts on milk tea, snacks and lunchboxes to attract customers. To avoid losing market share, Meituan rolled out its own subsidies, slashing delivery fees and offering coupons. While these promotions boosted order numbers, they significantly cut into margins. Executives say the company had to prioritize keeping its customer base engaged during a period of intense rivalry, even if that meant taking a financial hit.

Competition Heats Up Across Local Services

The delivery battle is part of a broader fight for dominance in China’s booming on-demand economy. Instant retail, grocery delivery, takeaway meals, and quick commerce have all expanded rapidly, attracting major investment from tech giants. Rivals are spending heavily to lure users with freebies and discounted deliveries, creating a cycle of promotions that is difficult for any single company to avoid. Meituan’s leadership acknowledged that the pressure is likely to continue as competitors view local delivery as an important long-term growth engine.

Consumer Spending Still Under Pressure

Meituan’s challenges are also tied to China’s broader economic slowdown. With consumer confidence still recovering, people are being more cautious with spending, affecting average order sizes and frequency. Although delivery remains popular, users are looking for value, which pushes platforms to reduce prices and offer promotions. Analysts say Meituan’s loss reflects not only competitive pressure but also the wider reality of a cautious consumer environment, where companies must work harder to maintain growth.

Strategic Investments Continue Despite Loss

Despite the setback, Meituan is not pulling back on expansion. The company continues to invest in new retail services, drone delivery trials, autonomous vehicle logistics, and community group buying. These long-term bets require heavy spending on technology and infrastructure. Executives believe that strengthening Meituan’s ecosystem now will create advantages once the market stabilizes and competition cools. The company has also increased support for merchants and small businesses on its platform, hoping to deepen cooperation and loyalty amid economic uncertainty.

Analysts Expect Recovery but Warn of Challenges

Market analysts say Meituan’s loss, though significant, does not signal a long term decline. The company remains one of the strongest players in China’s on demand services landscape, with a massive user base and deep logistics capabilities. However, analysts warn that the price war may continue through the coming quarters, leaving little room for rapid profit recovery. The key challenge will be balancing growth and subsidies while ensuring that investments in emerging services yield returns.

What the Loss Means for Meituan’s Future

Meituan’s performance offers a revealing snapshot of how competitive and cost-intensive China’s delivery sector has become. With rivals determined to build their presence and consumers expecting low prices, the pressure on margins is unlikely to ease soon. Still, Meituan’s broad service network and strong brand give it an advantage as it navigates the next phase of competition. The company has weathered downturns before and is aiming to strengthen its technology, expand services, and improve operational efficiency to return to profit. For now, the latest earnings show that even market leaders can feel the strain when competition becomes a battle of prices.