Food Delivery Price War Exceeds Expectations as Meituan’s Adjusted Net Profit Falls 89%

On August 27, Meituan released its second-quarter and first-half 2025 financial results, reporting revenue of RMB 91.8 billion in Q2—a year-on-year increase of 11.7%. Adjusted net profit dropped sharply to RMB 1.49 billion, representing an 89% decline compared with the same period last year. The company attributed this steep profit contraction to “irrational competition that began this quarter.”

Meituan’s food delivery operations are incorporated within its core local commerce segment rather than reported separately. In Q2 2025, this segment generated RMB 11.5 billion less than it did in Q2 2024. Operating profit fell from RMB 15.2 billion to RMB 3.7 billion year-on-year, a 75.6% reduction, while the operating margin narrowed from 25.1% to 5.7%.

Meituan cited intensified competition in the food delivery market as the primary driver of this decline. To bolster user engagement and loyalty amid the escalating price war, the company significantly increased expenditure on user incentives, promotional activities, and advertising. Reflecting these strategic shifts, sales and marketing expenses surged by RMB 7.7 billion—up 51.5% year-on-year. Meituan indicated that this rise was largely in response to fierce rivalry in both its food delivery and instant retail businesses.

Although CEO Wang Xing had previously warned of potential short-term volatility due to mounting competition, the magnitude of the Q2 profit downturn surpassed market expectations. As the three-way battle between Meituan, JD.com, and other players reshapes the industry, investors are now watching closely for Alibaba’s upcoming quarterly report to gauge the broader impact on sector profitability.