The food delivery subsidy war that unfolded in 2025 saw three major platforms collectively burn through over 200 billion yuan, marking one of the most expensive battles in internet history. However, burning cash was never a sustainable strategy, and with regulators stepping in to halt vicious subsidies, the platforms have returned to healthy competition. When the tide went out, it became clear which companies were merely propped up by subsidies and which were relying on their fundamental strengths.
As subsidy-driven, rough-and-tumble competition recedes, the peak season has become the ultimate testing ground for a platform's core competencies. The food delivery industry has pivoted from price wars to a deeper contest of operational efficiency and ecosystem health. In Q2 2026, Meituan, relying on its solid fundamentals, was the first to reach shore, posting total revenue of 104.6 billion yuan, a 14.4% year-on-year increase, with operating profit turning positive quarter-on-quarter and unit economics for its food delivery business turning profitable.
Meituan's early recovery in both revenue and unit economics is no accident. It stems from the systemic resilience built through its long-term commitment to a comprehensive consumer experience, reasonable merchant profitability, and protection of rider welfare. This ecosystem, which balances the interests of all parties, allowed the platform to seamlessly handle the release of genuine demand.
Food Delivery UE Turns Positive: Meituan Shows the Most Significant Loss Reduction and Reaches Shore First on Strong Fundamentals
From 2025 to 2026, China's food delivery market experienced an aggressive subsidy war. JD.com made a high-profile entry with its "zero-commission plus billions in subsidies" strategy, Alibaba's Ele.me (later rebranded as Taobao Flash Purchase) acted as a late-stage challenger, and Meituan was forced to respond. This irrational competition initially drove rapid growth in order volume and market share through short-term subsidies, but it failed to address fundamental issues like repeat purchase rates, delivery fulfillment, and merchant profitability.
In March 2026, official media sent a signal to halt the unhealthy practices, followed in April by the official implementation of the "Internet Platform Price Behavior Rules," which explicitly banned malicious price competition. Since then, competition in the industry has gradually shifted back to the essence of operations: users demand stable quality, merchants need reasonable profits, and riders require reliable income. These needs rely far more on a platform's systemic fundamentals than on simple price discounts for users.
As the allure of low prices fades, real consumer demand begins to surface. Only platforms with a smoothly operating system covering supply, fulfillment, and user experience can effectively absorb order growth and achieve healthy expansion. The second quarter, spanning April, May, and June with its pleasant weather between spring and summer, requires less additional subsidy or artificial stimulus. With stable fulfillment and strong demand, it naturally becomes the UE peak season for the food delivery industry and a golden window for platforms to recover quickly post-war.
At the same time, this peak season acts as a magnifying glass, testing the fundamental strengths of platforms after the subsidy battle. During this period, Meituan, with its solid foundation, achieved the most significant loss reduction and the fastest path to profitability. The company's Q2 revenue returned to double-digit growth, with operating profit turning positive quarter-on-quarter. Total revenue reached 104.643 billion yuan, up 14.4% year-on-year. Specifically, core local commerce segment revenue grew 10.1% year-on-year to 71.5 billion yuan in Q2, and after several quarters of intense industry competition, operating profit swung from negative to positive quarter-on-quarter. Benefiting from seasonal factors and the effective reduction of subsidies, Meituan's UE far exceeded industry levels in both food and non-food categories.
From the perspective of order share and transaction value share, as subsidy intensity declined from its peak, Meituan's advantages in order volume, gross transaction value, and user structure expanded further. The peak season, like a magnifying glass, highlighted Meituan's systemic advantages while unflinchingly exposing the weaknesses of new entrants. When subsidies receded, users who came for the discounts also left for the lack of them. Some platforms, lacking a sufficiently dense rider network, saw noticeably slower delivery times during lunch rush hours. This experience gap directly impacted order conversion and repeat purchase rates. Meanwhile, merchants attracted by subsidies, once traffic returned to normal, found order volumes far below expectations, and their willingness to stay quickly diminished. This vicious cycle of shrinking supply and deteriorating experience accelerated market share losses.
The data is merely the result; the real question is: why was Meituan able to reach shore the fastest after the subsidy tide receded? The answer may not lie within the financial reports but in the ecosystem Meituan has cultivated over years, connecting riders, merchants, and users. This systematic "basic skill set" enabled it to turn UE positive first in the initial peak season following the price war's end.
A Healthy Ecosystem Foundation: Users Get Experience, Merchants Make Money, Riders Have Security, and the Platform Grows
The business model of food delivery is brutally simple: a platform needs sufficient order density to spread out rider fulfillment costs; with enough orders, merchants are willing to stay; and the prerequisite for all this is user trust in the platform. Users won't stick around purely for low prices; a comprehensive experience is the true source of trust. Meituan's value to users lies in its massive rider fleet and intelligent dispatch system, ensuring timely and reliable delivery. Additionally, Meituan has heavily invested in food safety, prompting nearly 1.2 million merchants nationwide to upload "one-shot" store verification videos, with over 450,000 merchants connected to live-streamed "open kitchen" broadcasts. These initiatives let users "see clearly and eat with confidence," an experience that far surpasses mere price subsidies.
It is this comprehensive experience—rooted in product variety, punctual delivery, and food safety—that firmly captures users' long-term loyalty, generating high-frequency traffic with strong repeat purchases and laying the traffic foundation for high order density. On the rider side, Meituan's investments have built a stable and efficient fulfillment network. Through measures like abolishing late delivery fines, introducing "anti-fatigue" mechanisms, piloting "red light stop timing," and establishing a nationwide protection system, the platform has supported its riders. Notably, starting July 1, 2026, Meituan began fully paying for riders' "new-type work injury" insurance across the country, with premiums covered entirely by the platform, ensuring coverage for every order and every rider. Furthermore, it introduced a pension subsidy, providing a 50% cash subsidy based on the local minimum contribution base, and upgraded its "serious illness care plan" to cover all core family members of riders. This comprehensive protection fosters a strong sense of belonging and stability, encouraging riders to stay.
With a vast user base and sufficient order conversion, Meituan has the leverage and capability to retain merchants. Even during the subsidy war, the company continued to support merchants through initiatives like the "Fund Assistance" program and helped over 30,000 businesses gain more exposure through campaigns like the "Must-Order List." The food delivery industry is an integrated whole and a delicate, operations-driven business. A slight deviation in any single link can result in losses. Therefore, only by making each component slightly more precise can a platform achieve long-term growth and healthy development. These are elements that no amount of cash-burning, even to the tune of 200 billion yuan, can quickly replace.