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The Food Delivery War Is Still Escalating: Where Are Restaurant Brands Headed?
The Food Delivery War Is Still Escalating: Where Are Restaurant Brands Headed?
2025-09-29
Since 2025, China's food delivery industry has erupted in a new round of large-scale platform subsidy battles. This price war was first initiated by JD.com: in April 2025, JD announced its “Ten Billion Yuan Subsidy” to enter the delivery market, offering zero commission to attract merchants. At that time, Meituan held about 70% of the market share, with Ele.me (Ali’s platform) holding around 30%.  JD’s entry disrupted the existing duopoly. Feeling immense pressure, Meituan responded cautiously, while Alibaba swiftly counterattacked.
 
In late April, Alibaba upgraded "Taobao Flash Sale" in the Taobao App and integrated Ele.me into its e-commerce group.  Subsequently, Alibaba launched a "50-billion-yuan subsidy" plan and introduced a weekly "Super Saturday" order-boosting initiative, aiming to replicate the success of shopping festivals like Singles' Day and 618. The goal was to rapidly increase order volume through massive subsidies. Meituan initially adopted a wait-and-see approach but was forced to launch a high-profile counteroffensive in early July, initiating a "Crazy Friday to Sunday" campaign on July 5th, distributing free meal vouchers and large-value coupons. Thus, Meituan, Ele.me (via Taobao Flash Purchase), and JD entered into fierce competition throughout the spring and summer of 2025, reigniting a money-burning battle for market share in China’s food delivery sector — the first of its kind in a decade.
 
Surge in Delivery Orders for Restaurant Brands
 
The huge subsidies from the platforms led to explosive growth in order volumes and transaction amounts. Reports show that, driven by these subsidies, China's daily delivery orders skyrocketed from 100 million at the beginning of the year to a peak of around 250 million orders by July. On July 5, 2025, Meituan set a new record with 120 million daily orders, and Taobao Flash Sale (Ele.me) also surpassed 80 million orders that day. On July 12, during a second sprint, Meituan's daily orders reached 150 million, and Ele.me again exceeded 80 million orders. In this subsidy battle, the overall traffic of delivery platforms surged, and the transaction amounts for various restaurant brands grew significantly.
 
According to Sandalwood data, most restaurant brands saw a sharp increase in transaction amounts in the third quarter of 2025. For example, the proportion of delivery platform transactions for the coffee chain Luckin Coffee exceeded 60% in August, compared to less than 20% before the subsidy war. This indicates that the platform’s high subsidies directly drove the sales scale of brands on delivery platforms, attracting large numbers of users that would have otherwise used the brands' own channels to the higher-subsidy delivery platforms.
 
Notably, the subsidies had a particularly strong impact on affordable drinks and fast food categories. For example, delivery platforms spent heavily on coupons from May to August, launching promotions such as “2 cups of milk tea for 1.9 yuan.” Drinks from brands like "Mixue Bingcheng" (already inexpensive) became even more affordable under massive subsidies, prompting consumers to place larger orders. Many brands saw explosive orders on weekends during promotion days: A milk tea shop that typically sold 100 cups per day saw this number surge to over 300 cups on subsidy days, with order receipt paper running out one roll after another. "Coffee coupons" and "milk tea coupons" led to a sharp increase in orders for brands like Luckin and Mixue, gaining numerous new customers and significantly boosting the transaction volume for the month.

 
Overall, the subsidy war of 2025 made delivery platforms the high-speed engine for restaurant brands to acquire orders. A large number of consumers, attracted by platform discounts, flocked to the platforms to place orders, pushing the delivery business of brands on these platforms to grow rapidly in a short period of time. The subsidy strategy of delivery platforms has proven effective in boosting brand transaction amounts, with both industry-wide and specific brand-level growth being significant.
For Yum China, which seeks to strengthen its own channels, the rapid growth of delivery platforms is a double-edged sword. Too rapid growth could lead to an overly low proportion of sales through its own channels, affecting long-term strategies, while not participating in this feast would mean losing opportunities and market share to competitors. How to balance this by differentiating products on different platforms becomes essential. Even for brands mainly focused on dine-in, like Haidilao and Sushiro, they have also found more development opportunities through delivery platforms.
 
Behind the Order Frenzy, Hidden Concerns Arise:
However, the subsidies brought by platforms are not all about healthy growth; they have also led to multiple side effects and concerns:
  • Profits are greatly diluted — Meituan’s core local business operating profit margin dropped nearly 20 percentage points in Q2, with merchants generally reporting “order volume doubling, net profits halved.”
  • Distorted pricing mechanisms — After becoming accustomed to ultra-low prices, consumers become highly sensitive to regular pricing, leading the industry into a state of "volume without value.”
  • Weakening of own channels — Membership mini-programs and official apps lost their appeal in the face of high subsidies from platforms, and consumer habits were solidified by platforms.
  • Dine-in businesses are affected — Low-priced delivery directly impacted offline foot traffic, with some mall restaurants seeing their sales per square meter drop by over 10%.
  • Forced merchant competition — Small and medium-sized merchants face a dilemma: not joining promotions leads to volume loss, but participating means operating at a loss — a classic "damned if you do, damned if you don't" situation.
 
Outlook: Moving Beyond "Volume Without Value" Toward Value Co-Creation
In the face of the issues triggered by the subsidy war, government regulatory agencies have intervened multiple times. In July and August 2025, the State Administration for Market Regulation held talks with major platforms like Meituan, Ele.me, and JD.com, urging rational competition and standardized promotional behaviors. At the beginning of August, the three major platforms collectively issued a statement, promising to “standardize promotional subsidies,” including not engaging in large-scale zero-price promotions, not forcing merchants to participate, and not dumping goods at prices significantly below cost. Ele.me’s statement emphasized the need to “ensure merchants’ actual earnings and profit margins” and to avoid irrational promotions. These measures signal a gradual cooling of unregulated subsidy competition, suggesting that the food delivery industry may return to a healthier, more sustainable competitive path.
Disclaimer: The content and viewpoints expressed in this article are for reference purposes only and should not be construed as investment advice or recommendations. very investor should conduct thorough independent research and consult with professional investment advisors before making any investment decisions.
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