China’s Food Delivery War Leaves Tech Giants Bleeding Billions in Q3 2025

In a dramatic escalation of China’s hyper-competitive food delivery market, the country’s tech titans have collectively hemorrhaged over $14 billion in just two quarters, with Meituan posting its largest operating loss since going public and Alibaba’s profits collapsing by nearly 85 percent.

The numbers tell a brutal story of market warfare. Meituan, China’s dominant food delivery platform, reported a staggering 19.8 billion yuan ($2.7 billion) operating loss for the third quarter of 2025—the worst quarterly performance since its 2018 IPO. Meanwhile, Alibaba’s operating profit cratered from 35.2 billion yuan to just 5.4 billion yuan ($4.9 billion to $0.75 billion), representing an 84.7 percent decline. JD.com wasn’t spared either, recording a 10.5 billion yuan ($1.4 billion) operating loss after scaling back its aggressive spending.

The financial carnage stems from an all-out subsidy war that has gripped China’s food delivery sector. Between the second and third quarters of 2025 alone, these three tech giants burned through more than 100 billion yuan ($14 billion) in delivery subsidies and related sales expenses. The spending spree has created a paradoxical situation where Meituan’s sales expenses now exceed those of Pinduoduo—despite handling significantly lower transaction volumes.

Alibaba claims its Taobao Instant Commerce service has captured 40 percent market share in restaurant delivery when measured under a two-player market definition, suggesting the company is making significant inroads against Meituan’s dominance. However, this aggressive expansion comes at an extraordinary cost.

Industry analysts point to several factors driving this unsustainable spending. First, the Chinese consumer market remains highly price-sensitive, with users showing little loyalty to any single platform when competitors offer deeper discounts. Second, the entry of new players like ByteDance’s Douyin (China’s TikTok) into the food delivery space has intensified competition, forcing established players to defend their turf with increasingly generous subsidies.

The subsidy model works by having platforms cover substantial portions of delivery costs, sometimes paying drivers more than the actual delivery fee to ensure rapid service. While this drives user acquisition and order volumes, it creates a fundamentally unprofitable business model at scale. Meituan, despite being the market leader with over 70 percent share in many cities, finds itself trapped in a cycle where reducing subsidies risks losing market position to hungrier competitors.

What makes this situation particularly concerning is the timing. China’s broader tech sector is already facing headwinds from regulatory scrutiny, economic slowdown, and shifting consumer behavior. The food delivery wars are draining resources that could otherwise be invested in more profitable ventures or used to weather economic uncertainty.

The parallels to China’s earlier ride-hailing subsidy wars are striking. When Didi and Kuaidi merged in 2015 after burning through billions in subsidies, many hoped the food delivery sector would learn from that experience. Instead, the same destructive playbook is being replayed, with even larger sums at stake.

For consumers, the subsidy wars have created a golden age of cheap food delivery. Users can often order meals at steep discounts, sometimes paying less than half the menu price when factoring in platform vouchers and merchant subsidies. However, this consumer paradise is built on a foundation of massive corporate losses that cannot continue indefinitely.

The sustainability question looms large. Industry veterans note that while subsidies can capture market share, they rarely create lasting competitive advantages in the food delivery business. The service is inherently local, labor-intensive, and subject to thin margins. Once subsidies are removed, user behavior typically reverts to price-insensitive patterns, potentially leaving platforms with massive losses and little to show for them.

Some market observers suggest this could be a deliberate strategy by Alibaba and JD.com to pressure Meituan, forcing it to deplete its resources in a market it has long dominated. Meituan’s founder Wang Xing has acknowledged the challenging environment, stating that the company must balance growth with financial sustainability, though concrete steps toward profitability remain elusive.

The broader implications extend beyond just these three companies. The subsidy wars are affecting the entire ecosystem, from restaurants squeezed by platform fees to delivery drivers experiencing income volatility as platforms adjust pay rates to manage costs. Small local delivery services are being priced out, potentially reducing competition in the long term.

As China’s tech giants report their full-year results for 2025, investors will be watching closely to see if this subsidy-fueled growth model can be sustained or if a painful reckoning is inevitable. The current trajectory suggests that without significant strategic shifts, the food delivery sector could face a major consolidation or restructuring in the coming year.

The question remains: how much longer can China’s tech titans afford to lose billions in pursuit of food delivery dominance? And more importantly, what happens when the subsidy spigot finally runs dry?

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