Meituan reports third consecutive quarterly loss as rivalry in food delivery hits margins

Meituan has logged its third straight quarterly loss, a stark signal that margin recovery in China’s local services sector remains a distant prospect. The company reported an adjusted net loss of 4.97 billion yuan for the first quarter, though that figure narrowed sharply from the 15 billion yuan loss in the previous quarter. Revenue rose 5.6 percent year on year to 91 billion yuan. The headline improvement masks a deeper structural challenge. Meituan’s local commerce business — the core operation encompassing food delivery and in-store services — posted an operating loss of 2 billion yuan. That is a dramatic improvement from the 10 billion yuan loss in the prior quarter, but it remains deep in the red. The narrowing came largely from reduced spending on food delivery subsidies and better operating efficiency, not from any fundamental shift in competitive dynamics. Competitive pressure in food delivery appears to be easing, but that is only half the story. The real battle has shifted to in-store services, where Meituan faces growing challenges from rivals that have built their own merchant networks and user bases. This is not a temporary skirmish. The in-store segment requires heavy investment in merchant acquisition, technology, and user incentives — costs that will compress margins for years. Shares rose 6.5 percent to HK$78.25 ahead of the earnings announcement, reflecting some relief that the bleeding has slowed. But the market may be underestimating how long the recovery will take. Meituan’s core business is still losing money, and the competitive landscape in local services is fragmented and aggressive. During the post-earnings call, CEO Wang Xing focused on two areas that offer a glimpse of the company’s strategic pivot: overseas expansion and artificial intelligence. He highlighted the Keeta food delivery business, which achieved “meaningful efficiency gains” in Hong Kong and Saudi Arabia during the first quarter. Keeta has also entered other Middle Eastern markets, though Wang did not specify which ones. The overseas push is still small relative to Meituan’s domestic scale, but it Wang also discussed the Xiaotuan AI assistant, which is integrated into the Meituan app and provides personalized restaurant and merchant recommendations. He acknowledged the initiative is in early stages but noted that more users are finding it useful. The AI tool could eventually reduce customer acquisition costs and improve retention — but that payoff is years away. What a casual reader might miss is that Meituan’s loss streak is not just about competition. It reflects a structural shift in how Chinese consumers use local services. The pandemic-era surge in food delivery demand has normalized, and users now expect more from in-store experiences — reservations, reviews, loyalty programs, and seamless payment. Meeting those expectations requires sustained investment, not a quick fix. The question for Meituan is not whether it can return to profitability next quarter, but whether it can build a defensible position in in-store services before the next wave of competition arrives. The answer will take years to emerge.

Chinese food and on-demand delivery giant Meituan reported its third consecutive quarterly loss as competition in the country’s food delivery market appears to be easing but broader rivalry across the local service sector continues to weigh on margins.

Meituan’s third straight quarterly loss confirms that margin recovery in China’s local services is years away, not quarters.

The development adds to a wider Greater China consumer story in which companies are being judged on execution, capital access, regulatory fit and the credibility of their regional expansion plans.

For business readers, the important question is whether this becomes an isolated announcement or part of a more durable operating pattern across customers, financing channels, partners and public-market expectations.