Meituan's valuation has been permanently suppressed by the food delivery war.

In the past few years, Meituan has been a rather special presence among Chinese Internet companies.

It didn't emerge from the social relationship chain, nor from the e - commerce shelf. Instead, it grew out of the most arduous local life business. Eating, grocery shopping, hotels, movies, group buying, errand - running, and instant delivery. These high - frequency but scattered offline demands have been strung together by Meituan through a merchant system and a fulfillment network.

Therefore, the imagination space that the capital market gave to Meituan in the past was not just about being an "online food delivery platform". More precisely, Meituan was once regarded as a super local - life platform with food delivery as the entry point, in - store services as the profit pool, and instant delivery as the infrastructure, and it dominated the market in terms of share.

Although Meituan significantly reduced its losses in Q1's financial report, it seems a bit late because before that, the market had already started to reorganize Meituan's valuation model.

In the past, the market asked: How far can Meituan expand its boundaries?

Now, the market asks: Under the new competitive landscape, after losing market share in a year and then stabilizing, where should Meituan's profit center and valuation anchor point be placed?

The food delivery business has changed, and so has the valuation logic

The most important value of the food delivery business in the past was not just the large order volume, but that it provided the market with a stable long - term expectation.

Before the war, Meituan's food delivery market share was maintained at around 75% - 80% for a long time. In the eyes of the capital market, this figure meant that Meituan was in a nearly one - sided dominant position. The platform had a large enough user base, a strong enough merchant supply, and a dense enough fulfillment network.

Under this structure, investors would naturally derive a long - term model: as the scale continued to expand, the platform could gradually transform the network effect into pricing power, and then convert the pricing power into an increase in profit margin.

Therefore, when many securities firms made long - term calculations before, they projected the average net profit per order of Meituan's food delivery to 1.5 yuan, or even close to 2 yuan. If calculated based on 100 million daily orders and an average profit of 1.5 yuan per order, it would correspond to a net profit of over 70 billion yuan a year. With a P/E ratio of 15 - 20 times, the food delivery business itself would be a trillion - level business.

The key to this valuation method is that the market believes that food delivery will ultimately become a stable, high - frequency cash - flow business with strong pricing power.

However, after the food delivery war, this premise needs to be recalibrated.

In its latest report, Goldman Sachs revised down its long - term market share expectation for Meituan's food delivery to 50% - 55%. The change from 75% - 80% to 50% - 55% is not just a change in market share on the surface, but a change in the competitive structure in essence: the former is closer to a single - dominant platform, while the latter is more like a duopoly competition market.

The profit models corresponding to these two markets are not the same.

Under the single - dominant pattern, there is still room for the platform to increase its monetization rate and average profit per order; but in a duopoly competition, the platform needs to continuously maintain the stability of merchants, users, and the delivery side, and the upward space for the profit margin will naturally be restricted.

The changes on the merchant side also illustrate this point.

QuestMobile data shows that in March this year, the year - on - year growth rate of the monthly active users (MAU) of Taobao Flash Shopping on the merchant side exceeded 30%, while that of Meituan's food delivery only had single - digit growth during the same period. Behind this data is the change in merchants' business habits: more and more merchants are starting to regard opening stores on multiple platforms as the standard, rather than relying on a single platform.

This doesn't mean that Meituan's merchant supply has failed, but rather that the platform's exclusivity over the supply side has decreased.

Once it becomes normal for merchants to operate on multiple platforms, the competition between food delivery platforms will be more likely to be long - term. Meituan can still maintain its lead through scale, fulfillment, and user perception, but the market will discount the previous strong expectation of pricing power.

Meituan's current long - term goal is to restore the average profit per order to about 1 yuan. At the same time, under the influence of competition, the daily order volume may be revised down from 100 million to 70 - 80 million.

If calculated based on this new assumption, the profit center of the food delivery business may drop from the previously projected level of 70 billion yuan to about 30 billion yuan.

This is the reason for the market's re - pricing.

Food delivery is not unprofitable; it has changed from a "nearly monopolistic cash - flow" model to a "high - frequency but more competitive" model.

The food delivery business has front - line pressure, and the in - store business has pursuers

If the food delivery business is only under pressure on a single front, Meituan can rely more on the in - store business to support its profits.

The in - store business has long been one of Meituan's most stable cash cows. It doesn't require delivery fulfillment, has lighter assets, and higher gross profit margins. Food group buying, hotels, movies, leisure and entertainment, and local services rely on Meituan's long - term accumulated merchant relationships, user evaluation systems, and transaction closed - loops.

However, the in - store business is also facing a new competitive landscape.

In 2023, ByteDance entered the local - life market with high - profile, which once worried the market about Meituan's defense line. Later, since it was not easy to quickly improve the instant delivery system, ByteDance shifted more focus to in - store group buying. This direction is closer to Douyin's own advantages: content promotion, short - video conversion, live - streaming group buying, influencer store visits, and traffic distribution.

The result is not bad.

By 2025, it is said that Douyin's in - store GMV has exceeded 800 billion yuan, and its market share is approaching 40%.

According to market news, ByteDance has set a 50% growth target for its local - life GMV in 2026, aiming at 1.2 trillion yuan, and its scale has begun to approach Meituan's.

This has put pressure on Meituan's in - store business. The revenue growth rate of Meituan's in - store business has dropped from over 20% to nearly single - digit, and the operating profit margin has also decreased from over 30% to about 25%.

This set of changes shows that the competition in the in - store business is no longer just a temporary disturbance, but has entered a more long - term consumption stage.

Of course, Meituan still has a deep foundation in the local - life market. It has a complete merchant system, a mature transaction closed - loop, stable user perception, and multi - category synergy ability. Douyin's advantages lie more in traffic and content conversion, while Meituan's advantages still lie in transactions and fulfillment.

However, the problem is that when the competitive landscape of a high - profit business becomes more complex, the capital market will re - evaluate the stability of its profit margin.

In the past, the in - store business was the certain part of Meituan's valuation. Now, it also needs to face more intense competition verification.

Can AI and robots become the life - saving straw?

In this round of valuation switching of Chinese Internet companies, AI is an unavoidable keyword.

In the past, when talking about Meituan's AI, the market mostly felt a bit awkward. Meituan has indeed invested in many AI companies and developed AI products, but these products have not formed a strong market perception like Tencent, Alibaba, and ByteDance.

Meituan has developed the AI programming tool CatPaw, the C - end AI product "Ask Xiaotuan", the Agent "Xiaomei", and also tried the AI browser Tabbit.

In terms of investment, Meituan has participated in companies such as Zhipu, Yuezhianmian, Moore Threads, Muxi Co., Ltd., and Aixin Yuanzhi. In the field of robots, Meituan also has a long - term layout. It started promoting drones in 2016, has opened 53 routes, and has launched L4 - level autonomous driving unmanned delivery vehicles and indoor and outdoor embodied intelligent delivery robots such as "Little Yellow Bee", and has invested in companies such as Unitree Robotics, Galaxy General, and Xinghaitu.

It can even be said that Meituan originally had a very unique AI narrative: using AI and robots to transform the local - life fulfillment network.

Because Meituan has real - world scenarios. Food delivery, instant retail, errand - running, unmanned delivery, merchant scheduling, rider route planning, and warehouse - distribution coordination are all physical - world scenarios where AI and robots can directly intervene.

In the past, users searched for "nearby hot pot", "coffee near the company", "tonight's hotel" in the app.

This kind of demand is naturally suitable for an Agent to handle. It needs to understand location, time, taste, budget, evaluation, merchant fulfillment ability, and delivery time. Meituan has real POIs, merchant information, user evaluations, transaction data, and a fulfillment network. The most important significance of AI for Meituan is not to create another chatbot, but to change the search and transaction entry of the local - life market.

This story holds true and is highly relevant to Meituan's main business.

However, in reality, after the food delivery and in - store businesses simultaneously enter the competition cycle, the company's resources and management's attention will mostly return to the defense of the core business. AI and robots are still important, but it's difficult for them to become the overwhelming strategic focus in the short term.

Can AI truly bring orders, improve conversion, reduce fulfillment and merchant operation costs, rather than just staying at the product entry and conceptual cooperation level?

Investing in AI companies is one thing, and turning AI into the company's new growth mainline is another.

The food delivery war has changed the boundaries

It's difficult to simply conclude who is the winner in the food delivery war.

Alibaba and JD.com also need to pay subsidy and fulfillment costs when participating in the war. They are not without losses.

But from a strategic perspective, this war has at least changed the speed and space for Meituan's further expansion.

Alibaba can integrate Taobao Flash Shopping, Tmall Supermarket, and Hema into a complete instant - retail map. For Alibaba, food delivery is not an isolated business, but a reinforcement of the capabilities of the Taobao super - app. It can increase the frequency of users opening the app and strengthen the perception that "you can buy anything on Taobao".

JD.com can also emphasize the synergy between food delivery and retail. Food delivery has driven the shopping frequency on the main website to increase by more than 30% year - on - year, promoted cross - category consumption, and finally improved efficiency through the supply chain and fulfillment system.

These statements may not fully offset the short - term investment, but they at least show that the goals of Alibaba and JD.com in participating in the war are not just to grab food delivery orders.

More importantly, they have suppressed Meituan's pace of further expansion into e - commerce and instant retail.

Without this food delivery war, Meituan might have formed an offensive posture in more directions. It has a high - frequency user entry point, local merchant relationships, an instant delivery network, and the ability to operate with low prices and subsidies. Once the instant - retail business continues to grow, Meituan will become a potential competitor that Alibaba and JD.com must pay attention to.

Therefore, the impact of the food delivery war on Meituan is not only the short - term pressure on the profit statement but also the change in the strategic boundaries.

Before the war, the market once seriously discussed a question: Can Meituan become the next BAT - style giant?

At that time, Meituan had a complete local - life business format, a high - frequency transaction entry point, deep merchant relationships, and a strong local delivery network. The combination of these elements was indeed a very scarce business system.

But now, the focus of the market discussion has changed. It's not because Meituan is not important, but because it needs to answer another question first: After the food delivery, in - store, and instant - retail businesses all enter a new competition cycle, what kind of profit - making ability can Meituan maintain?

This is the core of the re - pricing of the valuation.

Meituan is not a company that has lost its competitiveness. It still has one of the strongest local - life infrastructures in China, a large user base, a merchant network, and a fulfillment system. Its execution ability, operation ability, and organizational resilience have been proven many times in the past.

In the past, Meituan's story was about continuous boundary expansion: high - frequency food delivery, in - store monetization, new product categories opened up by instant retail, international replication ability, and AI and robots improving fulfillment efficiency.

Now, these stories haven't disappeared, but they all need to be re - verified under the new competitive conditions.

Food delivery is still the core entry point, but the profit model needs to be re - estimated according to the duopoly pattern; the in - store business is still a cash cow, but Douyin's content traffic and subsidy offensive are changing the intensity of competition; internationalization still has imagination, but it still needs time to prove its scale and return; AI and robots still have potential, but they have not become Meituan's new mainline in the capital market.

Therefore, what Meituan really faces is not the win or loss of a certain battle, but the switching of the valuation narrative.

The food delivery war has changed not only the market share but also the way the market understands Meituan.

This article is from the WeChat official account "Shitianhao Observation" (ID: shitianhao01), author: Diligent Haozi. It is published by 36Kr with authorization.