Meituan sees itself clearly in the competition

Author | Ren Cairu

Editor | Qiao Qian

Among the three companies participating in the food delivery war, Meituan released its first - quarter financial report the latest, but presented the most surprising "loss - reduction" result.

In the first quarter of 2026, Meituan achieved revenues of 91 billion yuan, a year - on - year increase of 5.6%, basically in line with expectations. The highlight lies in the significant narrowing of the operating loss, which decreased from 16.1 billion yuan in the previous quarter to 6.5 billion yuan. Among them, for the most - watched core local business, the operating loss decreased from 10 billion yuan in the previous quarter to 2 billion yuan, significantly better than the 4 - 4.5 billion yuan predicted by investment banks.

Driven by the strong performance, after the opening of the Hong Kong stock market on June 2nd, Meituan's intraday increase reached over 9%. As of press time, it was reported at HK$85.25 per share.

Notably, in this quarter's financial report, Meituan also updated two key revenue metrics:

• On the one hand, "Merchandise sales revenue" is listed separately, mainly from grocery retail businesses (mainly Xiaoxiang Supermarket and Kuailv) and other self - operated retail businesses such as pharmaceuticals and alcohol. The financial report states that this change is to reflect the strategic importance of the retail business. This part of the revenue originally belonged to "Other services and sales". After being listed separately, the growth momentum of Xiaoxiang Supermarket will be easier to track;
• On the other hand, the original "Commission revenue" and "Online marketing service revenue" are combined and presented as "Merchant service revenue". As a result, it is more difficult to intuitively measure the take rate and merchants' willingness to invest in advertising. The situations of the in - store and home - delivery businesses have become more blurred, and it is also more difficult to observe the competitive situation of the two lines.

Changes in Meituan's revenue reporting method (since the first quarter of 2026)

Changes in the financial report caliber often reflect a company's most real strategic intentions. In this regard, Meituan has made several adjustments in the past few years. In the first - quarter report of 2022, Meituan stopped disclosing the GTV of food delivery, partially hiding the changes in consumer performance brought about by the pandemic; in the second - quarter report of the same year, Meituan adjusted the revenue breakdown of food delivery, in - store hotel and travel, and new businesses into two parts: core local business and new businesses, blurring the boundary between food delivery and in - store businesses. Since 2023, Meituan has also stopped disclosing the number of annual active merchants, users, and annual transaction volumes.

Looking back, changes in the macro - environment and impacts from competitors have reshaped and corrected Meituan time and time again.

A Meituan insider told 36Kr that in the early stage of the food delivery war in 2025, some middle - and high - level managers repeatedly stated internally that "everyone should put aside all current projects and focus on the competition." Since around the fourth quarter of 2025, Meituan's internal orientation has become clearer, that is, no longer focusing on the overall market order share, but allocating more resources to attracting high - value users and things that are beneficial to long - term competitiveness. Some previously suspended projects aimed at optimizing the user and merchant experience have also been restarted.

At least from historical performance, in the most intense and dangerous competition, Meituan has to re - examine its own advantages and disadvantages, clarify what to pursue and what to abandon, and then return to the track of "doing the right thing". Investor Xu Xin once pointed out the reason why Meituan won the group - buying war. "At that time, it was common in the industry to inflate data, but Wang Xing's competitors told me that Wang Xing wouldn't do that. Besides being genuinely good to users, Meituan found the essence of the business, which is the 'Three Highs and Three Lows' (high - quality, high - efficiency, high - technology, and low - customer - order, low - cost, low - gross - margin)."

Now, Meituan also shows a similar meaning in the in - store competition. When talking about the competition with Douyin in the earnings call after the financial report, CFO Chen Shaohui believes that the essential logic of the in - store business is not driven by traffic. "Competition will generate some noise," and he also said that Meituan's in - store business profit margin will remain stable in the short term and has room for recovery in the long term.

01 The food delivery war reaches a turning point, and the outcome will be clear after summer

The positive situation of food delivery UE (Unit Economic) is a collective question from the market to Meituan, Alibaba, and JD.com.

Currently, Meituan has a higher loss - reduction efficiency. In the first quarter, the core local business of Meituan had a loss of 2 billion yuan, only half of the expected loss. Wang Xing said that in recent months, Meituan has not only consolidated its market position but also expanded the UE gap with its competitors. "If the competition returns to rationality, the UE in Q2 will be significantly improved compared to Q1, but the UE improvement in the second half of the year will still depend on the evolution of the competitive environment."

On the loss - reduction path, Meituan relies on the improvement of the order structure and the advantage of its operational capabilities. People familiar with the matter said that during the peak subsidy period, Meituan and its competitors were almost on par in terms of order volume, but in terms of GTV share, Meituan Food Delivery has always maintained a share of over 60%.

At the supplementary earnings call, Meituan's management mentioned that the food delivery business achieved a small profit in April and May. Whether it can achieve overall profitability in the second quarter will depend on its performance in June. It is worth noting that in June, coinciding with important events such as the 618 promotion and the World Cup, compared with April - May, the intensity of competition and subsidy in the instant retail market, including food delivery, will change. However, judging from the statements of all parties, the intensity is unlikely to be as high as last summer.

Alibaba proposed a profit roadmap for its instant retail business in March, aiming to maintain the goal of the overall transaction volume of instant retail exceeding one trillion yuan in the fiscal year 2028 and expecting the instant retail business segment to achieve overall profitability in the fiscal year 2029. Once the industry as a whole enters the profit - recovery stage, Meituan's advantage in operational efficiency is worth looking forward to. However, whether the situation can stabilize in the upcoming second quarter still depends on whether Meituan and Alibaba can accept the current market - share pattern.

For Meituan, achieving a sustainable and high - quality daily volume of 100 million instant - delivery orders remains its long - term goal.

After clarifying the orientation and thinking of the food delivery business, the competition Meituan faces in the in - store business seems more difficult. In the first quarter, the GTV of Meituan's in - store hotel and travel business increased by more than 10% year - on - year, the revenue increased by a mid - to high - single - digit percentage, and the profit margin was over 20%. However, with the launch of the "Doushengshang" App by Douyin in March, the competition in in - store group - buying is intensifying. Morgan Stanley said in a research report that "there is a downward risk in the in - store hotel and travel business."

On the new battlefield of Doushengshang, Douyin has once again used the two tools of traffic and subsidies. On the one hand, the Douyin App is now vigorously attracting new users for the Doushengshang App. On the "Group - buying" page of Douyin, almost all products have the option of "Buy on Doushengshang" in the most prominent position. Only after an additional click can users see the option of "Buy directly", and the prices on Doushengshang are all lower than those on Douyin.

After users enter the Doushengshang App, each product will indicate "Platform subsidy of xx yuan" on the first - screen page. Taking a set meal from "Yu Ni Zai Yi Qi" as an example, the price on Meituan is 25.9 yuan, while the price on Doushengshang is 23.4 yuan. However, brands and merchants often make detailed distinctions in the set - meal content. For example, Meituan may offer more main - course options in the set meal, or in the combination of a double - combination set meal, the number of higher - value "Shrimp and crab roe wontons" will be more on the Meituan platform.

Price comparison between Doushengshang and Meituan (left is Doushengshang, right is Meituan)

Merchants will not abandon Meituan, a mature channel, but they also cannot ignore Douyin's traffic. QuestMobile data shows that as of May 10, 2026, the daily active users of Doushengshang have approached 16 million.

Similar to the food delivery business, Meituan has, to some extent, given up orders with a strong "price - war" nature and allocated resources to high - quality growth and profits, while firmly investing in category expansion and market penetration. Service retail and low - tier markets are regarded by Meituan as areas to create incremental growth.

Taking service retail as an example, Wang Puzhong said in June 2025 that "Most of the offline stores we see, except those selling physical goods, are service - retail stores. This is a huge market." Including fitness, hair - styling, massage, and medical aesthetics, the online penetration rate of this part of the market is low. Compared with the food industry, its products are more non - standardized, and the information barriers in transactions are also higher. Now, Meituan is improving the digitalization level of service retail by establishing digital profiles for non - standardized "craftsmen".

In the in - store group - buying market, Douyin is undoubtedly the "aggressor", but Meituan is not entirely the "defender". Instead, it is more like attacking the incremental market in a way it believes in. Chen Shaohui said that Meituan will focus on two things in in - store group - buying this year: strengthening its competitive advantage in core categories and building better digital infrastructure for merchants in a sluggish industry environment. The management also shows confidence in the in - store profit margin, saying that it can remain stable in the short term and will recover in the long term.

02 Xiaoxiang Supermarket enters the game, and Meituan moves closer to a new - generation retail company

After Meituan changed its revenue reporting method in the financial report, the trend of Xiaoxiang Supermarket has become more transparent. As a representative of self - operated retail and an absolute leading player in the pre - warehouse model, its presence within Meituan has risen sharply.

In terms of performance, despite the impact of the shutdown of "Meituan Youxuan", in the first quarter, the revenue of Meituan's new business still reached 27 billion yuan, a year - on - year increase of 21%, and the operating loss narrowed to 2.1 billion yuan. In terms of the newly separated revenue breakdown, the merchandise sales revenue of the new business increased by 40.7% year - on - year, and Xiaoxiang Supermarket contributed the most significant increment. The pre - warehouses of Xiaoxiang Supermarket now cover more than 55 cities, and the proportion of its private - brand products has also increased significantly.

A Meituan insider told 36Kr that whether in terms of the number of warehouses opened or strategic positioning, "having grand goals" is the current orientation of Xiaoxiang Supermarket, and it is regarded as Meituan's top growth business at present.

Wang Xing gave full and comprehensive affirmation to the performance of Xiaoxiang Supermarket in the earnings call after the financial report, saying that the business achieved very strong GTV growth in 2025, significantly outperforming the entire industry. Recently, it has accelerated its expansion, and the proportion of its private - brand (PB) products in sales has also been increasing.

He also talked about his understanding of the retail business. "The future growth of instant retail will be driven by multiple models. It requires both the 3P (third - party merchant) model and the 1P (platform self - operated) model like Xiaoxiang Supermarket." In the long run, the Xiaoxiang Supermarket business "has a clear profit roadmap", with the goal of maintaining a low - single - digit profit margin.

At this changing moment, we re - organize Meituan's retail system. Its C - end - oriented retail businesses are mainly distributed in two areas: "Meituan Flash Sale" in the core local business and "Xiaoxiang Supermarket" and "Happy Monkey" in the new - business grocery - retail segment. After the acquisition of "Dingdong Maicai" is finalized, it will also be integrated by the grocery - retail team.

Among them, Meituan Flash Sale is mainly based on the 3P model. On the basis of integrating offline small stores, it is now focusing on promoting the expansion of the more brand - oriented "Brand Flagship Lightning Warehouses". Meituan's self - operated Songshu Convenience and Waima Sending Wine also belong to Meituan Flash Sale. As we understand, Waima Sending Wine is about to exceed 2,600 stores. The monthly profit of a well - performing direct - operated store in Beijing is about 100,000 - 200,000 yuan. Since the first store of Songshu Convenience opened in 2022, it has now covered more than 79 cities, and the target for opening new stores this year is several times that of last year.

The financial report data shows that the "Merchandise sales revenue" of the core local business in the first quarter increased by 96.0% year - on - year. This indicator reflects the rapid growth of Meituan's self - operated pharmaceutical, Waima Sending Wine, and Songshu Convenience businesses. However, its revenue scale of 2.983 billion yuan is still far from the 17.989 billion yuan of the new - business segment and cannot shoulder the responsibility of large - scale growth.

Now, the instant - retail competition among large companies has shifted from food delivery to non - food retail categories. Alibaba re - emphasized its scale goal for instant retail, and Meituan upgraded the strategy of Xiaoxiang Supermarket and acquired Dingdong Maicai, all in preparation for this.

In the beautiful blueprint of instant retail, the boundary between retail companies and Internet companies is disappearing. On February 3, 2026, the stock price of retail company Walmart exceeded $125.47 per share, and its market value exceeded one trillion US dollars (as of press time, its market value has fallen back to $913.5 billion). Before that, most of the companies in the trillion - dollar club were technology companies.

The booming development of online business and the active attempt of AI applications have become the main driving forces for the significant increase in Walmart's stock price. Investment management company Logan Capital Management said that "Walmart's management is very far - sighted. They not only position Walmart as a retailer but also re - define it as a technology company." And the Chinese market is obviously more advanced in this regard, almost like a "teacher" for Walmart's online - business growth in recent years.

Now, traditional retail giants and large Internet technology companies are having more intersections in the retail field. A new - generation retailer must be more convenient and have technological attributes, which is the "retail + technology" positioning that Meituan has been emphasizing. At least for now, Meituan is one of the companies closest to the future retail company.