Among the three companies locked in China’s food delivery war, Meituan was the last to report first-quarter earnings. It also delivered the clearest surprise on the metric investors were watching most closely: narrower losses.
In the first quarter of 2026, Meituan recorded RMB 91 billion (USD 13.4 billion) in revenue, up 5.6% year-on-year and broadly in line with expectations. The stronger signal was its operating loss, which narrowed to RMB 6.5 billion (USD 957.5 million) from RMB 16.1 billion (USD 2.4 billion) in the previous quarter. Its core local commerce segment, the group’s most scrutinized business, cut its operating loss to RMB 2 billion (USD 294.6 million) from RMB 10 billion (USD 1.5 billion), materially better than analysts’ expectations of RMB 4.0–4.5 billion (USD 589.2–662.9 million).
Meituan also changed two key revenue disclosures this quarter. It began reporting “goods sales revenue” as a separate line item, mainly covering grocery retail businesses such as Xiaoxiang Supermarket and Kuailv, along with other self-operated retail categories such as medicine and liquor. The company said the change reflected retail’s strategic importance. The new disclosure also makes Xiaoxiang’s growth easier to track.
At the same time, Meituan merged “commission revenue” and “online marketing services revenue” into a single “merchant services revenue” metric. That makes take rates and merchant advertising appetite harder to read, while blurring the distinction between its delivery and in-store businesses.
Disclosure changes often point to strategic priorities. Meituan has adjusted its reporting several times in recent years. In the first quarter of 2022, it stopped disclosing gross transaction value (GTV) for food delivery. In the second quarter of that year, it regrouped food delivery, in-store, hotel and travel, and new initiatives into two segments: core local commerce and new initiatives. The boundary between delivery and in-store services became less visible. Since 2023, it has also stopped disclosing annual transacting users, active merchants, and annual transaction volume.
Viewed over time, macroeconomic shifts and competitive pressure have repeatedly pushed Meituan to revise its priorities.
A Meituan insider told 36Kr that, in the early stage of the food delivery war in 2025, some middle and senior managers repeatedly told employees to “put all projects aside and serve the competition.” By around the fourth quarter of 2025, the company’s internal direction became clearer: it would stop focusing on overall market order share and shift more resources toward high-value users and work that supports long-term competitiveness. Some user- and merchant-experience projects that had previously been paused were restarted.
Meituan has often clarified its strengths and weaknesses under intense competitive pressure. Venture capitalist Kathy Xu, founder of Capital Today, once explained why Meituan survived consolidation in group buying by noting that, while companies in the sector often inflated data, Meituan CEO Wang Xing was known for not doing so. She said Meituan’s advantage lay in treating users well and understanding the business model’s core: high quality, high efficiency, high technology, low average order value, low cost, and low gross margin.
That logic now appears in its in-store business as well. On the post-earnings call, CFO Chen Shaohui acknowledged that competition with Douyin could create short-term volatility, but said in-store services depend on more than traffic alone. He added that Meituan’s in-store profit margin should remain stable in the short term and has room to recover over the long run.
The delivery war nears a turning point
Whether food delivery’s unit economics can turn positive is the question facing Meituan, Alibaba, and JD.com.
For now, Meituan appears to be cutting losses more efficiently. Its first-quarter core local commerce loss of RMB 2 billion was about half of market expectations. Wang said that, in recent months, Meituan had strengthened its market position and widened its unit economics gap with competitors. If competition returns to a rational state, he said, second-quarter unit economics should improve significantly from the first quarter, though performance in the second half will still depend on the competitive environment.
Meituan’s path to lower losses depends on an improved order structure and stronger operating capabilities. Citing people familiar with the matter, 36Kr reported that, during the subsidy peak, Meituan and its rivals were at one point nearly level in order volume, but Meituan’s food delivery GTV share stayed above 60%.
On a supplementary earnings call, management said the food delivery business was slightly profitable in April and May. Whether the second quarter turns positive overall will depend on June. The month includes the 618 shopping festival and the World Cup, which could alter subsidy intensity across instant retail and delivery. Based on companies’ public comments, however, the contest is unlikely to become as intense as it was last summer.
Alibaba laid out a profitability roadmap for quick commerce in March. It maintained its target for the segment to exceed RMB 1 trillion (USD 147.3 billion) in transaction scale in fiscal 2028 and said the business is expected to become profitable overall in fiscal 2029. If the sector enters a profit recovery phase, Meituan’s operating efficiency advantage should matter. But whether the market stabilizes in the second quarter still depends on whether Meituan and Alibaba can accept the current market share structure.
For Meituan, reaching sustainable, high-quality quick commerce delivery volume of 100 million orders per day remains the long-term target.
Once food delivery’s direction became clearer, the competition in Meituan’s in-store business looked more difficult. In the first quarter, GTV for in-store, hotel, and travel rose by more than 10% year-on-year, revenue grew by a mid- to high-single-digit percentage, and profit margin exceeded 20%. But Douyin’s March launch of Doushengsheng, a discount-focused app for local group buying deals, has intensified competition. Morgan Stanley said in a research report that Meituan’s in-store, hotel, and travel business faces downside risk.
Douyin is again using traffic and subsidies as its main tools. The Douyin app has been pushing users toward Doushengsheng. On Douyin’s group-buying page, nearly every product prominently directs users to buy through Doushengsheng, while direct purchase on Douyin requires an extra click. Prices on Doushengsheng are generally lower than those on Douyin.
Inside Doushengsheng, each deal displays a platform subsidy amount near the top of the page. For one meal package from eatery chain Fish With You, the Meituan price was RMB 25.9 (USD 3.8), while the Doushengsheng price was RMB 23.4 (USD 3.4). But brands and merchants often differentiate package details. For example, a Meituan package might offer more main-dish choices or include more of a higher-value shrimp and crab roe wonton in a mixed package.
Merchants are unlikely to abandon Meituan’s mature channel, but they also cannot ignore Douyin’s traffic. QuestMobile data cited by 36Kr showed that, as of May 10, Doushengsheng had nearly 16 million daily active users.
As in delivery, Meituan appears to have partly stepped away from orders defined mainly by price competition. It is redirecting resources toward higher-quality growth and profit, while continuing to invest in category expansion and market penetration. Service retail and lower-tier markets are its areas for incremental growth.
Wang Puzhong, who leads Meituan’s core local commerce business, said in June 2025 that, offline, most storefronts beyond merchants selling goods are service retail outlets, forming a large market. Fitness centers, hair salons, massage providers, and medical aesthetics clinics remain weakly digitalized. Compared with restaurants, their services are less standardized and involve higher information barriers. Meituan is trying to digitalize service retail by building digital profiles for nonstandard service providers such as skilled tradespeople.
In local group buying, Douyin is clearly the attacker. But Meituan is not only defending. It is using its preferred playbook to attack incremental markets. Chen said Meituan will focus this year on strengthening its advantages in core categories and building better digital infrastructure for merchants in a weak industry environment. Management also expressed confidence that in-store margins can remain stable in the short term and recover over time.
Xiaoxiang moves to the center of Meituan’s retail strategy
Meituan’s new revenue reporting makes the trajectory of Xiaoxiang Supermarket more visible. As the representative of its self-operated retail business and a leading front warehouse player, Xiaoxiang’s internal profile at Meituan has risen sharply.
Despite the shutdown of Meituan Youxuan, Meituan’s new initiatives revenue reached RMB 27 billion (USD 4 billion) in the first quarter, up 21% year-on-year, while its operating loss narrowed to RMB 2.1 billion (USD 309.4 million). Under the newly separated revenue categories, goods sales revenue in new initiatives grew 40.7% year-on-year. Xiaoxiang contributed most of the incremental growth. Its front warehouses now cover more than 55 cities, and the share of private-label products has increased substantially.
A Meituan insider told 36Kr that Xiaoxiang’s current direction is ambitious, both in warehouse expansion and strategic positioning. It is seen internally as Meituan’s top growth business at present.
On the post-earnings call, Wang broadly praised Xiaoxiang, saying the business achieved very strong GTV growth in 2025, significantly outpaced the broader industry, recently accelerated expansion, and has been increasing the share of private-label products in sales.
Wang also described Meituan’s view of retail. The future growth of quick commerce, he said, will be driven by multiple models, including third-party merchant models and first-party models such as Xiaoxiang. Over the long term, Xiaoxiang has a clear path to profitability, with a target of maintaining a low-single-digit profit margin.
At this point in Meituan’s transition, its consumer-facing retail system can be divided into two main areas: Meituan Shangou, also known as Meituan Instashopping, under core local commerce, and grocery retail under new initiatives, including Xiaoxiang and Happy Monkey. Dingdong Maicai will also be integrated into the grocery retail arm after its acquisition is completed.
Instashopping is mainly a third-party merchant model. After initially integrating offline small shops, it is expanding through more quick commerce-oriented warehouses. Meituan’s self-operated brands, such as on-demand alcohol arm Waima, also sit under Meituan Shangou. According to 36Kr, Waima is about to exceed 2,600 stores. Better-performing directly operated stores in Beijing generate monthly profit of roughly RMB 100,000–200,000 (USD 14,731.2–29,462.5).
Meituan’s financial report showed that goods sales revenue in core local commerce rose 96% year-on-year in the first quarter. The metric reflects rapid growth in self-operated categories including medicine and alcohol. But at RMB 2.983 billion (USD 439.4 million), the revenue scale remains far below the RMB 17.989 billion (USD 2.7 billion) generated by goods sales in new initiatives, so it is not yet large enough to carry the group’s retail ambitions.
Competition among China’s large platforms in quick commerce is shifting from food delivery to nonfood retail categories. Alibaba has reiterated its scale targets for the segment. Meituan has prioritized Xiaoxiang and moved to acquire Dingdong Maicai. Both are positioning for the next stage.
The boundary between retailers and internet companies is dissolving in quick commerce. On February 3, Walmart’s share price surpassed USD 125.47 and briefly lifted its market capitalization above USD 1 trillion, though it has since fallen back below that level. Before that, the milestone had largely been reached only by technology companies.
Walmart’s rising online business and active use of artificial intelligence have been key drivers of its share price gains. Logan Capital Management, an investment management firm, said Walmart’s management had not only positioned the company as a retailer but redefined it as a technology company. In this respect, China’s market is arguably more advanced and has become a reference point for Walmart’s online growth in recent years.
Traditional retail giants and internet technology companies are now converging more deeply in retail. The next generation of retailers will need to be more convenient and more technology-driven. This is the retail-plus-technology positioning Meituan has long emphasized. For now, Meituan is one of the companies closest to that future retail model.
KrASIA features translated and adapted content that was originally published by 36Kr. This article was written by Ren Cairu for 36Kr.
Note: RMB figures are converted to USD at rates of RMB 6.79 = USD 1 based on estimates as of June 4, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.