The latest earnings report from Meituan offers a key lens through which to observe the ebbing of the food delivery subsidy war. According to the financial results, Meituan's second-quarter revenue reached 104.6 billion yuan, a 14.4% increase year-on-year, marking a return to double-digit growth. Its operating profit also swung back to positive territory quarter-over-quarter. This improvement was bolstered by narrowing losses in new business, but more importantly, it was driven by the contributions of its core local commerce, particularly the food delivery "mainstay" segment.
Over the past year, the food delivery industry has burned through hundreds of billions of yuan, yet the market landscape remains anchored at a 5:4:1 ratio. Meituan has not only maintained its GTV share above 60% but has also expanded its lead. In the mid-to-high average order value dine-in market (orders above 30 yuan), its share remains firmly above 70%. Since the start of this year, as regulatory guidance has steered the industry toward more rational competition, the focus has gradually shifted from "subsidy battles" back to "service and quality," placing the market squarely within Meituan's competitive advantage zone.
Looking at the data alone might feel abstract. But when you drill down into the operational details of user experience, fulfillment efficiency, and merchant supply, it's clear that the gap between platforms hasn't narrowed; it has actually widened. From minor tweaks to merchant display pages to the grander integration of delivery and local life ecosystems, the granularity and precision of platform services may seem to differ by a hair's breadth, yet they could prove to be decisive factors in the second half of the battle. With irrational subsidies receding, the contest of fundamental skills becomes the true business philosophy.
Bringing the Dine-In Experience to the Delivery Page: Mastery in the Details
The latest financial report shows Meituan's cost of sales ratio has declined for three consecutive quarters to 66.5%, nearly returning to pre-subsidy-war levels. Crucially, its order share has been largely maintained, keeping Meituan in the lead. This indicates it hasn't relied on burning cash to defend its turf. Without significantly cutting subsidies or artificially inflating average order values, still managing to hold its ground means Meituan must have been quietly putting in significant effort. Digging into its changes over the past six months reveals a recurring theme: user experience.
As issues like "ghost kitchens" and "delivery riders' no-choice lists" trend online, choosing takeout has increasingly become about picking from "what's left that's safe to eat," rather than "what to eat." This environment has allowed platforms branding themselves as "premium delivery" to quickly break into the market. Platforms are now competing with open kitchens and dine-in storefronts, seemingly making food hygiene more transparent. However, a user still cannot truly see whether a small, no-frills eatery with just three or four tables is clean or tasty. People are weary of "table safety" concerns. Targeting this pain point, Meituan’s page has a new solution: displaying real photos from its review platform, Dianping. Clicking on any small restaurant now shows not only its storefront and dining hall but also a "Dining Photo Album" filled with genuine photos uploaded by reviewers. These show dish presentation and portion sizes clearly and are continuously updated.
By cross-referencing these dine-in reviews with the merchant's submitted food safety logs, users can better identify reliable establishments. Simultaneously, new lists modeled on the Dianping Bib Gourmand and Black Pearl Restaurant Guide, such as the takeout "Must-Order List" and "Gold Label Stores," have been launched. These curated lists lower the risk of trial and error for delivery customers. It's evident that despite a year of intense competition, while consumer experiences may appear similar on the surface, subtle differences persist. Similar attention to detail is also visible in addressing users' "decision paralysis." In Meituan's delivery app categories, the "Food" section is finely segmented, with items like "Chicken with Yellow Rice" (Huangmenji) and "Claypot Rice" having their own dedicated categories. Other platforms either downplay food sub-categories or focus on upscale dining. This stylistic difference stems from their business models – e-commerce-centric platforms aim to push high-value general merchandise and lifestyle services, compressing "Food" category prominence to guide traffic elsewhere. Others may simply be avoiding a head-on clash with Meituan, opting for a "small and beautiful" premium delivery approach to lock in their e-commerce users' dining needs.
However, delivery is Meituan’s lifeblood, which dictates it must contest every inch. Furthermore, with over a decade of deep involvement in the food industry, the platform has amassed a vast supply. Without an exhaustive categorization system, users would be left to search for a needle in a haystack, wasting valuable time. To further streamline the user decision-making path, pricing has become more transparent. In the past, "number games" were prevalent – a product page would show 18 yuan, but red packets and full-reduction discounts were calculated separately, often inflating the final price to over 20 yuan. Meituan's "Bargain Delivery" (Teshang Waimai) focuses on an "all-inclusive price," offering three price tiers to spare users the mental math. This "Bargain Delivery" section even tailors its approach by product category. Searching for ice cream results in delivery times capped strictly under 15 minutes. Searching for crayfish lowers the weight of distance in search results, prioritizing "great taste" and "high repurchase rate." For categories like baked goods, where price, timeliness, and taste are hard to satisfy universally, search results revert to a traditional comprehensive ranking.
Clearly, Meituan's delivery algorithm may no longer rely on a "universal model." Instead, it prioritizes pain points for each specific local life and product combination to meet users' immediate needs and foster a better experience. This meticulous step-by-step optimization – from filtering and matching to price comparison – effectively intercepts user churn at multiple levels, enhancing conversion efficiency. It is through this intricate, "needlework-like" effort that Meituan is achieving higher-quality growth within the highly competitive delivery market. Of course, winning over delivery customers also requires reliable fulfillment performance. Ordering from the same restaurant, one notices that Meituan riders may pick up the food later but, because they are handling a single delivery, often arrive faster. Riders on another platform might depart earlier but, burdened with multiple orders, arrive a few minutes later. Behind these subtle differences lie not just disparities in delivery fleet capacity, but also differences in platform dispatch strategies, order batching logic, and route planning. Meituan's underlying operations are similarly more strategically "long-term-minded."
Wringing Out Losses Across Operations to Unlock "Efficiency Dividends"
In the second quarter, Meituan's delivery service revenue reached 26.78 billion yuan, a 13.1% year-on-year increase, returning to positive growth. Considering that tighter subsidies and a better order mix were simultaneously curbing order volume, achieving a 13-percentage-point revenue increase cannot be solely explained by Meituan's modest claim of "riding the peak season wave." The answer lies in the details of its delivery operations. A little-known statistic is that out of a 30-minute delivery duration, walking within the residential community itself can consume half the time. In large residential complexes with stringent access control, riders may spend two or three minutes registering and walking in, plus another few minutes navigating maze-like building layouts and waiting for slow elevators, easily exceeding 15 minutes of total overhead. These delivery losses are often "invisible" – the system typically calculates distance only from the merchant to the building entrance, effectively ignoring the time lost to getting lost or climbing stairs.
When a rider encounters such obstacles, not only is that single order delayed, but subsequent orders are also impacted. However, "rider-specific shuttle carts" bearing the Meituan logo are now appearing in many residential complexes. Where riders are barred from bringing their vehicles inside, they can use these carts, cutting a typical 10-minute walk to around 4 minutes. The platform also collaborates with communities to create detailed maps; in pilot programs, the time riders spend navigating has dropped from 5-10 minutes to just 2 minutes. Variables like rain or elevator wait times are now handled by models that estimate time buffers. In these ways, the bottlenecks of the "last 100 meters" in delivery are being cleared one by one. Clearly, while other platforms are still playing catch-up on route planning basics from three years ago, Meituan is already addressing pain points in the finer segments of the delivery process. This isn't just about reducing friction in one area, but a holistic improvement across the entire chain – from merchant meal preparation, pickup handovers, platform dispatch, in-transit delivery, all the way to the "final 100 meters."
With the delivery ecosystem optimized, riders are finally getting some breathing room. Riders can now have penalties waived for late deliveries, the countdown timer pauses at red lights, and an AI assistant, "Tuanbao," provides warnings on dangerous road sections. These "human-centric" adjustments aren't just about giving riders more dignity in the moment; they're aimed at fostering the long-term health of the rider ecosystem. Ultimately, the "speed race" approach is no longer viable in the delivery industry; a "quality competition" has just begun. Sacrificing some immediate efficiency for long-term sustainable operations is not an option; it's a mandatory question. This value shift is also evident in merchant ecosystem management. Following the delivery war, Meituan made a decisive cut to its own revenue streams: its ranking algorithm shifted from prioritizing "store rating + sales volume/activities" to a composite assessment based on "meal quality score + service experience score + food safety indicators." In the past, a merchant could spend money on promotions and combo deals, and boost their store rating above 4.7 to quickly gain exposure and order volume. The platform profited from advertising revenue and order counts. However, over time, whether the food actually tasted good became a peripheral concern. Merchants were also dragged into an arms race of discounts, squeezing their profit margins and potentially trapping them in a vicious cycle of "low quality, low price."
With the rating system reform, the power of "spending money" has been diminished in recommendations. Merchants with subpar quality will not receive traffic, and food safety indicators now directly account for a 20% weight. This gives quality merchants a fair starting line. Furthermore, the platform's method of directing traffic is no longer a deluge for everyone. Last year's war created a "super boom" with nearly 200 million daily orders, keeping merchants busy fulfilling orders. Yet, users attracted by free items and low prices often lose their loyalty once subsidies cease. Marketing money cannot build a moat, so platforms are recalibrating their subsidy strategies. Users have started noticing the changes: when browsing a store for 60 seconds without ordering and attempting to leave, the system automatically pops up a coupon to "retain" them. After ordering a recent meal, the system recommends other stores, and clicking in immediately provides a "new customer subsidy." Platform resources are now concentrated on improving conversion likelihood and win-backing lost users. For high-frequency, high-spending users, the strategy involves expanding premium supply like "brand satellite stores" and integrating consumption from delivery and dine-in into the membership points pool shared with hotel and travel services, using long-term benefits to retain loyalty.
From delivery and rider dispatch to merchant curation and precision traffic allocation, Meituan is meticulously addressing inefficiencies at every stage, resulting in a compounded optimization of overall efficiency. This systematic efficiency moat is precisely the true skill being tested as subsidies recede. The flames of the subsidy battle have died down, but the invisible smoke of conflict continues to drift. Every on-time rate, every recommendation's accuracy, and every small store's profitability ledger are chips in the platforms' quiet contest. Competition has not vanished; it has just become more rational and more covert, requiring a keen eye to perceive. The battle of fundamental skills in the second half is far from decided. However, the platform that can keep customers satisfied with their meals, let merchants conduct business with confidence, and provide stable income for riders is unlikely to fare poorly.
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