Meituan's Strategic Retrenchment
Following the large-scale shutdown of its Meituan Youxuan (preferred service) in June this year (retaining only operations in Guangdong and Zhejiang), on the morning of December 15, Meituan Youxuan services in Dongguan, Zhuhai, Zhaoqing, and other cities were abruptly discontinued. On the same day, Meituan's B2C e-commerce business "Tuanhaohuo" also announced the suspension of operations via an internal email.
The contraction of these two major business lines reflects Meituan's strategic shift in the post-food delivery war era. It has been observed that after the food delivery war, Meituan's approach to its core local commerce business has undergone some changes. Moreover, having expended significant "ammunition" in the food delivery battles during the second and third quarters, Meituan has not only scaled back its e-commerce and community group-buying operations but has also made subtle adjustments to its AI strategy.
"Efficiency-Driven Scale" Disrupted
Meituan's core advantage lies in the large-scale real-time dispatch system and fulfillment network it built over a decade. A 2022 report by Zhongtai Securities noted that food delivery platforms possess exclusivity and economies of scale in the fulfillment process, which, once established, become a key competitive edge for leading companies to fend off competition. This structure makes the food delivery industry prone to a "winner-takes-all" competitive landscape.
Historically, Meituan has relied on the flywheel effect of "efficiency driving scale, and scale feeding efficiency": continuously improving fulfillment efficiency through dispatch algorithms, data analysis, and operational optimization to expand order volume and market share, while scale growth in turn reduces per-unit delivery costs, enhancing monetization capabilities and gross margins. This strategy enabled Meituan to outlast competitors in early-stage competition with superior unit economics (UE) and gradually establish industry standards through algorithm efficiency, commission rules, and merchant operations.
However, the aggressive entry of JD.com and Alibaba in 2025 triggered a capital-intensive battle with little regard for short-term returns, forcibly disrupting Meituan's previously effective playbook. Before the food delivery war, Meituan held a 65% market share, while Ele.me had 33%, and other platforms combined for just 2%, according to a Bank of Communications International report. Post-war, J.P. Morgan's November report showed Meituan's share had dropped to 50%, with Alibaba rising to 42% and JD.com capturing 8%.
Food delivery lacks absolute technological or supply-side barriers, making entry relatively easy. By Q3 2025, Alibaba and JD.com had cash and short-term investments of ¥573.9 billion and ¥210.5 billion, respectively, compared to Meituan's ¥141.3 billion. This means that as long as they are willing to replenish funds from other businesses, Alibaba and JD.com have the capital capacity for long-term subsidies in food delivery.
Under this extreme stress test, Meituan barely held its ground: while it lost some market share, it still commanded over 70% of high-value orders (above ¥30). However, its profit pool was rapidly drained. In Q3, Meituan reported an adjusted net loss of ¥16 billion, its largest quarterly loss since its 2018 IPO. The core local commerce segment, including food delivery, saw an operating loss of ¥14.1 billion, with revenue posting its first negative growth since the pandemic.
This battle demonstrated that in the face of "unlimited capital," scale and efficiency are not invincible. When even the deepest efficiency advantages can be challenged by capital-intensive tactics, Meituan had to reassess its strategic priorities—shifting from expansion to defense and concentrating limited resources on reinforcing its most core and long-term valuable business moats.
From "Subsidizing Users" to "Locking in Merchants"
In June 2025, during the fiercest phase of the food delivery war, Meituan made a critical adjustment to its long-loss-making community group-buying business, Meituan Youxuan: suspending operations in most regions nationwide, retaining only Guangdong and Zhejiang. Over five months later, on December 15, Meituan decided to shut down the remaining regions, effectively ending the business.
On the same day, Meituan's other non-core business—B2C e-commerce platform "Tuanhaohuo"—also announced its suspension via internal email. Launched in August 2020, it had been seen as a strategic move into the express e-commerce sector.
The complete exit from Meituan Youxuan and the simultaneous halt of Tuanhaohuo signaled Meituan's clear choice to retreat from battlefields where it lacked long-term competitive advantages and limited synergy with its core local life strategy. This strategic retrenchment aimed to "lighten the load" on its ecosystem and free up resources to focus on instant retail, a key growth area.
The same logic applied to its subsidy strategy for core local commerce users. Despite rolling out indiscriminate subsidies like "¥0 purchases" during the peak of the food delivery war, recent observations show Meituan has reduced reliance on subsidies for user acquisition. As of December 13, 19 of the 33 posts on Meituan's Xiaohongshu account since October promoted its membership program, indicating a shift toward retaining existing users.
Since the official launch of "Meituan Membership" on March 31, the platform has iterated its benefits system multiple times. Current core perks include large-amount discount coupons for high-value food delivery orders and general coupons covering seven scenarios: dining, lodging, travel, entertainment, shopping, and healthcare. On September 28, Meituan also revamped its "Membership Center."
These moves suggest Meituan is directing limited subsidies and operational resources toward its core high-value customers (HVCs) rather than continuing blanket subsidies. In Meituan's vision, the new membership system is not just a promotional tool but a "transparent" user value management system: the platform and merchants can better identify user value and preferences, enabling more precise allocation of marketing resources across user tiers.
This represents Meituan's latest attempt to convert "traffic" into "retention" in the era of存量 competition. How "retention" translates into profit still hinges on Meituan's longstanding business logic: building a foundational traffic pool via large-scale, low-cost food delivery, then leveraging high-frequency food orders to drive growth in低频 but high-margin businesses like in-store services, hotels, and travel, where it earns commissions and ad revenue.
For instance, the membership system incentivizes food delivery users to engage in higher-value消费 like in-store group purchases, hotel bookings, and medical aesthetics within Meituan's ecosystem, indirectly boosting its instant retail and in-store & travel businesses.
In 2021, in-store and travel contributed about one-third of Meituan's core local commerce revenue but generated most of its profits. That year, food delivery's operating margin was just 6.6%, compared to 43% for in-store & travel. Although Meituan stopped disclosing segment-specific data after 2022, industry estimates peg its current margin at 30%–35%.
Before the 2025 food delivery war, Meituan and Douyin waged an equally fierce battle in the in-store sector from 2023–2024. Leiphone cited analysts noting Douyin's aggressive entry一度 slashed Meituan's in-store operating margin from ~40% to just over 20%. Since fully entering local生活 in early 2023, Douyin quickly captured ~30% of the in-store group-buying market; by September 2024, the Meituan-Douyin split was roughly 70:30.
This year, as Meituan clashed with JD.com and Alibaba in food delivery, Douyin launched a "sneak attack" on its in-store & travel business: - In June, Douyin quietly rolled out "Tanfan," a mini-program covering the full链 from info查询 to ordering and group purchases, directly competing with Dianping; - In July, Douyin Life Services announced billions in platform subsidies for travel products and upgraded "Local Push," integrating merchant messaging, marketing pages, and live streams; - In September, Douyin expanded its "Heartbeat Rankings" from 40 to 101 cities, featuring 3,300 restaurants.
Goldman Sachs reported Douyin's life services GTV (primarily from in-store消费) surged nearly 60% YoY in the first ten months of 2025, with full-year GTV expected to exceed ¥800 billion. Meituan, meanwhile, managed only low double-digit growth from its ¥1 trillion base in 2024, narrowing the gap significantly.
To counter Douyin's offensive, beyond membership-driven in-store traffic, Meituan has doubled down on the supply side, seeking to "lock in" merchants financially, operationally, and strategically.
Since September, Meituan has多次 upgraded its "Prosperity Plan" to support餐饮 merchants, adding ¥2.8 billion in October and another ¥1 billion in late November. It also launched AI tools like "Kangaroo参谋," "Kangaroo Butler," and "Smart掌柜," along with brand satellite stores, to help merchants cut costs and boost efficiency.
These measures aim to deepen merchant reliance on Meituan's platform and solidify its supply-side edge. Whether these user- or merchant-side moves can improve post-war conversion and efficiency will become clearer in future earnings reports.
AI Strategy in Retreat
On December 13, five days before WowAI's scheduled shutdown (December 18), users flooded the comments under Meituan's latest Xiaohongshu post with a joint open letter signed by 100 users, urging Meituan to address product retention or data migration options.
WowAI, an internally incubated startup and Meituan's first AI interactive product launched in November 2023, became a signal of Meituan's recalibrated AI priorities under post-war constraints.
Earlier this year, founder Wang Xing positioned AI as a key "offensive" strategy, targeting full-scale advances in self-developed LLMs, AI productization (AAI), and workflow transformation (AI at Work). As a latecomer among internet giants, Meituan initially sought rapid catch-up via aggressive investment.
This was evident in H1 talent strategies: core local commerce CEO Wang Puzhong personally recruited AI talent on social media, while former HR head Wei Xiaokang scouted "AI疯子" (AI fanatics) for Lightyear Beyond on Xiaohongshu.
These hires reflected Meituan's dual AI tracks—one serving core businesses like food delivery, the other exploring non-core areas like companionship, content, tools, ToB, and hardware. However, post-H1, Meituan's AI output has focused almost entirely on core business digitization, with products like consumer assistant "Xiaomei," merchant tools "Kangaroo参谋," "Kangaroo Butler," and "Smart掌柜."
Independent AI explorations have dwindled. Reports suggest Lightyear Beyond's hiring has slowed, while WowAI prepares to shutter and Miaoshua mini-program remains "under maintenance." Meituan appears to have sharply curtailed open-ended AI-to-C experiments.
Meanwhile, Meituan continues investing in foundational tech. Since H2, it has密集 released base model updates, completing全模态 (full-modal) capabilities spanning language, vision, audio, and video in just five months.
Recent reports indicate ex-ByteDance视觉大模型 lead Pan Xin has joined Meituan to helm multimodal AI innovation, underscoring Meituan's urgency to monetize AI amid food delivery losses. Despite a ¥16 billion Q3 loss, R&D spend rose 31% YoY to ¥6.9 billion. In early November, Meituan raised ~$3 billion in its largest-ever bond offering to replenish funds.
However, compared to content or social platforms, Meituan faces lower AI "error tolerance." Its core operations demand秒级响应, physical-world fulfillment, and complex coordination—a single AI error (misassigned riders, flawed pricing, or poor merchant recommendations) can swiftly trigger user complaints, rider protests, and merchant disputes, incurring real costs and reputational damage.
This reality dictates that Meituan cannot rapidly hand core决策权 to AI like some peers. Under "limited ammunition," its AI strategy is retreating from broad exploration to a pragmatic, business-aligned path emphasizing certainty and商业化落地.
Learning from Every Battle
Over 15 years, Meituan has fought the "千团大战" (group-buying wars), "first food delivery war," hotel battles with Ctrip, ride-hailing clashes with Didi, power bank wars, community group-buying wars, and Douyin's local生活 offensive. Its history is essentially an internet warfare chronicle.
Each pivotal conflict, win or lose, has left enduring lessons: - The group-buying wars forged Meituan's精细化运营 DNA, with "三高三低" (high quality/low price, high efficiency/low cost, high tech/low margin) securing victory. - The first food delivery war saw Meituan逆袭 Ele.me via ground teams, massive subsidies, and团购 synergies, building its地推 army and delivery network—key moats today. - The 2020社区团购 war, though a failure, deepened Meituan's grasp of生鲜 supply chains and下沉 markets, informing later instant retail formats like Xiaoxiang超市 and闪购.
Against this backdrop, the 2025 food delivery war represents a deeper "基因强化" (genetic reinforcement). At the cost of massive losses, it forced Meituan to recognize that internet competition's next phase demands shifting from capital's "无限游戏" (infinite game) to a "有限战争" (finite war)—defending core turf with efficiency and tech-driven growth.
Crucially, the war accelerated Meituan's pivotal pivot—refocusing AI from uncertain exploration to a growth tool anchored in present-day主业 needs.
As core local commerce CEO Wang Puzhong put it, Meituan "doesn’t want to卷 (get caught in cutthroat competition), but was被动卷入" (dragged in)—fighting for survival. Yet each such brutal被动 war acts as a natural selection test,刻下 (etching) new strategic genes while serving as the key to unlocking the next growth phase. ■
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