In 2024, Meituan's core local commerce operating profit hit 52.4B RMB. In 2025, the same segment swung to a 6.8–7B RMB loss. Six hundred billion yuan in profit capacity evaporated in a single year of subsidy warfare. The real question is not whether Meituan built a real moat. It's whether a physical logistics moat can survive when competitors decide to pay to circumvent it.
I. Decoding the Business DNA
Meituan never competed on content or social graphs. It competed on physics.
The core promise is deceptively simple: order something, and a rider shows up at your door in 30 minutes. That promise — not the app, not the algorithm — is the load-bearing pillar of the entire business. Food delivery, Flash instant retail, hotel and dining bookings, and autonomous delivery all hang on that one commitment.
Using a Job-to-be-Done lens: consumers hire Meituan to eliminate the friction of urban daily life. I'm hungry but don't want to go out. I need paper towels but the downstairs store is closed. I want to book a dinner but I don't have time to research. Meituan converts unplanned needs into problems solved in under 30 minutes.
This value proposition serves two customer groups whose interests are fundamentally in tension.
Consumers want cheap, fast, and reliable. Merchants want order volume, low commission rates, and platform independence. Meituan sits between them trying to satisfy both. The structural vulnerability: if a competitor offers consumers deeper discounts or merchants lower fees, the whole table gets reshuffled. In 2025, Alibaba's Flash and Douyin Local pushed that reshuffling to an extreme.
Customer Segmentation: Three Tables, Three Logics
Food delivery users (peak daily orders nearly 98M in 2024): High-frequency, habitual, but habit-dependent. Migration cost is low — users switch for enough subsidy, and they'll switch again.
In-store dining and travel users: Search-intent driven, deeply linked to Dianping's review ecosystem. Decision chains are longer and switching costs higher. Meituan's competitive advantage here is more durable. But Douyin's short-video discovery format has been pulling away impulse-purchase occasions.
Merchants (14.5M active merchants in 2024): The direct revenue source. Food delivery commission rates run at ~20–23%. On-store advertising and lead generation are high-margin businesses. Lose the merchants, lose the supply side.
II. How the Money Works
Business Snapshot
Metric Value 2024 Full-Year Revenue 337.6B RMB (+22% YoY) Q3 2025 Revenue 95.5B RMB (+2% YoY) 2025 Full-Year Net Loss Guidance 23.3B–24.3B RMB Annual Transaction Users (end-2024) 770M Active Merchants (end-2024) 14.5M Peak Daily Delivery Orders (2024) 98M [Source: Meituan 2024 Annual Report, March 2025; Eastmoney Finance, March 2026]
Revenue Structure: Two Engines, One on Fire
Meituan's revenue comes from two divisions: Core Local Commerce (delivery + in-store + Flash) and New Businesses (Meituan Select, grocery, autonomous delivery, etc.).
In 2024, Core Local Commerce generated 250.2B RMB in revenue — 74% of total — and 52.4B RMB in operating profit. That was the all-time high, which now serves as the benchmark against which the 2025 collapse is measured.
In 2025, as Alibaba Flash deployed billions in food delivery subsidies and Douyin attacked the in-store dining turf, Meituan matched the spend. In Q3 2025, per-order loss hit 2.6 RMB. Core Local Commerce swung to a 14.1B operating loss that quarter alone. Full-year net loss guidance exceeded 23B RMB.
This is not an operational efficiency problem. The market structure was rewritten by external force.
The Flywheel: Real, But Leaky
Meituan's flywheel logic is airtight on paper: more orders → denser delivery network → faster delivery times → better user experience → more orders.
By 2025, Meituan operated the world's largest instant delivery network — millions of riders, hundreds of thousands of stations. Competitors cannot replicate this network from scratch in under 5 years or for under 100B RMB in capital.
The flaw: user stickiness comes from habit, habit comes from frequency, frequency comes from low prices. When subsidy wars push food delivery prices to near cost, users form loyalty not to Meituan but to "cheapest available." That's the structural crack in the flywheel.
III. The Flywheel and the Moat
Three Real Moats
Moat 1: Delivery infrastructure. Millions of riders, tens of thousands of stations — physical assets accumulated over 10 years. This is not software. It's a physical network pressed into existence one delivery at a time. Alibaba and Douyin can subsidize users, but they have no riders. Alibaba Flash's ability to launch a subsidy war actually validates the moat: it has to use Meituan's (or Ele.me's) logistics to fulfill orders.
Moat 2: Merchant data. A decade of restaurant reviews, order history, and footfall analytics in Dianping gives Meituan's in-store business a data advantage that can't be bought. Merchants buy Meituan advertising because the targeting works.
Moat 3: LBS user intent. "Find food and local services on Meituan" is a conditioned reflex for a generation of urban Chinese users. Meituan is a search destination — users arrive with specific needs. Douyin is a discovery destination — users arrive to be entertained and stumble upon purchases. These are different consumer mental states. Douyin's launch of the standalone group-buying app "DouShenSheng" (抖省省) in February 2026 signals that Douyin knows it needs to win the search-intent game, not just the content game.
Flash: The Next Flywheel or Another War?
In 2025, Meituan Flash (30-minute all-category delivery) grew rapidly, partnering with 5,600+ chain retailers. In Q4 2025, it captured 70%+ market share among orders above 30 RMB — meaning it dominated the high-ticket segment without relying on pure price.
The instant retail market is projected to exceed 1 trillion RMB in 2026 and 2 trillion by 2030. If Flash can replicate the delivery network moat logic, it becomes the next 10-year growth engine.
The risk: Flash is still burning cash while food delivery is also bleeding. Running two loss-making fronts simultaneously compresses the balance sheet.
IV. Risks and Cracks
Risk 1: If the Subsidy War Doesn't End, Who Runs Out First?
Meituan's 2025 net loss exceeds 23B RMB. Its opponents: Alibaba, with 1B+ users across Taobao and Tmall, and Douyin, with 1.1B daily active users. Both can sustain losses longer. Both have cross-subsidy resources Meituan doesn't.
China's five regulatory agencies issued a joint warning in H2 2025 against predatory pricing, and summoned platforms for compliance talks. The signal: the unlimited subsidy playbook is politically unsustainable. But the timeline for closure is outside Meituan's control.
Risk 2: The In-Store Moat Is Narrowing
Douyin's content discovery format pulled away impulse dining occasions. The February 2026 launch of DouShenSheng directly targets Meituan's planned-purchase search scenarios — the last stronghold Meituan thought was structurally protected.
Meituan's counter is Shen Membership, with 70%+ of in-store merchants now enrolled. But actual merchant retention rates haven't been disclosed. That's the most critical unknown.
Risk 3: Rider Costs Are a Rising Structural Floor
Meituan spent 1.4B RMB covering occupational injury insurance for 6M+ riders in pilot provinces under Ministry of Human Resources guidance. Full social security coverage is coming. For users, this means better rider welfare. For the P&L, it's a permanent cost increase.
V. The Endgame
Scale Returns Are Real, But Geography-Bounded
Meituan's model is scale-returns-increasing in theory: more orders → denser network → lower per-order cost → stronger price competitiveness. In Beijing and Shanghai, this flywheel spins efficiently. In lower-tier cities, rider density drops, delivery efficiency declines, and scale economics weaken. Keeta's overseas expansion faces the same reset: every new market requires rebuilding the physical network from scratch.
The One Variable That Determines Everything
Subsidies will end eventually. When they do, what remains of Meituan's food delivery market share?
JPMorgan data from November 2025 showed Meituan holding approximately 50% order share and 60% GMV share — even at the peak of the subsidy war. This is the most important data point in the entire analysis. It means the delivery network and habit moat are genuine, not a mirage inflated by spending. If that share holds post-subsidy, Meituan's profit recovery will be rapid and powerful. The margin structure supports it.
If share collapses, then Meituan's 2024 profits were monopoly rents, not earned competitive returns.
VI. The Verdict
Meituan is a physical infrastructure business disguised as an internet company — and that distinction matters.
The delivery network is not replicable. The merchant data is not replicable. The user intent positioning is hard to erode. The 230B-plus loss in 2025 is real, but it happened while market share largely held. That's structurally different from a business losing share while losing money.
The one variable that changes everything is post-subsidy market share. November 2025 data suggests the moat held under maximum competitive pressure. If that's true, the profit recovery trade-off is simple math: stop burning on subsidies, watch the margin structure normalize toward 2024 levels.
This is not a business in decline. It's a business defending a physical infrastructure position that took 10 years to build, against opponents who can subsidize but cannot replicate. The defense is expensive. Whether it was worth it depends entirely on how the next two years score.
This analysis is based on public financial disclosures, investor relations materials, and industry research. It does not constitute investment advice.