The fierce competition between Meituan, Taobao Flash Sales, and JD.com in the food delivery market continues to intensify, leaving many restaurant owners struggling to cope. Multiple restaurant operators have reported that the platforms’ subsidy wars are further eroding store profits, while the surge in orders is putting additional strain on staffing and inventory management.
Several industry associations, including the China Cuisine Association and the China Chain Store & Franchise Association, have called on the platforms to regulate excessive price subsidy competition, maintain fair market order, and ensure merchants retain reasonable profit margins.
“The platform-issued discount vouchers during these battles often require merchants to bear costs of 8 yuan, sometimes even up to 12 yuan, not including the delivery fees paid to the platform and the platform commissions,” said a small food stall operator located in the basement food court of a shopping mall in Jiangsu province. The shop specializes in various fried skewers, with an average customer spend of around 25 yuan.
The store owner broke down the numbers: under normal circumstances, a 25-yuan delivery order nets about 8 yuan after deducting customer delivery fee discounts, rider delivery costs, platform commissions, and standard discounts. During the subsidy wars, merchants must shoulder additional voucher costs, reducing actual income further to around 6 yuan per order.
For example, on July 13, for a delivery order worth 35.88 yuan, after deducting 18 yuan in merchant subsidies, a 0.96 yuan platform commission, and a 3.45 yuan delivery service fee, Awen’s actual earnings were only 14.47 yuan — a collection rate of just 40%.
“Delivery profits were already lower than dine-in, and since the subsidy wars began, the margins have shrunk even further,” he said.
Since the start of this round of battles between food delivery platforms, many restaurant owners have taken to social media to complain that large subsidies provided by the platforms are largely shouldered by merchants. Although order volumes have increased, profits have declined. One shop owner posted bluntly, “Making two yuan per order isn’t even worth the exhaustion.”
Another restaurant owner shared their July mid-month account statement on social media: for the first half of the month, the store’s revenue was 80,000 yuan, with actual earnings of 40,000 yuan. After deducting costs for ingredients, platform promotion fees, packaging, half a month’s wages, utilities, and rent, the remaining profit was only 3,500 yuan.
While profits are being squeezed, small and medium-sized restaurant operators are also grappling with operational pressures from fluctuating orders.
The aforementioned restaurant owner said that to handle the order peaks during the weekend price wars, his store had to hire two additional staff, increasing labor costs. In addition, the unpredictable promotions disrupt normal stock planning. “Normally, business peaks from Friday to Sunday, so we stock more then. But now with the uncertain campaigns, two weeks ago we didn’t have enough inventory on Saturday, while on Friday and Sunday we overstocked. Last Sunday alone, 10 kilograms of pork ribs were wasted.”
Alongside the delivery boom, dine-in orders have significantly declined. The restaurant owner said that since the delivery wars began, the proportion of dine-in orders in his store has dropped from 40% last year to just 10%. “Many customers who come to the store still prefer to order through the delivery app or pick up via the platform. We pay rent but have effectively become a delivery-only shop.”
Wang Hongdong, director of the Catering Research Institute, said that small restaurant owners have little bargaining power in this battle and cannot cope effectively on their own. “Platforms need to explore a healthier subsidy mechanism — one that avoids food waste and prevents excessive disruption to physical stores.”
In light of the restaurant operators’ plight, more industry associations are speaking out, urging delivery platforms to stop excessive, inwardly competitive subsidies.
On July 15, the China Cuisine Association published a statement saying that heavy platform subsidies have caused delivery prices to fall below dine-in prices, pushing a large number of consumers online and squeezing dine-in space, and this has left restaurant businesses in a dilemma of “high order volumes but no profit,” or even “losing money to gain popularity,” with mounting operational pressures.
The association called for the regulation of platform subsidy behaviors, clear boundaries for the legality of such subsidies, optimization of cost-sharing mechanisms between platforms and merchants, and the establishment of a cap on the proportion of subsidies merchants are required to bear. The goal is to reduce merchants’ operational burdens and ensure their reasonable profit margins.
On the same day, the China Chain Store & Franchise Association also issued an “Initiative Letter,” advocating for the regulation of the instant retail market order.
The association called on platforms to stop using their market advantage to enforce mandatory actions, and explicitly prohibited practices like “traffic skewing,” “search downgrades,” or other forms of disguised coercion forcing merchants to participate in price subsidies. It also warned against contract clauses, algorithm rules that unfairly push merchants to bear disproportionate subsidy costs, and monopolistic practices like “choose one from two” or “exclusive cooperation.”
“Instant retail represents the best practice of deep online-offline integration. Its vitality lies in convenience, quality, and efficiency — not in capital-driven price carnivals,” said the China Chain Store & Franchise Association in its letter.