Meituan Reassesses Strategy Amidst Intense Competition

Chinese food delivery and technology giant Meituan has achieved a significant turnaround in the first quarter of 2026, substantially reducing its operating losses and signaling a strategic shift in how it reports its business segments. The company is navigating an increasingly competitive landscape, prompting a re-evaluation of its core operations.

Meituan reported revenues of 91 billion yuan, meeting market expectations. The most notable achievement was the considerable reduction in operating losses, which fell from 16.1 billion yuan in the previous quarter to 6.5 billion yuan. The core local commerce segment, a key driver of Meituan's business, saw its operating loss shrink from 10 billion yuan to 2 billion yuan, outperforming analyst forecasts.

Following the release of its financial results, Meituan's stock saw a surge, reaching over a 9% increase during trading on the Hong Kong Stock Exchange. The company also updated its financial reporting. It has now separated "merchandise sales revenue," which includes grocery retail (such as Xiaoxiang Supermarket) and other self-operated retail businesses like pharmaceuticals and alcohol. Additionally, "commission revenue" and "online marketing service revenue" have been combined into a new "merchant services revenue" metric. This consolidation makes it more challenging to directly track the performance of individual business lines like food delivery and in-store services.

These changes in financial reporting are indicative of Meituan's evolving strategic priorities. Company executives have indicated that in the face of intense competition, the focus has shifted from merely chasing order volume to concentrating on acquiring high-value users and investing in capabilities that foster long-term competitiveness. Projects aimed at enhancing user and merchant experience, some of which were previously paused, are now being reactivated.

CEO Wang Xing stated that the unit economics for the food delivery business have improved in recent months. He indicated that if the competitive environment becomes more rational, Meituan expects further significant improvements in its unit economics in the second quarter. The company also noted that its food delivery business achieved slight profitability in April and May, with overall second-quarter profitability depending on June's performance. This points to a potential inflection point in the industry, as key players focus on achieving sustainable profitability.