Meituan, which owns the Kita platform, records its first quarterly loss since 2022

The Chinese Meituan Group, the leader in food delivery services and owner of the international “Kita” platform, recorded its first quarterly loss since the end of 2022, in light of the intensification of competition with the e-commerce giants Alibaba and JD.com.

The company disclosed a net loss of 16 billion yuan ($2.26 billion) during the quarter ending September 30, compared to a net profit of 12.8 billion yuan during the same period last year, according to data (LSEG), which represents the company’s first quarterly loss since December 2022.

The group’s CEO, Wang Xing, told Reuters that the price war in the food delivery market is unsustainable, describing it as “a model of bad money driving out good money.” He stressed that “Meituan” still leads the categories of orders with medium and high prices, explaining that its market share exceeds two-thirds of orders whose value exceeds 15 yuan, and rises to more than 70% for orders exceeding 30 yuan.

The company expected to record additional operating losses during the fourth quarter of this year, at the level of local trade activity and the performance of the group as a whole, in light of the continued intensive spending to maintain its market share of about 70%, while its competitors Alibaba and JD.com continue to pump large investments to attract customers.

The Chinese market is witnessing intense competition, especially in the instant retail sector, which relies on delivering goods within less than an hour.

Meituan’s entry into the electronics sales market earlier this year was an area of ​​strength JD.com — prompted the latter to launch its own food delivery platform, while Alibaba intensified its efforts in the fast retail sector as well.

In light of these developments, Alibaba officials said this week that their focus is now shifting toward improving the unit’s economics after years of seeking to enhance market share.

The analyst from Third Bridge, Jimmy Chan, expects the intensity of the price war to decline over the next year, expecting the economics of the “Meituan” unit to become positive in the first or second quarter of 2025.

This comes as Chinese regulators approved new rules to regulate pricing with the aim of protecting small merchants, in a move that prompted major players to pledge to reduce the pace of price competition.

In another context, Meituan continues to accelerate its international expansion through its “Kita” brand in Hong Kong, the Middle East and Brazil, where it launched its services last October 31.

Although Meituan’s shares have declined by more than 30% since the beginning of the year, the company announced that third-quarter revenues rose by 2%, exceeding analysts’ expectations.