For years, the convenience of China’s hyper-efficient food delivery ecosystem was built on the back of aggressive platform subsidies. However, a recent high-level symposium hosted by The Beijing News has exposed the growing friction in this model, as experts and merchants warn that 'ultra-large, high-intensity' subsidies are no longer fueling growth, but are instead cannibalizing the very businesses they claim to support. This shift comes as new regulations, including the Internet Platform Price Behavior Rules, began formal implementation in April 2026 to curb market distortions.
The reality for many merchants is a phenomenon of 'profitless prosperity.' One Beijing-based roast duck restaurant reported that while subsidies drove daily orders from 200 to over 500, the actual revenue per order was halved, leaving 40% of deliveries priced below the cost of production. As labor, ingredients, and fulfillment costs rise in tandem with volume, the net profit margins for small-to-medium enterprises are being squeezed to the breaking point by platform-mandated discounts.
This aggressive pricing strategy has led to a bizarre market inversion where online delivery is frequently cheaper than dining in. Under normal economic logic, delivery should command a premium to cover packaging and logistics; instead, massive marketing spends—totaling 173 billion RMB across Alibaba, Meituan, and JD in late 2025—have artificially depressed online prices. This has siphoned foot traffic away from traditional storefronts, with data showing that 65% of dine-in merchants have seen significant revenue declines as they struggle to compete with subsidized digital rivals.
Legal and economic scholars argue that the food delivery market has effectively hit its 'ceiling.' With the era of rapid user acquisition over, platforms are locked in a zero-sum struggle for a stagnant pool of existing customers. This 'involutionary' competition relies on burning capital to maintain market share rather than creating new value. Experts suggest that the focus must shift from price wars to improving service quality and reducing systemic transaction costs if the ecosystem is to remain sustainable.
Regulators are now stepping in to move the industry toward a more transparent framework. The current focus is on ensuring that platform rules are not just tools for market dominance, but are subject to oversight and merchant appeal processes. The goal is to prevent dominant players from using their algorithmic and financial might to transfer the cost of competition onto vulnerable vendors, ensuring that the 'Fifteenth Five-Year Plan' period begins with a more balanced and healthy digital economy.