Meituan Cuts Jobs After Costly Price War, Pivots to AI
Chinese food-delivery giant Meituan has laid off fewer than 2,000 employees over May and June 2026, marking the company’s largest personnel adjustment in recent years. The cuts come in the aftermath of a devastating year-long price war in China’s instant-retail sector that burned through an estimated RMB 150 billion (US$20.7 billion) in combined profits across Meituan, Alibaba, and JD.com, according to Caixin Global.
The Price War That Changed Everything
The conflict began in February 2025 when JD.com announced it was recruiting restaurant merchants for food delivery. The situation escalated dramatically in late April when Alibaba’s Taobao Flash Sale entered the market. What followed was an unprecedented year of subsidy spending that transformed China’s on-demand delivery landscape.
At its peak, combined daily meal-delivery orders across the three platforms exceeded 200 million, as TMT Post reported. The financial toll was staggering: Meituan reported a net loss of RMB 23.4 billion in 2025, reversing a RMB 35.8 billion profit in 2024. Revenue rose just 8.1% to RMB 364.9 billion.
“With industry-wide subsidies finally getting more rational, we are seeing a shift back to the fundamentals of operational efficiencies and user experience,” Meituan CEO Wang Xing told analysts on the company’s Q1 2026 earnings call. “This transition plays to our strengths.”
Layoffs Hit Multiple Departments
The layoffs, which began in early May, affected multiple departments including in-store group buying, commercialization, and Meituan Instashopping. Some groups saw headcount cuts of 20% to 40%. Employees described the reductions as the company’s largest personnel adjustment in recent years.
One laid-off Meituan employee captured the atmosphere of uncertainty: “On paper, the team still exists. In reality, nobody is left.” Another said, “If this layoff hadn’t happened, I probably wouldn’t have done it now. The company made the decision for me.”
AI: The New Strategic Priority
Even as Meituan cuts headcount, it is investing heavily in artificial intelligence. The company’s Core Local Commerce (CLC) division recently established a new AI Transformation department, elevating AI to the same organizational level as food delivery and Instashopping.
CEO Wang Xing has been emphatic about AI’s transformative potential. “Mobile internet and the internet have no essential difference, like roses and peonies,” he said at an internal meeting. “But AI compared to the internet is like the difference between a monkey and a flower.”
Meituan’s R&D spending has actually risen during the crisis, reaching RMB 70.4 billion in Q1 2026, up from roughly RMB 50 billion per quarter in 2023. The company has developed its proprietary LLM “LongCat” and launched an AI assistant called “Xiaotuan” in the center of its app navigation bar.
According to Inside Retail Asia, Meituan’s adjusted net loss narrowed to RMB 5 billion in Q1 2026 from RMB 15.1 billion in Q4 2025, as subsidy intensity began to ease.
A Broader AI-Driven Restructuring
The layoffs at Meituan are part of a wider trend across China’s technology sector. As TMT Post reported, AI coding tools have compressed development timelines dramatically, triggering restructurings at Alibaba, Tencent, Baidu, and Ctrip. Even top performers with “exceeded expectations” ratings have been laid off as entire teams are eliminated.
At Meituan, employees report that AI token consumption has been incorporated into performance reviews, and managers require weekly reporting on AI usage. One employee noted, “My manager doesn’t really know what AI can do. But he says he won’t allow anyone on our team to fall behind in this AI wave.”
Regulatory Intervention and the Road Ahead
Chinese regulators have actively intervened to curb the destructive competition. In late March 2026, the State Administration for Market Regulation reposted an Economic Daily article titled “The Food Delivery War Should End.” In April, seven e-commerce platforms — including Meituan — were fined a combined RMB 3.6 billion over food delivery safety violations.
Meituan has also been making strategic acquisitions. In February 2026, it acquired Dingdong Maicai for US$717 million, adding over 1,000 front warehouses and 7 million monthly active users.
What to Watch For
The key question is whether Meituan can successfully navigate its dual challenge: recovering from the price war financially while pivoting toward an AI-driven future. CEO Wang Xing expects meaningful improvement in food delivery unit economics in Q2 2026, but the second half of the year depends on competitive dynamics.
Meanwhile, an intriguing subplot involves Huawei’s strategic interest in Meituan’s success. As OFWeek noted, Meituan lacks its own cloud infrastructure, making it a potential major customer for Huawei’s Ascend AI chips. If Alibaba wins the instant-retail war, computing power benefits flow to Alibaba’s own ecosystem; if Meituan wins, Huawei gains a foothold in complex real-world AI deployment.
For China’s tech workforce, the implications are profound. The combination of AI automation and post-price-war cost-cutting may permanently reshape employment in the country’s internet sector. As one former Meituan employee put it, the company didn’t just cut jobs — it made a decision that many workers were too hesitant to make for themselves.