Meituan Cuts Jobs After Costly Instant-Retail Price War

Chinese food-delivery giant Meituan has laid off fewer than 2,000 employees over the past two months, the company confirmed, following a devastating price war in China’s instant-retail sector that swung the company from a 35.8 billion yuan profit in 2024 to a net loss of approximately 23.4 billion yuan in 2025. Employees described the reductions, which began in early May, as the company’s largest personnel adjustment in recent years, according to Caixin Global.

The Price War That Changed Everything

The layoffs are the direct consequence of a brutal subsidy war that erupted in early 2025 when JD.com, led by founder Liu Qiangdong, launched a food delivery service. Alibaba quickly followed, and by July 2025, its Taobao Flash platform announced a massive 50-billion-yuan ($7 billion) subsidy plan. What followed was described by Chinese regulators as a “race to the bottom,” with all three platforms offering heavily subsidized deliveries — including the infamous “0 yuan bubble tea” promotions that drove order volumes but destroyed profitability.

The financial toll was staggering. Meituan’s Core Local Commerce division swung from a 52.4 billion yuan operating profit in 2024 to an operating loss of approximately 7 billion yuan in 2025. The company’s market capitalization fell from a peak of roughly 2.3 trillion yuan to approximately 400 billion yuan, as 36Kr reported in a detailed analysis of the price war’s impact.

Layoff Details and Restructuring

The job cuts affected domestic businesses including in-store group buying, commercialization, and Meituan Instashopping, with some groups seeing headcount reductions of 20% to 40%. Out of a total workforce of approximately 110,000 in 2025, the company confirmed fewer than 2,000 employees have been laid off since early May 2026.

Meituan is simultaneously restructuring its Core Local Commerce division, establishing a new AI Transformation department in June 2026. Led by former Dianping general manager Mu Yao and reporting directly to CLC CEO Wang Puzhong, the new unit signals that AI is moving from “technical exploration” to “strategic core,” as 36Kr’s Tech Planet reported.

Financial Recovery Signs

There are early signs the price war may be abating. In Q1 2026, Meituan’s revenue reached 91 billion yuan ($13.45 billion), up 5.6% year-on-year, while its adjusted net loss narrowed to 4.97 billion yuan from 15.1 billion yuan in Q4 2025, according to Reuters.

CEO Wang Xing told analysts on the Q1 2026 earnings call: “With industry-wide subsidies finally getting more rational we are seeing a shift back to the fundamentals of operational efficiencies and user experience. This transition plays to our strengths.”

Chinese regulators have also stepped in. In April 2026, seven e-commerce platforms — including Meituan — were fined a combined 3.6 billion yuan over food delivery safety violations. The State Administration for Market Regulation launched a special inspection campaign until December 2026 targeting “involution”-style price wars across multiple sectors.

Strategic Pivot: AI and the Dingdong Acquisition

Meituan is pursuing a two-pronged strategy to recover. In February 2026, it acquired Dingdong Maicai’s China business for $717 million (up to $997 million with dividends) to strengthen its fresh grocery e-commerce position, as Caixin Global reported. The acquisition bolsters Meituan’s Little Elephant Supermarket brand, which operates nearly 1,000 stores across 20 cities.

Simultaneously, Meituan is investing heavily in AI. The company invests more than 10 billion yuan annually in AI development, and on July 7, 2026, it open-sourced LongCat-2.0, a 1.6-trillion-parameter AI model trained entirely on 50,000 domestic Chinese chips — an industry first for a system of its size, according to Caixin Global.

Wang Xing has articulated a “To A” strategy — serving AI agents — positioning Meituan’s merchant network and rider system as indispensable infrastructure for all AI platforms. “Even if Einstein were to be a secretary and asked to book a restaurant, he still wouldn’t know if there were any seats available,” Wang Xing said on the Q1 earnings call. “This is not a matter of intelligence but of information.”

What to Watch

Several open questions remain. Will the layoffs extend beyond the reported 2,000 as AI automation accelerates? Can Meituan successfully integrate Dingdong’s operations without further losses? And will regulatory intervention permanently change the competitive dynamics of China’s instant-retail market?

With the price war showing signs of easing and Meituan pivoting toward AI-driven efficiency, the company’s path to recovery depends on whether it can stabilize its core business while building a new growth engine in artificial intelligence.