Cost skyrocketed by 4 billion, closing 6.54 million stores in two years! The once-booming industry is now in complete disarray.

(Source: Financial Gossip)

Author | Zeng Youwei

Every minute, about 5 shops disappear. And many surviving merchants are also forced to use cheap ingredients just to stay afloat. The backlash from the takeaway food battle finally arrived!

Does everyone have experiences like this? A delivery shop you often order from that tastes great suddenly changes its flavor. When you ask the owner why the taste is different, the owner tells you that the recipe has changed.

However, a recent investigation into how the takeaway food battle affects merchants shows that the change in flavor may not be as simple as a change in recipe.

The flavor change is very likely because merchants, to save costs, switched to cheaper ingredients—leading to changes in the taste and mouthfeel. This situation is far from rare.

All kinds of signs suggest that consumers who believed they were getting the benefits in the takeaway food battle may now be the ones being hit by its backlash.

The topic of the 2025 takeaway food battle stayed hot for a full year. In many catering businesses, the number of takeaway orders even saw spikes of several times within a week.

But after keeping busy for a year, many merchants realized when reconciling their accounts that, “the headwind traffic pouring in from the heavens” ultimately did not bring them “getting rich overnight.”

Instead, orders that just keep climbing—one after another—are dragging them into the deep abyss of “falling back into poverty.”

The relevant data is even more shocking. According to a survey by LiXin Consulting on merchants’ situations in the takeaway food battle:

Since last year, against the backdrop of an enormous surge in online traffic in the catering industry, 80% of catering operators saw their profits decline, and 74% of stores saw their average order value drop.

For example, a dine-in set meal that originally sold for 12 yuan could still earn 6 yuan. But under the subsidy battle, once that dine-in set meal turned into a takeaway order, the merchant could only earn 2.5 yuan from it, and the profit was cut in half.

Faced with profits cut in half, many merchants, to reduce costs, started making moves in places consumers can’t see.

As a result, the takeaway battle’s backlash boomeranged and ultimately hit some consumers who were still proud that they could eat cheap delivery food.

Costs surge by 4 billion yuan

Even a “10,000-store” giant can’t hold on

In last year’s takeaway food battle, 75% of the newly added takeaway orders had a paid price of under 15 yuan. For consumers, it was no different from going back to prices from a decade ago.

Under this atmosphere of sustained low prices, many consumers gradually stopped liking dine-in and chose takeaway instead. For takeaway platforms, this is obviously good news.

But for merchants, it may not be good at all. When consumers no longer choose dine-in, it means merchants have to tilt more resources toward takeaway.

In the environment of the subsidy battle, to get more takeaway orders, many merchants could only use the most primitive method—low prices—to gain traffic.

In this process, the merchants’ original average order value system was hit with unprecedented force. According to relevant data, about 74% of merchants saw their average order value decline over the past year.

The most obvious impact is that merchants’ profits are under continuous pressure. In the past, dine-in revenue was the main source of revenue for catering businesses.

But the takeaway food battle has fundamentally changed consumers’ spending habits. Online channels have become the new main battlefield for many catering establishments.

Even when some consumers are already at the restaurant, to get cheaper meals, they take out their phones without hesitation and place their own takeaway orders after stacking various coupons.

Nowadays, even some large catering chains have situations where almost no one comes to eat during the lunch and dinner peak hours, and in their place are wave after wave of delivery riders picking up takeaway orders.

There are fewer people dining in, but operating costs for fixed assets—such as rent, utilities, and so on—don’t change as the number of dine-in customers decreases.

In other words, many catering establishments have to maintain heavy-asset operations every day, yet they’re doing low-profit businesses where the per-order profit isn’t as high as before.

According to LiXin Consulting’s research, 65% of catering stores’ dine-in business revenue is shrinking year over year, and in half of the merchants, the decline exceeds 20%.

How much specific cost has the takeaway food battle added to merchants? We can see it from Luckin Coffee, once regarded by the outside world as the “direct beneficiary” of the takeaway food battle.

80% of merchants are losing money

Small shops use cheap ingredients just to survive!

According to its financial reports, in only the fourth quarter of 2025, the net profit of this “direct beneficiary” of the takeaway food battle fell by about 40% year over year, to 518 million yuan.

On the other side of the decline in net profit, its delivery fees reached 1.63B yuan. Looking at all of 2025, besides the takeaway price war, Luckin’s delivery costs surged to 4 billion yuan, up 94.5% year over year.

The massive delivery-fee cost seriously squeezes the profit space of this 10,000-store giant.

If even such a large chain has paid such huge costs, then for smaller catering businesses with weaker bargaining power during the takeaway food battle, the operating pressure they face is even more unimaginable.

It is precisely in this situation that, to reduce costs, many merchants have no choice but to pass this pressure upstream along the supply chain. The most direct manifestation is that many merchants were forced to replace their original high-quality ingredients and switch to cheaper, low-cost ingredients.

This shift is also forming a vicious cycle, and ultimately it is being transmitted to consumers who appear to be benefiting.

According to LiXin Consulting’s report, in the takeaway food battle, 39% of merchants, just to survive, were forced to use cheaper ingredients.

Another 20% of merchants chose to add more low-cost dishes to their menus, while only 30% of merchants with pricing power keep strengthening their bargaining and price negotiation against their original suppliers.

A roast duck shop owner told a reporter that in order to compete with another restaurant that sold thousands of orders per month and priced its roast duck at only 18.8 yuan per piece, his shop gave up the chilled duck he used to source at a purchase price of 30 yuan, and instead chose to procure frozen duck carcass strips with a purchase price of less than 10 yuan.

This supply-chain shift is even all-around. For example, the ingredient types for dine-in and takeaway are separated: for dine-in, fresh meat is stir-fried on demand; for rice, fresh rice is used. For takeaway, pre-made frozen meat is used, and the rice is changed to cheaper aged rice.

Besides compromising on ingredients, merchants also choose to cut costs in places many consumers can’t see.

In the operation of catering businesses, kitchen sanitation maintenance, dishware disinfection, cold-chain transportation, and other links are often major parts of daily fixed spending for merchants.

As average order value declines and profits come under pressure, these major fixed spending items naturally become targets for cost-cutting for many merchants.

With reduced funds, relevant quality assurance is bound to decline in this process too. The probability of related food safety issues may also increase—possibly without anyone noticing.

Supply-chain “bleeding,” consumers take the backlash

Is there still a winner in the takeaway food battle?

The takeaway food battle raged through 2025 for a full year. To compete for market share, various takeaway platforms also poured hundreds of billions of yuan into this track over the past year.

However, looking back after such a massive investment, what the takeaway food battle has brought to many small and medium-sized catering businesses is a solid decline in average order value and profits under pressure.

Large leading chain stores have stronger supply chains. They can optimize costs through supply-chain advantages and, with their vast market networks, gain more say in the takeaway food battle.

Even under these circumstances, as major participants in the subsidy battle, they still can’t obtain the maximum benefits. For small and medium-sized catering businesses, this subsidy battle will be even tougher.

Trapped by platform mechanisms and shifts in consumer habits, many merchants also fall into industry self-squeezing (internal over-competition) so that they can keep doing business.

Some merchants even couldn’t withstand the internal over-competition and were knocked out first.

According to data released by Meituan in October 2025, for newly opened standalone full-service dining stores, the closure rate within 3 months surged from 27% to 34% in just one short year.

The closure rate within half a year reached 50% as well.

In all of 2025, the domestic catering industry’s closure rate hit a new high again. The related closure rate had reached 48.9%; and before 2020, this figure was still below 20%.

Meanwhile, from 2024 to August 2025, domestic catering stores that closed totaled 6.54 million.

More worrying is that in the third quarter of 2025, per-capita consumption in the overall domestic catering market was only 33 yuan. The unit price of dine-in orders at catering stores is already very close to the level of 2015.

In recent years, the net profit margins of many large publicly listed catering companies have been below 10%. For small and medium-sized catering merchants, this figure has long been maintained at around 5% only.

When merchants’ profits are under long-term pressure, they shift cost pressure both upward and downward.

When merchants swing the big knife of cutting costs toward the upstream supply chain, this pressure has long been passed on to consumers.

Just this past 315 (Consumer Rights Day), many catering merchants were exposed for cutting corners by selling inferior goods to meet cost needs, thereby triggering food safety issues.

More concretely, during the most intense takeaway food battle in the third quarter of 2025, the number of takeaway complaints and reports increased by 23.8% year over year.

For the whole of last year, there were 505k takeaway complaints and reports, up 14.1% year over year.

Written at the end

Today, many catering merchants are calling for an end to internal over-competition within the industry. After all, whether now or in the future, what can support a healthy cycle of industry development is never merely comparing who has the higher or lower price, but rather comparing whose quality and service are better.

The authorities have also held talks with major takeaway platforms multiple times, and fighting internal over-competition has become one of this year’s core development themes.

Low prices seem to create a sales celebration. But when the tide recedes, people only then realize that what is “free” is actually the most expensive.

An industry can develop only when it is profitable—so it can provide consumers with better, higher-quality products.