Many Chinese restaurants are struggling because of cheap food delivery apps.

Behind the cheap coffees and super-cheap meals flooding food delivery apps in China is fierce competition, causing many restaurants to struggle.

Meituan delivery drivers move busily around office complexes in Guangzhou to deliver food - Photo: NIKKEI ASIA

From cups of coffee costing just 1 yuan (3,700 VND) to meals for less than 4 yuan (about 15,000 VND), Chinese consumers are benefiting greatly from the fierce price war between food delivery platforms.

But behind the promotion fever is a bleak picture for many restaurants, tea and coffee shops - places that depend on direct customers - now facing declining revenue, escalating costs and increasing operational pressure.

Revenue dropped despite the large number of customers.

According to Bloomberg 's analysis based on financial reports for the first half of 2025, major food chains such as Haidilao or Tai Er in China have recorded sales at stores decreasing from a few percent to nearly 20%.

Table turnover – a measure of how many times each table is used on average over a period of time – has fallen or barely increased, as consumers turn to food delivery services like Meituan, JD.com or Alibaba for discounts, instead of dining in.

Massive discount campaigns have helped food delivery platforms expand their share of China’s $80 billion market, but they have left restaurants in a quandary: orders surge but profits fall, staff are overwhelmed, and dine-in customers are left behind.

In Shanghai, Chen Qiang, the owner of four noodle shops, said his shop once offered a 24 yuan ($3.36) discount coupon for orders of 25 yuan or more, causing a surge in delivery orders and forcing staff to work overtime.

By July, he had to stop taking orders during the lunch rush hour because regular customers complained of slow service.

"We are busier but earning less, because the cheap orders cannot make up for the lost on-site customers," he shared.

Costs related to its delivery fleet have also risen sharply. Yum China Holdings, which operates KFC and Pizza Hut, said those costs are becoming a major drag on profit margins, even though second-quarter revenue beat forecasts. The company’s stock has also fallen as investors worry that fierce competition will erode long-term profits.

Many Chinese restaurants cannot focus on serving customers on-site, due to having to concentrate on handling a large number of orders from food delivery apps - Photo: REUTERS

Promotional spiral with no way out

While delivery revenue is growing, the associated costs are also becoming more burdensome. Milk tea chain Luckin Coffee said its second-quarter delivery costs increased 175%, accounting for 14% of net revenue (compared to 7% in the previous quarter).

Guming - a milk tea chain with more than 11,000 stores - also admitted that agents are under great pressure because they have to pay more subsidies to the platform, in addition to commissions and delivery fees.

According to Guming's CFO, George Meng, previously it took 3-4 delivery orders to equal the profit of 1 cup sold on-site, but now this number has increased to 8 orders.

However, refusing to participate in the discount spiral on food ordering apps is not the solution.

As in the case of the Chagee milk tea brand, which chose not to discount to position its premium image, growth slowed down significantly: second-quarter revenue increased by only 10% (compared to 35% in the first quarter), operating profit decreased by 11%, and in-store sales plummeted by 23%.

For restaurants, the price war is not just a temporary trend, but also a consequence of the race for market share between technology giants.

Alibaba, which once dominated the e-commerce market with 85% market share, now has to spend tens of billions of yuan in subsidies to compete with Meituan and JD.com in the $80 billion food delivery market.

According to Goldman Sachs Bank, as of July Alibaba held 43% of the food delivery market share in China, closely following Meituan (47%).

HA DAO

Source: https://tuoitre.vn/nhieu-nha-hang-trung-quoc-lao-dao-vi-cac-ung-dung-giao-do-an-gia-re-20250917152219672.htm