Takeaway price war is "strangling" the supply chain as suppliers bite back and opportunists profit

Supply chain under siege

The runaway subsidy-and-price war in China’s food-delivery market is no longer just a Darwinian fight among restaurants — it is reverberating up the chain and squeezing suppliers, vendors and recyclers. It has been reported that secondhand equipment recyclers initially saw a surge in business — with the share of pure delivery kitchens in their recoveries rising about 18% in 2025 — but fierce price competition has since compressed their gross margins from historical levels of roughly 50–60% down to the mid-40s in some cases. Who wins when the cost of doing business is transferred upstream? Increasingly, nobody does.

Restaurants respond by cutting costs — and quality

Lixin Consulting (立信咨询) data show the human cost: nearly seven in ten merchants report falling revenues since the subsidy battles began, and 80% report declining net profit. In reaction, 39% of restaurants have switched to cheaper raw-material suppliers, 30% intensified price bargaining with vendors, and 20% increased the share of low-cost dishes on menus. The immediate consumer attraction — steep discounts and “爆单” order spikes — masks a deeper problem: incremental volume has not translated into sustainable income, and some merchants who refused to join the discount melee saw dine-in traffic evaporate as customers used platforms to chase bargains.

Big names and regulators wake up

Even major chains have felt the squeeze. Luckin Coffee (瑞幸咖啡) reported a surge in delivery-related operating expense and a sharp increase in logistics costs; Tims Coffee China (Tims咖啡中国) executives have publicly warned about the industry’s internal competition. It has been reported that platforms poured hundreds of billions into subsidies to chase market share, prompting regulators to act: the State Council’s Anti‑Monopoly and Unfair Competition Committee office (国务院反垄断反不正当竞争委员会办公室) announced an evaluation of promotion practices, and the State Administration for Market Regulation (市场监管总局) has summoned multiple platforms to curb disorderly promotion and restore normal pricing mechanics.

Aftermath — who pays the bill?

The fallout is stark. Small and mid-sized restaurateurs close stores; suppliers see margins erode or are forced to lower quality; consumers’ price tolerance has been overstretched. Some “gravediggers” — opportunistic buyers of distressed assets and low-cost resellers — have profited in the short term, it has been reported, but the broader industry is left with a ravaged profitability model and a public that may no longer trust low-price signals. The question now is whether platforms, restaurants and suppliers can re-anchor competition around quality, service and efficiency — or whether the market will keep doing what it has done best: burn cash, reshuffle players, and leave a trail of casualties.