Food Delivery Wars "Strangle" Supply Chain: Suppliers Backlashed, "Body Collectors" Making a Fortune

Why does the takeaway war with AI reduce profits for equipment recyclers instead of increasing them?

Author | Catering Boss Insider

“Competing to death with peers, starving oneself”—since the start of the takeaway battle, extreme competition has become the industry’s theme, with a wave of store closures and “widespread casualties” occurring in less than a year.

“By 2025, the proportion of pure takeaway stores recovered will increase by 18%. Especially one month after the takeaway war began, our recovered takeaway stalls were mostly booming, and only after this year’s Spring Festival did they gradually stabilize,” a second-hand equipment recycler told Insider.

The industry’s stock competition has extended its cold reach to the upstream equipment recycling sector. Fierce price wars are eroding recyclers’ profit margins, forcing gross profit rates down to extremely low levels.

“Looking at the profit margin from the recycling price to the selling price, the gross profit used to be around 50% to 60%, but now the maximum is about 50%, sometimes even 45%.”

This second-hand equipment recycler feels that the market is now full of contradictions. On one hand, “new entrants in the catering industry keep coming in. Currently, 90% of daily inquiries are from people wanting to buy equipment, only about 10% are asking about recycling.” On the other hand, veteran restaurateurs are demanding higher quality equipment, “Items in good condition within three years sell well, older ones basically can’t be sold.”

It’s clear that while newcomers are still dazzled by the “boom” illusion of the takeaway war, veteran players have already sensed the danger.

Statistics show that profit loss is becoming the biggest pain point for the catering industry in this takeaway war. A report from Lexin Consulting indicates that since the subsidy battles began, nearly 70% of merchants saw revenue decline compared to 2024, and 80% experienced a drop in net profit.

Post-War Aftermath of the Takeaway Battle

“Probably never doing catering again,” said Mr. Zhu, who runs a mixed rice shop in Hangzhou.

It’s well known that during the takeaway war, the most noticeable thing was that takeaway prices were far lower than dine-in prices, with enough discounts to attract customers.

Two months after last year’s “Takeaway Subsidy War,” Mr. Zhu had no choice but to close his shop. “It’s not profitable at all. Without subsidies, there are no orders; with subsidies, I lose money. Others subsidize and get cheaper, customers turn around and buy the cheaper options. It’s just not a good business anymore.”

This small mixed rice shop mainly relies on dine-in sales, with takeaway accounting for a small portion. After the subsidy war, dine-in business became even worse. “Other restaurants all took subsidies, customers can save dozens of yuan per order, and they’re happy to order takeaway to get discounts. For us, who don’t participate in subsidies or price wars and mainly focus on dine-in, business only gets worse.”

He also admits, “The most direct impact of subsidies on customer flow is seen in neighboring shops. As soon as they run promotions, you see a lively scene of delivery guys lining up to pick up orders. But once the promotion ends, the shop immediately has no orders. That’s just how it is.”

Lexin Consulting data shows that 65% of dine-in revenue among merchants has decreased year-over-year, with nearly half experiencing a drop of over 20%.

Wang Guoyu, founder of Nancheng Xiang, once revealed, “Since the takeaway war, Nancheng Xiang’s daily total revenue has increased by about 30% to 35%, but dine-in sales have not grown, and some stores are even declining.”

Especially when takeaway prices are generally lower than dine-in, people prefer ordering takeaway and are also very keen on “ordering in-store for takeaway.”

In December last year, noodle chain Ma Ji Yong posted signs in some stores saying “Takeaway orders cannot be for dine-in.” Some understood it as a “necessary measure to maintain order,” but others questioned whether it was “limiting consumer freedom.”

“Ordering in-store for takeaway” is essentially an attack on dine-in businesses. Customers enjoy dine-in experiences at group-buy prices, while restaurants bear the costs of traffic and fixed offline expenses. This is undoubtedly “cutting to the bone” on already thin profits.

But the deadly temptation lies in the neighboring dirty, disorganized takeaway-only shop, which, despite poor food quality, service, and environment, relies on low prices to attract orders, creating a “bad money drives out good” scenario.

“As a dine-in restaurant, when I saw such a pure takeaway shop with a dirty kitchen, I couldn’t help but want to do the same because of the frequent delivery orders,” admitted a catering boss.

Low takeaway prices don’t bring customer flow; they lead to declining quality under high cost pressure

In the early days of the takeaway war, consumers were attracted by the strong appeal of “low-price milk tea,” and businesses experienced a surge of orders, with staff overwhelmed and delivery drivers filling the stores. Business seemed prosperous and peaceful.

However, behind this “subsidy frenzy,” the entire industry is stuck in a deep dilemma of “growth without increased revenue.” Even leading chains can’t fully escape the quagmire of low-price competition.

Luckin Coffee’s 2025 financial report shows that in Q4, Luckin’s operating expenses as a percentage of net revenue increased by 4.1 percentage points year-over-year, mainly due to rising delivery costs from increased takeaway orders, reaching 1.631 billion yuan, a 94.5% surge. Last year’s second half also saw Luckin’s net profit decline for two consecutive quarters.

Recently, Tim Hortons China CFO Li Dong publicly stated that due to the internal competition caused by takeaway subsidies and price wars, the company is forced to seek a balance between same-store growth, pricing, and profit margins.

As major catering brands struggle in this internal competition, how can small and medium-sized businesses, with no advantages in supply chain or bargaining power, survive in this environment?

When traffic growth can’t cover high costs like rent, labor, and ingredients, survival becomes increasingly difficult. To save themselves, some choose to fight back by raising the upstream supply chain pressure.

Lexin Consulting data shows that since the subsidy war began, 39% of merchants have switched to cheaper raw material suppliers, 30% have intensified bargaining with suppliers, and 20% have increased the proportion of low-cost dishes.

These strategies are desperate measures for self-preservation. When quality is sacrificed for price, consumers ultimately bear the consequences, with declining quality further distancing the industry’s “value for money” from mainstream consumer expectations.

This “chaotic battle” has come to a halt

Leading catering brands launch the “Anti-Price War” first shot

The day will come when the price war runs out of bullets. It’s time to shift focus from traffic battles to value return.

Starting in early 2026, top catering brands have begun to launch their “anti-price war” initiatives. Kudi Coffee ended its “all-you-can-eat for 9.9 yuan” promotion early, KFC adjusted some delivery prices, and McDonald’s and Naixue raised their product prices. These are not only passive responses to cost pressures but also proactive attempts to steer the industry back to normal pricing.

More importantly, regulatory intervention has also slowed down this chaos.

In early 2026, the State Council’s Anti-Monopoly and Anti-Unfair Competition Office announced an investigation into the takeaway platform service industry. In February, the Market Supervision Administration held talks with several platform companies, requiring them to regulate promotional activities.

In this no-winner price war, not only do small merchants close, supply chain quality suffers, and leading brands see profits decline, but the industry also reflects on the future development of catering as an ecosystem of platform, merchants, and supply chain.

Lexin Consulting’s survey data confirms this shift—84% of merchants are calling for an end to the low-price competition and advocating for a return to healthy competition based on dish quality, service experience, and technological efficiency.

The most severe “aftereffect” of this takeaway war is that millions of catering businesses have been sacrificed in the platform’s traffic ambitions—ironically, despite billions in subsidies, the market structure remains unchanged.

Looking back, this takeaway war has only left a battered mess: consumers’ price tolerance has been exhausted, normal profit models for merchants have been destroyed, and “burning money for loyalty” has become a shared “blood and tears” lesson in the industry.

Editor on Duty | Sun Yu

Visuals & Illustrations | Zhang Jinying

Operations | Snow Cone