Restaurant Owners Caught in Takeout Wars: Monthly Losses Exceeding $10,000, but Opting Out Isn’t An Option

CNBC AI News, August 11th – The food delivery landscape is currently embroiled in a fierce battle for market share, with major platforms engaging in promotional offers reminiscent of, or even exceeding, their initial launch phases.

While some consumers are undoubtedly benefiting from these aggressive discounts, the picture is far less rosy for restaurants.

Numerous restaurant owners are reporting that despite a surge in order volume, their financial situation has deteriorated, with severely reduced profit margins and, in some cases, outright losses.

China Central Television (CCTV) recently highlighted several case studies illustrating this challenging situation:

A popular tea shop located in a prime business district in Hubei province reported that on a takeout order priced at 19.4 yuan, revenue after deducting all fees practically covered only the cost of goods sold, leaving virtually no profit.

In another example, a Cantonese restaurant processed 4,158 takeout orders in June, generating 162,215.8 yuan in revenue. However, after accounting for merchant subsidies, platform commissions, delivery fees, rent, labor, utilities, and ingredient costs, the restaurant incurred a loss of 10,340.47 yuan.

A breakfast shop cited an average of nearly 1,000 daily takeout orders, yet struggled to generate any meaningful profit, sometimes even operating at a loss.

The owner explained, “Previously, with traditional dine-in service, a single store could generate tens of thousands of yuan in income. But now, we have no choice. If we don’t offer takeout, we’ll lose business to competitors.”

CCTV investigations reveal that takeout platforms often utilize promotional mechanisms where subsidies are shared between the platform and the restaurant. In some cases, when multiple promotions are stacked, the cost can exceed the revenue, effectively forcing restaurants to sell at a loss.

Despite these challenging economics, most restaurants feel compelled to participate in these platform subsidy programs to maintain visibility and order flow.

Experts suggest that the food delivery war represents a “burn-to-acquire” approach driven by capital, a high-stakes “involutionary” game that is “unsustainable” in the long run.

The practice of platforms offloading operating costs onto merchants and delivery drivers by increasing commissions and squeezing prices not only exacerbates disorderly competition but also potentially sows the seeds for compromised service quality and a diminished consumer experience.