RMDA Industry Insights - Delivery Price Wars: What China’s Crackdown Means for Operators
By: Christine Walter
Over the last few days, regulators in China launched a formal investigation into competition practices among major food delivery platforms in an effort to curb extreme price wars and subsidy-driven discounting that have squeezed profits and eroded margins for restaurants and delivery businesses. The probe, backed by China’s State Council and antitrust authorities, highlights concerns that excessive rivalry and below-cost pricing are distorting fair competition and harming the broader economy (Source: reuters.com).
For years, delivery ecosystem players have chased rapid growth by driving down prices to attract users. Platforms compete with deep discounts, restaurants feel pressure to participate in promotions that erode profitability, and delivery providers are pushed to fulfill more orders with shrinking returns. While these tactics can temporarily boost order volume, they also condition customers to expect lower prices, train markets toward unsustainable economics, and create fragile systems that struggle when costs inevitably rise.
China’s investigation signals a broader industry recognition that price wars alone are not a viable long-term strategy. Regulators are essentially saying: a marketplace built on constant discounting may not be healthy for operators, for workers, or for customers in the long run. This intervention could reshape competitive dynamics—not just in China, but as a cautionary bellwether for delivery markets globally (Source: retailasia.com).
As delivery prices have come under scrutiny abroad, many operators in Western markets are confronting parallel headwinds. Inflation, rising labor costs, elevated platform fees, and shifting consumer behavior are putting pressure on restaurant economics and forcing delivery-centric businesses to rethink their strategies. According to recent industry surveys and analysis, diners are becoming more value-conscious, weighing cost alongside quality, convenience, and experience when they choose where and how to spend their food dollars (Source: mckinsey.com).
What this means is straightforward: competing on price alone is increasingly less effective. Consumers may be drawn by initial promotions, but long-term loyalty and sustainable business performance require a value proposition that extends beyond deep discounts. Operators that differentiate through service quality, reliability, speed without compromise, and operational excellence stand to benefit more over time.
Taken together, China’s regulatory initiative and evolving consumer trends point to a pivotal shift in the delivery landscape—away from unsustainable price competition and toward efficiency, value, and strategic differentiation.
So What Can Delivery-Focused Operators Take Away?
Here are the key strategic implications for operators today:
1. Price competitiveness alone rarely wins—efficiency and value do.
Discounting can be an effective short-term tactic, but when it becomes the default means of attracting customers, it erodes both margins and brand equity. Especially as customers become more selective about where they spend, a value proposition rooted in consistent experience and perceived worth becomes more important than episodic promotions (Source: ift.org).
2. Sustainable delivery economics matter more than ever.
Across markets, operating costs—labor, fuel, rent, technology fees—continue to rise. Delivery operators that depend on continuous price promotions find their margins narrowing even faster. Shifting focus to cost structuring, efficient routing, menu optimization, and clear customer value signals makes delivery economics more resilient (Source: mckinsey.com).
3. Strategic use of technology will be a key differentiator.
Today’s leading operators use technology to reduce friction in their systems—not to add complexity. Predictive dispatch systems, AI-enhanced personalization, real-time data analytics, and automated communication can streamline operations, reduce manual overhead, and deliver a better customer experience without resorting to superficial discounts.
Instead of asking “How do we get more orders?” businesses should ask, “How do we fulfill orders better once we have them?” Smarter delivery isn’t about adding more software; it’s about eliminating systemic inefficiencies:
Dispatch optimization to minimize idle time and reduce fulfillment costs
Clean data that reveals bottlenecks in service quality or cost allocation
Automation that improves customer communication and reduces service friction
Demand forecasting that aligns staffing with real needs rather than guesswork
Delivery Excellence Over Price Wars
Operators who excel in these areas have a structural advantage. They are not trapped by discount cycles. They make decisions based on visibility across their operations and can adjust quickly to changes in consumer demand, competitive behavior, or economic pressure.
In fact, as delivery becomes an increasingly central component of restaurant revenue for many brands, those who do execution better—without destroying margin—will be the ones that thrive. This is especially true in an environment where consumers want something more than just cheap; they want value, defined as quality, convenience, trust, and relevance for the price they pay (Source: restaurant.org).
A Shift Toward Smarter, Not Cheaper, Delivery
China’s regulatory move underscores that marketplace health isn’t just about who can offer the lowest price—it’s about who can operate sustainably within a fair competitive structure. A similar philosophy is emerging among consumers as well; price matters, but value matters more. Operators that marry efficient systems, strong brand value, and disciplined economics will win over the long term.
The delivery landscape continues evolving globally—and The RMDA exists to help operators navigate these shifts with insights, strategy, and shared expertise so that no one has to go it alone.
In the next chapter of delivery, success won’t belong to the loudest or the cheapest.
It will belong to those who build delivery businesses that last.
