by LI Ye, LU Yibei

China's food delivery giants are waging an all-out price war, flooding tea and coffee chains with orders and luring consumers with vouchers as steep as "0 yuan drinks." Behind the frenzy, though, store owners are warning that the math doesn't work.

Meituan, JD.com, Taobao Flash Buy and Ele.me are each pouring billions of yuan into subsidies, triggering what some online users call a once-in-a-generation discount bonanza. Chains like Luckin, Cotti, Mixue, Chabaidao, Chagee and Ningji have become the biggest beneficiaries, with drinks priced as low as 2 yuan—up to 55 per cent off store prices.

The logic is simple: consumers can only eat three meals a day, but they can order multiple drinks. As prices drop, even occasional buyers are tempted. According to Ele.me data seen by Jiemian News, orders for coffee and milk tea in cities like Nanjing and Suzhou have more than doubled.

One Chagee franchise owner in southern China told Jiemian that at the height of the surge, his store received over 50 orders an hour and had to hire temporary staff. Volume jumped first on JD, then on Ele.me. Meituan lagged behind, but the overall total rose by 1,000 orders a month.

Major chains are reporting record numbers. JD said nearly 200 food brands have crossed the one-million-order mark. Ele.me noted that 95 per cent of the growth went to chain operators, with smaller cities seeing the fastest acceleration. Revenue at some tea brands has hit new highs.

But for many merchants, the profits aren't keeping pace. The Chagee operator told Jiemian that while an in-store order might net 75 to 85 yuan out of 100, a delivery order after platform fees and discounts might return just 60—sometimes as little as 35. He estimated his current take-home rate is closer to 50 per cent. Even with more orders, his revenue is flat.

Independent shops are faring worse. Some break even or lose money on each order. Others cut corners. A delivery rider in Shanghai told Jiemian that in June, the volume was so intense he had to help shop staff prepare drinks. By July, the chaos had eased, but operators remained under pressure.

Delivery volume also squeezes dine-in service and tests the limits of supply chains. "This is an unfair exam," said one restaurant executive. Only businesses with fast prep, deep inventories and stable logistics can keep up.

UBS analyst FANG Jinchong described the market as a "game of chicken," with no platform wanting to fold first. He expects the battle to stretch through Singles' Day in November.

Consumers, meanwhile, are growing accustomed to 1-yuan lattes and near-free milk tea. But the industry is already seeing cracks. According to Meituan Research Institute, dine-in spending per customer fell 10.2 per cent last year. Nearly half of restaurants cut prices, with the sharpest declines at higher-end venues.

For now, volume is booming. But few in the industry believe this momentum is built to last.