Introduction

From May to August 2025, China’s major food delivery platforms, Meituan, Ele.me, and JD.com, launched a fierce price war. A price war involves repeated competitive price cutting that can be difficult to stop once firms begin responding to one another’s discounts (Heil & Helsen, 2001). In China’s delivery market, platforms increased subsidies and promoted unusually low-cost meals to attract customers and protect market share. News reports cited billions spent on promotions in China’s instant-commerce sector, and consumers saw steep discounts on coffee, fast food, and meal sets (Butts & Cheng, 2025). For example, the price of a large cup of latte dropped from the usual 30 yuan (about $4.10 USD) to 10.9 yuan (about $1.50 USD). For consumers, these promotions meant convenience and savings. For small restaurants, however, participation meant merchant-funded discounts, platform commissions, and fiercer competition for rankings.

Platforms organize the conditions under which customers encounter restaurants. Search rankings, coupons, delivery speed, user ratings, and promotional labels shaped what appears first on a customer’s screen. Restaurants that refused discounts could preserve margins but risked losing visibility, and vice versa. Post-pandemic delivery habits made it sharper (Wang et al., 2022). Many people had become accustomed to eating at home and relying on food delivery services (Pinheiro de Souza et al., 2022). During the 2025 price war, the China Cuisine Association reported that June revenue for above-designated-size catering units fell by 0.4% year on year and argued that platform subsidies were intensifying pressure on restaurants, especially smaller merchants (China Cuisine Association, 2025).

In May 2025, the State Administration for Market Regulation (SAMR) and four other government bodies summoned JD.com, Meituan, and Ele.me over competition problems in food delivery and required platforms to follow e-commerce, anti-unfair-competition, and food-safety laws while protecting consumers, merchants, and riders (State Administration for Market Regulation, 2025a). In July, SAMR again required Ele.me, Meituan, and JD.com to regulate promotional activities and compete rationally (State Administration for Market Regulation, 2025b). In late August 2025, Meituan distributed one-time subsidies to more than 100,000 small and medium-sized restaurants on its platform to promote healthier competition and help vendors recover (W. Xu, 2025). These interventions showed that the price war had become a public governance problem involving merchants, consumers, riders, platforms, and the state.

This paper investigates how a family-run restaurant in Shanghai navigated platform pressure during the 2025 food-delivery price war and explores what this reveal about the relationship between platform capitalism and moral economy. This paper argues that Zhang, the owner of Xiao Cai Fang, adopted a selective and relational strategy. She withdrew from Ele.me when the required discount became too costly, kept a more limited presence on Meituan for exposure, and strengthened direct relationships with customers through WeChat, phone orders, in-person service, small gifts on holidays, and everyday acts of care. The case suggests that long-term social relationships can create partial autonomy within platform capitalism, but it also shows that the moral economy depends on hidden labor and cannot fully overcome structural inequalities between small merchants and large platforms. The paper first reviews literature on platform capitalism, platform-dependent entrepreneurship, governance, and moral economy. Next, the paper outlines the methods, ethnographic findings, broader discussion about small-scale entrepreneurship and resilience in platform economy.

Literature Review

Research on platform capitalism often focuses on the power of platform firms (Kenney & Zysman, 2016; Srnicek, 2017), algorithmic management and information asymmetry (Rosenblat & Stark, 2016; Julie Yujie Chen & Sun, 2023; Huang, 2022; Wu et al., 2023) and delivery workers (Aliaga et al., 2026). These perspectives are essential, but they can leave small merchants analytically underexplored. Xiao Cai Fang shows how platform power is experienced through daily pricing, menu design, customer communication, delivery choices, and service ethics. The paper therefore contributes to economic anthropology by examining the persistence of embedded social relations in digital markets, to platform economy research by analyzing merchant dependence, and to small-business studies by showing that survival strategies involve not only cost control and digital marketing but also culturally specific reciprocity, obligation, and care.

Nick Srnicek (2017) argues that digital platforms accumulate power by positioning themselves as intermediaries between different groups of users, collecting data, and benefiting from network effects. In food delivery, this means that restaurants join platforms because customers are already there, while customers use platforms because restaurants are listed there. As participation grows, leaving the platform becomes more costly. The platform does not simply connect supply and demand; it sets the rules of visibility, pricing incentives, ranking, and customer access (Srnicek, 2017).

Cutolo and Kenney (2021) define platform-dependent entrepreneurs as actors who use digital platforms to reach markets but operate under rules set by platform owners (Cutolo & Kenney, 2021). Yu and Sekiguchi’s (2024) systematic review similarly find that platforms lower entry barriers but create dependence and risk through rules that shape visibility and access (Yu & Sekiguchi, 2024). Their review identifies multi-homing—the practice of maintaining a presence on multiple competing platforms simultaneously—branding, and off-platform activity as common autonomy strategies. Xiao Cai Fang follows this pattern, relying on WeChat, phone calls, local trust, repeated care, and a long history of neighborhood relationships.

The effects of delivery platforms are double-edged. Online platforms can improve urban food-system resilience by helping restaurants continue operations during shocks such as COVID-19 lockdowns (Wang et al., 2022). At the same time, empirical research on on-demand delivery finds that benefits vary by restaurant type: independent restaurants may benefit less than chains and may face substitution of their own takeout channels (Li & Wang, 2024a). These findings help explain why small restaurants continue using platforms even when they complain about them: platforms create exposure and logistics, but they can intensify competition and narrow the space for restaurants to differentiate themselves through service quality or atmosphere.

Research on Chinese food delivery platforms has often focused on labor. Chen and Sun (2023) analyze these platforms as a digital labor policy challenge. Huang’s (2022) ethnography shows how algorithmic management organizes delivery workers through virtual organization, information asymmetry, and algorithm-driven control. Wu et al. (2023) describe an algorithm-human hybrid management system. On the other hand, Xu et al. (2025) examine how riders cope with navigation, time estimation, order distribution, and ratings. These studies show that platforms govern through technical systems that appear neutral but structure economic behavior. This paper extends that insight to a small restaurant: the platform affects not only riders’ routes but also merchants’ prices, menus, customer relations, and sense of fairness.

Platform governance research is also important because regulation can help while remaining incomplete. In a study of commission-fee caps for delivery platforms in the United States, Li and Wang (2024b) showed that policies designed to help independent restaurants can produce unintended consequences when platforms respond by changing fees, recommendations, or other rules (Li & Wang, 2024b). Xiao Cai Fang’s problem was not only the visible commission rate. It also involved discount requirements, ranking visibility, promotional labels, and the possibility that refusing participation would reduce public exposure. Regulation must therefore consider the whole platform environment, including less visible design choices that shift pressure onto merchants.

Anthropological theories of moral economy help explain why Zhang did not treat every business decision as a narrow calculation of profit. James Scott’s (1976/2006) concept of moral economy emphasizes norms of subsistence, fairness, and mutual obligation among people vulnerable to market shocks. Karl Polanyi’s (1944) theory of embeddedness suggests that economic life is shaped by institutions, relationships, and moral expectations. Mauss’s (1925/1993) theory of gift exchange shows that gifts create enduring relations of giving, receiving, and reciprocating. Together, these theories help interpret Zhang’s insistence on fresh ingredients, fair pricing, and care for elderly customers. The central question is not whether moral economy survives outside platform capitalism, but how it persists inside it and where its limits appear.

Materials & Methods

This study uses ethnographic methods to examine how one small restaurant responded to the 2025 food delivery price war. Ethnography is a qualitative research approach that seeks to understand how people make meaning through everyday practices, relationships, routines, and social interactions by engaging in prolonged observation and participation within a particular social setting (Hammersley & Atkinson, 2007; Reeves et al., 2013). It is appropriate because the research question concerns meanings, relationships, routines, and values rather than only measurable outcomes. Quantitative data can show changes in revenue or order volume, but ethnographic observation can reveal how an owner interprets those changes, negotiates moral limits, and maintains social ties under pressure (Morgan-Trimmer & Wood, 2016; Reeves et al., 2013).

The research site is Xiao Cai Fang, a pseudonym meaning “Home-style Eatery,” located in Changning District, Shanghai. The owner is referred to as Zhang. The study draws on four semi-structured interviews with Zhang, informal conversations with regular customers, participant observation conducted while volunteering as a waitress, and field notes from earlier visits as a regular customer. During the period of participant observation, attention focused on food preparation, customer service, ordering routines, WeChat communication, and Zhang’s management of platform and non-platform orders. Attention was paid to how she interacted with regular customers, handled special requests, adjusted bills, coordinated with kitchen staff, and encouraged direct ordering.

Following fieldwork, interview transcripts and field notes were reviewed to identify recurring themes, including platform pressure, pricing boundaries, ingredient quality, direct communication, reciprocal care, government intervention, and moral obligation. Prior familiarity with the restaurant helped establish trust over time. As a local Shanghainese speaker and student, I was able to communicate with Zhang in a familiar register and observe interactions that may have been less visible to an outsider. This positionality supported access but also required caution: my familiarity with the restaurant could make its care practices feel ordinary, so I treated field notes as material for repeated reflection rather than immediate interpretation.

The study received approval through a school-level Institutional Review Board at St. Mark’s School of Southborough. The board consisted of the headmaster, a science faculty advisor, and the school nurse. Informed consent was obtained from all participants. All interview records, photographs, and observational notes are stored on a password-protected computer accessible only to me, and participants were informed that they could withdraw at any time.

Admittedly, the study has limitations. It focuses on one restaurant and one owner during a specific moment in the 2025 price war. It cannot establish how common Zhang’s strategy is among Shanghai restaurants, nor does it include direct interviews with delivery riders, platform managers, regulators, or customers who order online only. The strength of the case is depth rather than representativeness. The findings should be read as an intensive case study that reveals mechanisms and tensions useful for future comparative research, not as a claim that all restaurants respond in the same way.

Results

Xiao Cai Fang is located on a narrow street in a central Shanghai neighborhood with old-style apartments, small shops, fruit stalls, markets, and restaurants. During lunch, riders in yellow, blue and red uniforms move quickly between storefronts and office buildings. Respectively, they are Meituan, Ele.me, and JD.com riders. White-collar workers arrive for simple meals, while older residents and regular customers appear throughout the day. Xiao Cai Fang is part of a neighborhood ecology in which repeated encounters create familiarity.

The 2025 price war disrupted this rhythm. Before July 2025, Xiao Cai Fang used both Meituan and Ele.me to maintain online visibility and customer traffic. In Zhang’s daily operations, JD.com did not function as a meaningful channel. Zhang explained that both platforms required restaurants to offer discounted dishes, but Ele.me’s requirements were more severe. According to Zhang, Ele.me required discounts of about 25%, while Meituan requested discounts closer to 20%, and the restaurant bore the loss. At first, order volume increased, but profit fell sharply. Zhang said that some lunch orders became unprofitable after accounting for ingredients, labor, delivery-related fees, and platform commission (Zhang, Interview, July 27, 2025).

Zhang’s first boundary was ingredient quality. Xiao Cai Fang specializes in light home-style cuisine, and Zhang repeatedly emphasized freshness. “Using the simplest cooking method for the best ingredients,” she said, “makes the most delicious dish.” Every morning, she checked ingredients and, when needed, walked to the nearby market herself. For special orders such as spicy fish head, she and her husband selected fish and vegetables in person. She refused to shift toward cheaper prepared food: “We do not do heat-up meals. We only start making the food once an order is placed, which does not fit the delivery mode” (Zhang, Interview, July 10, 2025). Her insistence on ingredient quality illustrates the logic of a moral economy in which maintaining integrity and fairness outweighs the platform-driven cost-cutting pressure.

By mid-July, Zhang estimated that revenue had dropped approximately 30%, and by the end of July the decline exceeded 50% (Zhang, Personal communication, July 30, 2025). Faced with the increasing losses, she withdrew completely from the Ele.me platform and remained only on the Meituan platform, where the discount requirements were lower. She encouraged regular customers to contact the restaurant by phone or WeChat, especially for short-distance orders that she could deliver herself, avoiding the commission fee. “Regular customers know to call the restaurant phone,” she explained. “For short distances, I deliver the orders myself within the scheduled time” (Zhang, Interview, July 27, 2025). Her decision marked an adaptation strategy, selective deplatforming, avoiding the rapid accumulation of losses and protecting the restaurant’s reputation and credibility. This move also indicated that she began to rely on long-term social relationships rather than algorithmic visibility to sustain the business.

Zhang has run Xiao Cai Fang for nearly twenty years, and the restaurant’s interior makes these relationships visible through customer photographs, seasonal flowers, and other familiar details. Rather than describe these decorations as background, it is more useful to interpret them as relational infrastructure: they remind customers that Xiao Cai Fang is a social place, not only a food provider. Under platform pressure, restaurants become comparable menu items on a screen; Xiao Cai Fang’s physical space helps convert transactions back into relationships.

One dish, “Grandma’s Braised Duck,” illustrates the degree for which Zhang values interpersonal relationship and embeddedness in the local community. Zhang explained that the dish sold for 28 yuan ten years ago and still sold for 28 yuan during the price war. “Although the price of ducks has gone up, so have labor costs, everything else, and even the rent, but I did not increase the price of this dish,” she said, “I know I am losing money, but it is impossible that everyone just orders the braised duck” (Zhang, Interview, July 10, 2025). The price of this dish is about 4 US dollars. Economically, this dish sacrifices margin. Socially, it signals continuity and loyalty. In Mauss’s (1925/1993) terms, the dish functions partly like a gift: it remains a commodity, but it also creates a moral tie by communicating that the restaurant remembers and values its regular customers.

During the price war, Zhang used WeChat more actively. Before the price war, she rarely posted updates. During the crisis, she began sharing photos of freshly cooked dishes, newly purchased flowers, small 10 yuan in-store coupons, and time-limited promotions. She also asked regular customers to bring friends, leave reviews when they felt comfortable, and order directly when possible. This strategy used a digital tool, but it differed from platform communication. On a delivery app, customers mainly encounter price, ratings, delivery time, and promotional labels. On WeChat, they encounter Zhang’s voice, daily routines, such as pictures of her going to the gym every morning, and social invitations. WeChat, therefore, became a hybrid infrastructure: digital in form, but relational in content.

The shift to WeChat also reveals the limits of autonomy. Direct ordering reduced platform commissions, but it required Zhang to perform additional coordination work: answering messages, confirming orders, managing timing, and sometimes delivering food herself. Platform capitalism did not disappear; some of its logistical work was transferred back onto the owner. Her strategy succeeded only because regular customers already trusted Zhang and were willing to move some orders outside the app. A newer restaurant without established relationships might not be able to reproduce this tactic.

The strongest evidence of moral economy appeared in small practices that did not look like formal business strategy. During participant observation, I rushed to serve rice to a table that already had their main dishes. Zhang gently corrected me: “Rice should be delayed by five to eight minutes so that diners can enjoy tasting the main dishes before filling up” (Zhang, Conversation, July 27, 2025). The timing of rice service is not visible on a platform menu, but it shapes the dining experience. Similar details appeared throughout the day. Zhang wrapped napkins around chopstick tips, chatted with regular customers while they were ordering, reminded a young diner to drink hot soup on a humid day, and coordinated respectfully with kitchen staff. When customers paid, she often rounded down the total by a few yuan, a small gesture of goodwill. She sometimes asked customers for online reviews, but she did so gently rather than coercively. “When people feel cared for, they will be willing to help,” she said (Zhang, Personal communication, July 10, 2025). These acts were minor in financial value, but they produced an accumulated sense of care and gave customers a reason to return in person rather than choose the lowest-priced delivery option on an app.

One episode made her moral logic particularly clear. At around 4:30 p.m., after the lunch rush, an elderly neighbor walked in and said she had little appetite but wanted a small bowl of shrimp congee to warm her stomach. Zhang smiled and prepared it to use ingredients bought that morning. This dish was not on the menu and did not generate any profit. Yet it showed how subsistence, care, and reciprocity could guide economic action even under intense market pressure (Scott, 1976/2006).

These practices helped Xiao Cai Fang survive the most intense period of the price war from June to July in 2025. Delaying rice service, wrapping chopsticks for both practical and aesthetic use, preparing off-menu soup, holding the price of a beloved dish, thanking kitchen staff, and sending WeChat updates were not random habits. They formed a relational system that converted customer loyalty into partial economic resources. At the same time, Zhang acknowledged that maintaining customer relationships required substantial time and effort. At the same time, relational survival carried costs. Zhang described responding to WeChat messages late at night and occasionally delivering orders herself (Zhang, Personal communication, July 27, 2025). The same moral commitment that makes Xiao Cai Fang distinctive also requires Zhang to absorb pressure that a purely profit-maximizing business might refuse.

Discussion

The findings show that Xiao Cai Fang’s response to the 2025 price war was best understood as selective dependence rather than simple resistance. Zhang did not reject digital platforms altogether; she maintained partial digital visibility and redirected trusted customers toward WeChat and phone orders. This pattern supports recent research on platform-dependent entrepreneurship, which shows that entrepreneurs often respond to platform power through multi-homing, branding, and off-platform activity (Cutolo & Kenney, 2021; Yu & Sekiguchi, 2024). Xiao Cai Fang’s case adds that, for a small neighborhood restaurant, off-platform activity may depend less on technical innovation than on the slow accumulation of trust.

Selective deplatforming shows that platform dependence is not absolute, but neither is autonomy. Zhang could leave one platform because she had long-term customers, a physical location, a recognizable reputation, and a second platform to preserve minimal exposure. Srnicek’s (2017) account explains why platforms gain power through network effects and data control, but Xiao Cai Fang shows that platform power is negotiated through local practices. The platform organizes visibility; the restaurant organizes trust. Survival depends on how these two systems interact.

The case also deepens the concept of moral economy. Soctt’s (1976/2006) moral economy emphasizes subsistence and fairness under conditions of vulnerability. For Zhang, fairness did not mean refusing all market exchange. It meant deciding which compromises would destroy the restaurant’s identity. Lowering prices temporarily was acceptable only up to a point. Replacing fresh-cooked meals with heat-and-serve meals and abandoning regular customers during a crisis were not acceptable. These boundaries show that the moral economy operates as a practical decision-making framework rather than an abstract value system.

Polanyi’s concept of embeddedness is equally useful. Delivery platforms often separate transactions from their original contexts by presenting restaurants as ranked, priced, and rated options. Xiao Cai Fang responded by re-embedding transactions in social relations: WeChat messages, remembered preferences, small discounts, off-menu cooking, face-to-face service, and respectful coordination with kitchen labor. Yet this re-embedding did not return the restaurant to a pre-digital world. Instead, the restaurant combined platform participation and local sociality. The result was a hybrid economy in which digital infrastructure and neighborhood reciprocity were both necessary.

The most important tension is that the same relational practices that helped Xiao Cai Fang survive also required additional effort from Zhang. For example, maintaining customer relationships through WeChat allowed her to encourage direct ordering and reduce dependence on delivery platforms. From an analytical perspective, however, this strategy also required time spent answering messages, coordinating orders, and maintaining regular communication with customers. Whether Zhang herself viewed these activities as burdensome, rewarding, or both was not a question explored directly during fieldwork and would require further research. Nevertheless, the case suggests that a moral economy is not simply a form of resistance to platform capitalism. It may also rely on forms of labor that remain largely invisible within platform-centered accounts of restaurant survival. This interpretation helps avoid romanticizing care while recognizing the practical work involved in sustaining long-term social relationships. In this sense, a moral economy is not simply a form of resistance. It can also become a financial burden for the owner. This point prevents the analysis from romanticizing care. The restaurant’s warmth is real, but it is sustained by Zhang’s willingness to absorb pressure that the platform system does not recognize. The government’s intervention adds another layer. The 2025 regulatory talks showed that the state recognized the price war as a problem of fair competition and multi-party welfare, not merely as normal consumer discounting (State Administration for Market Regulation, 2025a, 2025b). Meituan’s small-merchant subsidy program likewise framed merchant support as part of industry stabilization (W. Xu, 2025). For Xiao Cai Fang, however, these measures did not automatically solve the immediate problem of whether to accept a discount, how to remain visible, or how to preserve customer trust. Regulation acted at the level of sector rules; Zhang’s response operated at the level of daily practice.

Policy can address obvious abuses while leaving hidden platform power intact. Research on restaurant delivery platforms suggest that independent restaurants may benefit less than chains because platforms can reduce differentiation and substitute existing takeout channels (Li & Wang, 2024a). Research on commission-fee caps shows that even policies designed to help independent restaurants can have unintended consequences if platforms respond by changing recommendations or fees (Li & Wang, 2024b). China’s later national standard directly addressed issues visible in Xiao Cai Fang’s experience: platform fees, promotional rules, merchant management, rider rights, and dispute mechanism (State Administration for Market Regulation, 2025c). Fair competition policy should therefore examine the whole platform environment, not only posted commission rates.

The case therefore suggests that state intervention and moral economy are complementary but incomplete responses. Government action can restrain irrational subsidies, clarify rules, and protect vulnerable participants. A moral economy can mobilize trust when platforms become too costly. Yet neither fully cancels the structural asymmetry between a small merchant and a large platform. Meituan’s subsidy program prioritized merchants with good reviews and high return-customer rates, suggesting that relational loyalty can itself be translated back into platform metrics (W. Xu, 2025).

Because this is a single-case study, its claims must remain cautious. Xiao Cai Fang is a long-standing restaurant with almost twenty years of neighborhood relationships. A ghost kitchen, chain outlets, tourist-district restaurants, or new shops might not have enough social trust to move customers from delivery apps to WeChat. The case suggests a mechanism rather than a universal pattern: when long-term relationships exist, they can partially ameliorate platform pressure. Future research should compare restaurants across neighborhoods, price levels, and ownership forms and include delivery workers, platform managers, regulators, and online-only customers.

Conclusion

This research examined how a small, family-run restaurant in Shanghai navigated the food-delivery price war from June to July 2025. Through interviews and participant observation at Xiao Cai Fang, it showed that restaurant owner Zhang responded to platform pressure through selective deplatforming, partial platform participation, WeChat communication, direct ordering, and everyday practices of care. Her actions suggest that small restaurants are neither passive victims of platform capitalism nor fully autonomous entrepreneurs. They operate in a constrained space where survival requires constant negotiation among visibility, margins, reputation, regulation, and moral values.

Until August 2025, the government’s intervention-imposed restrictions on discounts and implemented stricter supervision over the algorithms of the delivery platforms. Although these measures did not completely prevent the three companies from continuing their promotional activities, they significantly reduced the intensity of the discounts and brought a more stable situation to the industry environment.

The paper contributes to economic anthropology by showing how moral economy persists in a digital market. Reciprocity, obligation, and trust did not disappear when customers ordered through apps. Instead, Zhang worked to move some exchanges back into embedded relationships through WeChat groups, phone calls, in-person dining, gifts, and personal service. The paper contributes to platform economy research by shifting attention from platform firms and delivery workers to small merchants, whose experiences show how algorithmic visibility and promotional rules shape daily business decisions. It contributed to small-business studies by showing that adaptation can be both relational and technological. The broader significance of the case is not that all restaurants should duplicate Zhang’s strategy. Rather, Xiao Cai Fang demonstrates both the possibility and the limits of relational survival. Long-term customer trust can reduce dependence on platforms, but it cannot solve structural problems such as high commissions, forced discounts, opaque rankings, and unequal bargaining power. Government intervention is necessary because these problems exceed what any single restaurant can solve. The 2025 regulatory meetings and later national standard show policy attention to platform fees, promotional rules, merchant autonomy, and rider protections (State Administration for Market Regulation, 2025a, 2025b, 2025c).

Ultimately, Xiao Cai Fang shows that platform capitalism does not erase moral economy. It pressures, reorganizes, and sometimes exploits it. Yet moral economy remains visible in the owner’s insistence on fresh ingredients, her refusal to accept unsustainable discounting, her care for elderly neighbors, and her effort to preserve customer relationships outside the platform screen. This case suggests that the future of small restaurants in digital markets will depend not only on better technology or stronger regulations, but also on whether local forms of trust can survive under conditions that increasingly reward scale, speed, and price competition.

Acknowledgements

I would like to thank the ethics committee at St. Marks School of Southborough, specifically Dr. Hills, Ms. Taylor and Ms. Plimpton. I am grateful to the owner of the restaurant for being so open and allowing me to conduct research and participant observation at the restaurant during July 2025.

Ethical Approval Statement

This research received ethics approval from the ethics committee at St. Mark’s School of Southborough, MA on May 24, 2025.