FOOD delivery company Meituan Dianping reported a loss Friday for the October-December period after two consecutive quarters of profit, as it expanded into the community group-buying business that relies heavily on subsidies.

It reported a loss of 2.24 billion yuan (US$343 million) versus profit of 1.46 billion yuan in the same quarter a year earlier, the company said in a stock exchange filing.

Meituan, whose services also include restaurant reviews and bike sharing, said total revenue rose 34.7 percent in the October-December period from a year earlier to 37.92 billion yuan. That compared with the 39.17 billion yuan average of 14 analyst estimates, IBES data from Refinitiv showed.

Food delivery, which accounts for over half of Meituan’s total revenue, posted quarterly revenue growth of 37 percent to 21.54 billion yuan.

Meituan’s community group buying service, called Meituan Select, enables communities to set up groups for bulk buying. The service is part of Meituan’s new initiatives that grew by 51.9 percent year on year in revenue to 9.24 billion yuan.

Operating losses from new initiatives in 2020 ballooned to 10.9 billion yuan from 6.7 billion in 2019, the company said, adding that it may continue to report overall operating losses in the next few quarters as “we ramp up our community e-commerce business.”

The firm’s expansion has run into regulatory hurdles as China has recently stepped up efforts to rein in the growing influence of tech giants, citing the risk of abuse of market power to stifle competition, misuse of consumer data and the violation of consumer rights.

Meituan Select was among the five platforms fined by regulators earlier this month for “improper pricing behavior.”

(SD-Agencies)