The Seven Fresh Food MALL is viewed as "restaurant physical infrastructure" and represents an important pilot project for JD.com's entry into the physical dining sector. To some extent, JD.com is targeting the enormous potential of the mass dining market, where both dine-in and takeout formats constitute important pieces of its local life services business puzzle.

JD.com is determined to develop Seven Fresh Food MALL as a long-term business venture and will continue expanding stores in the future. According to the Seven Fresh Food MALL head, the concept adopts a "dine-in + takeout" model. Since the Harbin flagship store opened, customer traffic has increased more than threefold, and daily takeout orders have grown 100% compared to the initial opening period. By introducing different restaurant formats, the goal is to achieve diversified complementarity and shared traffic flow.

Since JD.com entered the food delivery sector in February this year, related developments have attracted continuous attention from the outside world. Moreover, in recent months, the industry experienced intense subsidy wars, with JD.com, Meituan, and Alibaba all joining the fierce competition. While the competitive landscape has stabilized currently, the food delivery and broader instant retail sector may still face turbulence. In short, players need additional strategies to win market share.

For JD.com, its core retail foundation remains solid. In the second quarter this year, JD.com's revenue exceeded 350 billion yuan, with growth rates reaching three-year highs. Meanwhile, the food delivery business has generated synergies with core e-commerce operations—food delivery has brought significant traffic and user growth, and takeout users show higher conversion rates when purchasing e-commerce categories, providing JD.com with a new growth narrative.

Food delivery, dine-in, instant retail, and local life services—as market conditions change and technological iterations improve fulfillment capabilities, major players are moving beyond previous low-dimensional competition. Next, we're likely to see a new competitive landscape that combines internet and physical business formats.

**JD.com Wants More Than Just a Food Court**

Dining is undoubtedly a high-frequency market. Whether through food delivery, dine-in, or combined shopping and dining models, these have all been efficient channels for acquiring higher traffic and expanding business boundaries. An industry observer who has long followed the restaurant sector noted that China's restaurant market scale continues growing annually, from 3.9 trillion yuan in revenue in 2017 to breaking through 5.5 trillion yuan in 2024. Fundamentally, gross profit margins can reach 80%, while net profit margins range between 30%-45%.

JD.com has been highly active in this area this year. Besides the newly opened Seven Fresh Food MALL, JD.com also launched Seven Fresh Kitchen, a new food delivery model, in late July. Additionally, the new shopping complex JD MALL has landed in multiple cities—while JD MALL currently focuses on shopping, dining formats are also represented.

According to JD.com's logic, entering offline physical dining stems from both the market's large potential and the industry's numerous pain points. Solving these pain points represents new opportunities. The Seven Fresh Food MALL head explained that compared to traditional food courts, Seven Fresh Food MALL balances various restaurant formats among tenant merchants, including time-honored brands, specialty snacks, and internet-famous brands. Each merchant is required to configure live kitchen broadcasts, while also serving diverse takeout needs and calculating the economics of takeout versus dine-in ratios.

Based on operations at the Harbin flagship store, dine-in currently dominates, but takeout orders continue growing steadily, with takeout's proportion gradually increasing. Unlike the subsequently launched Seven Fresh Kitchen, Seven Fresh Food MALL has different location selection considerations. Previously, Seven Fresh Kitchen head Liu Bin stated that for Seven Fresh Kitchen store locations, JD.com fully considers nearby supply conditions, preferring areas with very high ghost kitchen order ratios. Location selection also considers partners' existing store layouts to avoid competing for existing business.

In contrast, Seven Fresh Food MALL prioritizes locations in core commercial districts of major cities and collaborates with established property companies to reduce risks. This location strategy also enables tenant merchants to change from previous large-store models, using small stall formats with lighter investment to improve per-square-meter efficiency.

The food delivery market has developed mature business models, seemingly leaving limited space for innovation. Currently, Seven Fresh Food MALL appears to be more than a simple aggregated store model, potentially offering higher integration capabilities for merchant resources. If traditional food courts, even restaurant formats from the new retail 1.0 era, essentially operated traffic businesses, Seven Fresh Food MALL intends to further improve "traffic" efficiency.

This involves the so-called "cross-store single order delivery." Through this mechanism, users can create combined delivery orders across different merchants, thereby boosting collaborative order volumes among merchants. The Seven Fresh Food MALL head revealed that this mechanism has obvious positive effects on delivery orders. In this scenario, Seven Fresh Food MALL must also overcome operational bottlenecks, such as optimizing merchant food preparation times, managing cross-store order aggregation to improve fulfillment efficiency, and optimizing delivery capacity, especially coordinating delivery resources during peak hours.

**Revenue Sources**

Seven Fresh Food MALL undoubtedly represents a relatively heavy model. Second-quarter financial reports show that supporting JD.com's initial food delivery expansion largely relied on profit transfers across business segments. With JD.com's strong determination in dining, calculating cost-benefit ratios remains a necessary consideration.

Xu Ran provided one pathway during the earnings call—JD.com will holistically weigh return on investment across different channels to improve overall marketing efficiency. According to JD.com's planned restaurant sector roadmap—first getting dine-in takeout to join JD.com's delivery platform, second launching Seven Fresh Food MALL, third having Seven Fresh Kitchen join Seven Fresh Food MALL—this combination strategy has reached its latter stages.

Seven Fresh Kitchen operates under a partnership model, where partner merchants only need to jointly participate in menu development and can enjoy sales revenue sharing, while JD.com handles location selection, store construction, and operations. Although Seven Fresh Food MALL hasn't disclosed specific cooperation methods with tenant merchants, it currently appears to follow a heavy asset investment approach.

As two parallel businesses, JD.com's solution for coordinated operations involves future integration of Seven Fresh Kitchen into Seven Fresh Food MALL. The Seven Fresh Food MALL head explained that Seven Fresh Food MALL targets dine-in scenarios while Seven Fresh Kitchen targets home delivery scenarios, with different price ranges. Integration can connect scenarios and enable bidirectional traffic flow. Additionally, through shared resources in ingredient procurement, kitchen reuse, and delivery fulfillment, costs can be optimized to the greatest extent.

Extracting profits from supply chains represents another major focus. Restaurant supply chains are relatively lengthy, involving numerous stages from ingredient sources to consumer consumption. Procurement, inventory, logistics, supplier management, information systems, and data analysis—compared to traditional dining, from reducing waste to improving decision-making efficiency, this supply chain business still offers significant untapped potential.

For merchants alone, as the food delivery market matures, traditional merchants' digital transformation has become an industry trend. Research firm Jiaworld Consulting believes this process not only changes traditional restaurant enterprises' business models but also provides new value creation opportunities for delivery platforms. In the food delivery ecosystem, merchants as core upstream participants directly influence entire industry efficiency and experience through their digitalization levels. Throughout this process, digital tool applications provide important support for merchant transformation. Through big data and advanced technologies, platforms can help merchants more precisely understand consumer needs and optimize menu structures and service processes.

According to the aforementioned head, Seven Fresh Food MALL's flagship store supply chain efficiency improvements mainly focus on digital technology empowerment, using hardware and system investments to help improve merchants' food preparation and order fulfillment efficiency. Subsequently, supply chain efficiency improvements will extend to ingredient traceability and other areas, achieving cost reduction and efficiency gains across the entire chain to drive genuine merchant growth.

From this perspective, Seven Fresh Food MALL represents JD.com's local life services experiment. Within this scenario, online and offline distinctions become very blurred, and roles between B-side supply chain enterprises and C-side new retail enterprises also interchange, resembling an upgraded hybrid business format.

Currently, this experiment has just begun.