(Yicai Global) March 18 -- Dingdong Maicai’s shares plunged after Chinese regulators investigated the online grocery platform over food safety issues following a media report.

Dingdong [NYSE: DDL] closed 10.8 percent down at USD3.79 yesterday. In after-hours trading, the stock was up 0.3 percent as of 7.53 p.m. local time in New York.

The market supervision bureau of Beijing's Haidian district called in representatives of Dingdong Maicai on March 16 to discuss food safety issues, and told the firm to check stores and warehouses to identify and eliminate risks, the bureau said on its official WeChat account yesterday. Beijing regulators have also inspected Dingdong Maicai, Missfresh, and other fresh grocery platforms.

Dingdong Maicai was summoned the day after a report on food safety concerns by Beijing News. The report said one of the firm’s warehouses labeled frozen fish as fresh produce, sold out-of-date fruits and vegetables, tampered with the shelf life of foodstuffs, and failed to carry out sanitation work according to regulations.

Dingdong suspended operations at the warehouse immediately after an internal investigation led by Chief Executive Liang Changlin revealed that the report was true, the Shanghai-based company said on Weibo yesterday. It issued an apology to customers.

Afterward, the firm carried out inspections nationwide and took measures to avoid similar issues, it added, noting that it submitted the inspection results and rectification plans to the regulator.

Founded in 2017 and backed by Sequoia Capital China, Dingdong Maicai operates a close-to-store warehouse business model, enabling it to complete fresh produce orders in under half an hour.

Its net loss shrank 12 percent to CNY1.1 billion (USD173.1 million) in the third quarter of 2021 from a year earlier, per its latest earnings report released on Feb. 15. Revenue jumped 72 percent to CNY5.5 billion.

Editor: Futura Costaglione