Meituan bets big on AI despite losses, unveils LongCat model and Xiaotuan assistant
Meituan's AI Gamble: Losses Today for Tomorrow's Local Services Revolution
China's on-demand service giant Meituan posted sobering financial results this week - a 23.4 billion yuan ($3.4 billion) annual loss amid fierce competition in instant retail. But the company's earnings call revealed an ambitious countermove: going all-in on artificial intelligence.
The Numbers Behind the Strategy
The 2025 financial report showed revenue growth slowing to 8%, reaching 364.9 billion yuan. What caught analysts' attention wasn't the disappointing bottom line, but where Meituan plans to spend its way out of trouble. "We're not just building chatbots," CEO Wang Xing emphasized. "We're creating digital bridges between screens and streets."
Meet LongCat and Xiaotuan
At the heart of this push are two homegrown AI products:
- LongCat: A large language model specifically trained on Meituan's treasure trove of local business data - from parking availability to regional spice preferences
- Xiaotuan: An AI assistant that's already replacing keyword searches with natural conversations in the main app
The company also launched a standalone app called Xiaomei, though details remain scarce.
Why This Matters for Your Next Takeout Order
Unlike generic AI assistants that struggle with real-world constraints, Xiaotuan taps into Meituan's decade of hyperlocal knowledge. Want "a Szechuan place near the cinema with parking and quick service before my 7pm movie"? That's exactly the complex query it handles by cross-referencing:
- Merchant locations and capacities
- Real-time delivery rider availability
- Historical wait time data
- Even parking space updates from partnered garages
"The magic happens when digital intelligence meets physical logistics," Wang told investors. He envisions AI eventually coordinating everything from kitchen prep times to traffic-aware delivery routes.
The Bigger Picture
Meituan's pivot signals a broader shift in China's local services wars - from subsidy battles to efficiency competitions. As one analyst noted: "They're betting that whoever best integrates AI into operations will dominate the next decade."
The road ahead won't be smooth. Rivals like Alibaba's Ele.me are making similar moves, and profitability remains elusive. But with 700 million active users generating endless behavioral data, Meituan might just have the raw material needed to train its way to victory.
Key Points:
- Financial Context: $3.4B loss despite $53B revenue as competition intensifies
- AI Focus: LongCat model and Xiaotuan assistant prioritize real-world integration over chat
- User Impact: Natural language replaces keyword searches for complex local service requests
- Industry Shift: Marks transition from subsidy wars to AI-driven efficiency battles
