Luckin Coffee's 30,000 Stores and 49.3 Billion Revenue: Behind the Impressive Growth Lie Hidden Concerns About Balancing Scale and Efficiency

Port Business Observation by Xiao Xiuni

On February 26, 2026, Luckin Coffee (China) Co., Ltd. (hereinafter referred to as Luckin Coffee, LKNCY) released its Q4 and full-year 2025 financial results. As early as December 2025, Luckin Coffee co-founder and CEO Guo Jinyi revealed at the Xiamen Entrepreneur Day Conference that the company is actively advancing the process of relisting on the U.S. main board.

From the darkest days of financial fraud to achieving both profitability and scale; from being caught in the 9.9 yuan low-price competition to completing a strategic shift prioritizing efficiency, Luckin is demonstrating its long-term growth logic with solid financial reports. However, the short-term pressure from a decline in Q4 net profit year-over-year and a sharp slowdown in same-store sales growth at self-operated stores also serve as a critical test of its ability to balance scale expansion and profit optimization.

1

Full-year performance doubles, delivery costs surge 94.5% amid food delivery wars

In the early morning under office buildings, at community corners, and on commercial streets in counties, a striking Luckin blue has long integrated into the daily consumption scenes of Chinese consumers. Founded in 2017, Luckin Coffee, as a new retail coffee operator, has always been committed to promoting coffee consumption domestically. Now, it has secured its position as the largest chain coffee brand in China.

In 2025, this coffee leader experienced a pivotal year where scale and profitability were realized simultaneously. Its full-year performance was outstanding across the board, but in Q4, due to industry-wide food delivery wars intensifying, it faced temporary profit pressure, becoming the most notable aspect of its impressive annual report.

Key financial data show resilience in growth: the company’s total revenue for 2025 was 49.288 billion RMB, up 43% year-over-year. Meanwhile, GAAP operating profit for 2025 reached 5.073 billion RMB, up 42.1%.

The impressive consumer performance was the core driver of growth. In 2025, Luckin Coffee’s annual beverage sales exceeded 4.1 billion cups, a 39% increase YoY; the average monthly number of transaction customers reached 94.15 million, up 31.1%. The continuous expansion of the user base and steady increase in consumption frequency have built a solid consumer foundation for Luckin Coffee.

Behind this sticky consumer base is Luckin’s ongoing store network expansion. In 2025, the company added 8,708 stores, including 8,599 in China (including Hong Kong), 30 in Singapore, 70 in Malaysia, and 9 in the U.S.; by the end of 2025, Luckin’s global store count reached 31,000, a 39% increase, firmly maintaining its position as the largest fresh-brewed coffee chain in China.

Store structure optimization has further strengthened Luckin’s growth resilience. The company has formed a healthy pattern of “strong self-operated experience and extensive franchise penetration.”

Self-operated stores numbered 20,200, serving as the core of the brand, generating 36.243 billion RMB in revenue in 2025, up 41.6%. Same-store sales growth for self-operated stores improved significantly to 7.5%, from -16.7% in 2024. Store-level operating profit was 6.436 billion RMB, up 32.2%, with operating profit margin slightly decreasing from 19% in 2024 to 17.8%.

Franchise stores, totaling 10,800, became the main force in Luckin’s market penetration. In 2025, franchise revenue reached 11.594 billion RMB, a 49.7% YoY increase, far surpassing self-operated stores.

Despite excellent full-year results, the performance fluctuation in Q4 drew market attention. The core background was the full-scale escalation of the food delivery wars in Q4. Major coffee brands increased subsidies and fought fiercely for delivery orders, leading to industry-wide competition entering a heated phase. While Luckin maintained its customer base during this period, it also faced significant cost pressures.

Even in the industry’s traditionally slow season, Luckin demonstrated strong customer flow resilience in Q4, achieving total revenue of 12.777 billion RMB, up 32.9%. The company stated this growth was mainly driven by a 32.8% YoY increase in GMV, with Q4 GMV reaching 14.8 billion RMB.

In terms of revenue structure, Luckin’s product sales revenue in Q4 2025 was 9.93 billion RMB, a 31.2% increase from 7.568 billion RMB in the same period of 2024.

Fresh beverages accounted for 7.151 billion RMB, up from 6.925 billion RMB in Q4 2024, representing 71.6% of total revenue, a slight decrease of 0.4 percentage points. Other products contributed 605 million RMB, up from 496 million RMB, accounting for 4.7% of total revenue, down 0.5 percentage points. Other income was 174 million RMB, up from 147 million RMB, representing 1.4%, a slight decrease of 0.1 percentage points. Revenue from partner stores reached 2.847 billion RMB, a 39.2% increase from 2.046 billion RMB, accounting for 22.3% of total revenue, up 1 percentage point, becoming an important driver of Q4 revenue growth.

Contrasting with revenue growth, profit in Q4 was under pressure due to the delivery wars, showing a clear characteristic of increased costs without corresponding profit growth. Data shows that net profit in Q4 was 518 million RMB, down from 851 million RMB in the same period of 2024, with a net profit margin of 4.1%, nearly halving from 8.8%. Non-GAAP net profit was 699 million RMB, down from 938 million RMB, with a margin of 5.5%, down 4.3 percentage points from 9.8%.

Store and overall profitability indicators also declined. In Q4, self-operated store operating profit margin was 15%, down from 19.8% in 2024. GAAP operating profit was 821 million RMB, down from 1.008 billion RMB, with a margin of 6.4%, below 10.5% in 2024. Non-GAAP operating profit was 964 million RMB, down from 1.104 billion RMB, with a margin of 7.5%, below 11.5%.

The core reason for this contrast lies in the sharp rise in delivery costs amid the delivery wars. Financial data shows that delivery expenses in Q4 reached 1.631 billion RMB, nearly doubling from 839 million RMB in 2024, a 94.5% increase. Meanwhile, delivery costs as a percentage of total revenue rose sharply from 9% to 13%, a 4 percentage point increase, directly squeezing profit margins and being the main factor behind the halving of net profit margin.

Regarding the surge in costs during the delivery wars, CFO An Jing explained in the earnings call that the increase in delivery expenses was mainly driven by a significant rise in delivery order volume on delivery platforms. Amid the industry-wide delivery wars in Q4, Luckin increased its share of delivery orders to consolidate market share and compete for delivery traffic. The expansion of store coverage and the further solidification of user delivery habits directly led to a substantial increase in delivery expenditure.

However, An Jing also emphasized that although overall delivery costs increased, the average delivery cost per order decreased YoY. This detail reflects operational efficiency gains from scale expansion. With increased store density, shorter delivery radii, and ongoing supply chain and delivery system optimization, Luckin’s unit order delivery cost has improved. The short-term impact of the delivery wars, with order structure heavily skewed toward delivery, caused absolute growth in delivery expenses, creating a “per-order optimization but total high growth” contradiction. This short-term pressure on profits does not indicate a decline in operational efficiency.

2

Same-store sales growth sharply declines, multiple factors trigger short-term growth concerns

Alongside rising delivery costs, Luckin’s same-store sales growth in self-operated stores has plummeted quarter by quarter, further fueling market worries about its short-term growth momentum.

Data shows that in Q1 2025, same-store sales growth was 8.1%, rising to 13.4% in Q2, and maintaining at 14.4% in Q3. However, in Q4, amid the intensification of delivery wars, this figure sharply dropped to 1.2%, reaching the lowest level of the year.

This decline results from multiple factors, with the impact of the delivery wars being particularly significant. On one hand, brands like Kudi and Lucky Coffee increased their penetration into lower-tier markets and offered aggressive low-price promotions, diverting some of Luckin’s core customers. On the other hand, in Q4, colder weather and pre-holiday consumer hesitation led to reduced offline self-pickup traffic, while the high proportion of delivery orders increased costs and further hampered revenue growth of existing stores. Additionally, Luckin’s own transitional price strategy adjustments temporarily affected the consumption frequency of price-sensitive users.

In response to market concerns about performance fluctuations during the delivery wars, Chairman Li Hui emphasized: “I think it’s not just about scale, but about overall system efficiency improvement.”

Li Hui sees continuous system optimization as a reflection of the company’s restructuring of its business model since 2020—from supply chain integration and digital store operations to refined user management. Luckin’s core competitiveness has shifted from mere scale expansion to full-chain efficiency enhancement. The cost fluctuations and same-store sales slowdown caused by the delivery wars in Q4 are temporary industry phenomena and will not change the company’s long-term focus on efficiency and profitability.

3

2026 strategic shift: moving away from low-price competition and balancing scale expansion

In response to Q4 performance fluctuations, Luckin’s management did not avoid the issue but clarified its core strategic direction for 2026: moving away from the 9.9 yuan low-price competition, prioritizing profits, while steadily expanding scale, seeking a new balance between order structure and efficiency.

Co-founder and CEO Guo Jinyi admitted that, considering the ongoing changes in delivery platform subsidies, it will take time for the order volume structure to shift from delivery back to self-pickup. Additionally, the large subsidies in 2025 created a high base, so Luckin’s same-store sales and profit performance in 2026 may face some short-term fluctuations and challenges, which is consistent with industry development laws.

He also emphasized: “These short-term fluctuations will not change the long-term growth logic. With resilience, digital foundation, scale advantages, and the continuous strengthening of competitive edges on both supply and demand sides, as well as operational upgrades driven by efficiency improvements, we remain confident in long-term performance and profitability.”

In fact, Luckin’s strategic shift has already begun in early 2026. The company has reduced the use of 9.9 yuan coupons, lowering their proportion to below 10%, and raised main price points to 12.9-14.9 yuan. By reducing low-price subsidies and guiding self-pickup consumption, it aims to optimize order structure and reduce delivery costs, alleviating profit pressure from the source.

Luckin’s price adjustment reflects profound changes in the competitive landscape of the fresh-brewed coffee industry. The 9.9 yuan price war has largely receded, with the industry shifting toward profit prioritization. However, Luckin’s price transition still faces fierce market competition.

Brands like Kudi Coffee, which initiated the price war, still stick to the “9.9 yuan everywhere” strategy, with 18,000 stores globally in 2025; Mixin Group’s Lucky Coffee, leveraging supply chain advantages, priced fresh coffee at 6-8 yuan, with store count surpassing 10,000 in November 2025; and brands like Nuo Coffee are accelerating penetration through low-price strategies. Luckin’s price transition faces significant market tests.

Nevertheless, scale expansion remains a core strategy for Luckin in 2026. To accelerate growth, the company has launched a new franchise policy, significantly lowering franchise thresholds. In 2026, Luckin’s new retail partnership model will waive franchise fees; traditional franchise fees are only 30,000-50,000 RMB annually, with refundable deposits of 50,000-80,000 RMB, and equipment costs supported with interest-free installment plans. The first-month equipment fee can be as low as 55,000 RMB. Investment costs for rural stores start around 250,000 RMB, and urban stores range from 350,000 to 600,000 RMB (excluding rent), greatly reducing franchisee entry barriers and paving the way for deeper penetration into lower-tier markets.

Overseas markets are also steadily expanding, becoming a new growth track. Currently, Luckin has achieved profitability in Singapore, is rapidly expanding in Malaysia, and cautiously testing the U.S. market, with a preliminary global layout emerging.

Guo Jinyi stated that China’s coffee market is still in a high-growth phase, and gaining market share remains a top priority. In 2026, the company will maintain a steady and flexible development pace, promoting healthy growth across store openings, cup volume, and pricing, seeking a better balance between scale and profit.

4

Controlling shareholder acquires Blue Bottle Coffee, adding a key piece to IPO strategy

Luckin Coffee’s relaunch of its IPO is also supported by deep capital arrangements from its controlling shareholder, Dacheng Capital, adding an important component to its capital market strategy. According to media reports from LatePost, Dacheng Capital successfully acquired Blue Bottle Coffee, a high-end coffee chain under Nestlé, for less than $400 million, after signing an agreement with Nestlé to fully acquire the brand at a price below $400 million, compared to Nestlé’s initial asking price of $700 million.

For China’s coffee market, Dacheng Capital is no stranger; it is considered the mastermind behind Luckin’s “rebirth.”

Founded by Li Hui in 2017, this industrial investment firm was an early financial investor in Luckin Coffee, participating in its $200 million Series A in 2018. After the 2020 financial fraud crisis, Dacheng Capital not only increased its investment but also led Luckin’s bankruptcy restructuring and management overhaul, ultimately becoming its controlling shareholder and driving Luckin’s turnaround from crisis to sustained profitability.

The acquisition of Blue Bottle Coffee is seen as Dacheng’s strategic move in the coffee sector, closely aligned with Luckin’s plan to relist on the U.S. main board, sparking market speculation.

Industry analyst Zhu Danpeng believes that after Dacheng’s acquisition of Blue Bottle, Luckin has successfully built a comprehensive product pyramid with a stable and healthy development trend. The temporary decline in profit margin in 2025 is not due to operational issues but a strategic choice to further increase market share and prepare for future capital market deployment.

He also noted that, leveraging years of development, Luckin’s brand effect, scale effect, and fan base continue to grow, while its supply chain system becomes more complete and mature. The combination of multiple core advantages strengthens Luckin’s foundation, and its future sustainable development is entering a healthy, positive, and orderly growth phase. (Produced by Port Finance)