Luckin Coffee sustains record-breaking growth in the third quarter

Luckin Coffee opened more than 2,400 stores in the third quarter to reach 13,273 sites | Photo credit: via Shutterstock

Luckin Coffee has posted its highest-ever quarterly revenues, bolstered by record monthly transacting customers and sustained outlet growth. 
 

The Xiamen-based coffee chain’s sales in the three months ended 30 September 2023 reached RMB 7.2bn ($987m), a 15% increase on its second quarter and 85% rise on the same period in 2022. 

GAAP operating income reached RMB 961m ($132m) with a margin of 13.4%, compared to RMB 585m ($80m) and a 15% margin in the same quarter of 2022. 

Luckin Coffee also maintained rapid outlet expansion in the third quarter, opening 2,437 stores – nearly 1,000 more than it opened in the previous three months – to reach 13,273 sites.  

More than 8,800 of Luckin Coffee’s total outlets are company-owned, with the remaining 4,466 franchised. Revenues from company-owned stores accounted for 71% of total third quarter sales.  

The coffee chain opened 11 new stores in Singapore to reach 23 outlets. 
 

CEO Dr. Jinyi Guo credited Luckin Coffee’s innovative product offerings and marketing efforts as driving significant growth in customer transactions. Average monthly transacting customers in the third quarter reached 58.5 million – 36% higher than the previous quarter and 133% above the same period last year. 

“We are proud to report another strong quarter, where we achieved record revenue and increased our footprint with more than 2,400 net new store openings. Our new, innovative product offerings and marketing efforts continue to resonate with customers, driving significant growth in both revenue and monthly transacting customers,” Guo said. 

In September 2023, Luckin Coffee unveiled a lucrative collaboration with Chinese alcoholic spirit brand Kweichow Moutai and sold more than 5.42 million cups of its baijiu-infused latte in a single day. Daily sales of the product, which has an alcohol content below 0.5%, exceeded RMB 100m ($13.7m).  
Luckin Coffee’s main expenses during the period were materials ($434m) and rent ($195m), however, increased delivery orders led to associated expenses rising 36% year-on-year to RMB 587m ($80.5m).  

Luckin Coffee’s rapid outlet expansion is significantly outpacing its main competitor in China, Starbucks, which operated 6,500 stores across 250 Chinese cities as of the end of June 2023. The US coffee chain is targeting 9,000 stores in China by 2025. 

Additionally, Luckin’s latest sales are $150m higher than Starbucks’ $822m third quarter revenues in China. Starbucks is due to release its fourth quarter results on 2 November 2023. 

Luckin Coffee also faces competition from domestic operator Cotti Coffee, founded by its former executives Charles Lu and Jenny Qian.  

In August 2023, Beijing-based Cotti Coffee said it had opened more than 5,000 locations across China in just 10 months. In a further indication of its growth aspirations, Cotti Coffee has entered South Korea, Indonesia, Japan and Canada within the last few months.