China’s largest coffee chain has bounced back from its first quarter operating loss with record revenues and RMB 1bn ($144.6m) profit, but also opened 971 fewer stores than in the previous three months
.jpg.aspx?lang=en-GB&width=700&height=462)
Customers inside Luckin Coffee’s milestone 20,000th store in Beijing | Photo credit: Luckin Coffee
Luckin Coffee has highlighted a ‘positive shift’ in its financial performance after turning a RMB 1bn ($144.6m) profit in the second quarter.
The Beijing-based coffee chain, fresh from its first quarterly loss in two years, attributed improved income to record revenues, a significant increase in beverages sold and a ‘surge’ in average monthly transacting customers.
Luckin Coffee achieved 35% year-on-year sales growth in the three months ended 30 June 2024 to reach RMB 8.4bn ($1.1bn) – a 34% increase on the previous quarter. Sales of barista-prepared beverages reached RMB 6bn ($827.6m), representing 71.6% of total net revenues during the period – up from RMB 4.3bn ($602.7m) in the first quarter.
Average monthly transacting customers peaked at 69.7 million in the second quarter – 62% higher than the same quarter of 2023 and 16% above the first three months of 2024.
However, profit earnings were also likely boosted by the relative slowdown of Luckin Coffee’s lightning expansion across China. The small-format coffee chain, which operates a substantial number of delivery and pick-up only locations opened 1,366 net new locations across China in the second quarter to reach 19,924 sites.
The company also opened five net new stores in Singapore – currently its only international market – to reach 37 outlets.
Luckin Coffee’s 7.4% quarter-on-quarter outlet growth is its lowest since the end of 2022 and represents a significant drop-off from the more than 2,500 new outlets it had averaged over the previous three quarters.
“As we move into the second half of 2024, we remain focused on delivering value to customers as well as leveraging our strengthened supply chain and increased store footprint to introduce more innovative and high-quality products to our growing customer base. We believe that we are well-positioned to increase our market share, quality of our products and brand awareness,” said Jinyi Guo, CEO, Luckin Coffee.
The coffee chain reached 20,000 stores earlier this month with a new site in Beijing, a milestone Guo said ‘underscored its dominant position among China’s coffee chains’.
Luckin Coffee surpassed Starbucks’ annual sales in China last year by nearly $350m – the first time it has done so.
Seattle-based Starbucks, which operates more than 7,000 stores in the world’s largest branded coffee shop market, has posted consecutive 12.5% and 8% sales declines in China in its first two quarters of 2024.