Luckin Coffee posts strong third quarter and confirms US launch plan

Luckin Coffee now operates 21,343 stores and has unveiled plans for a US launch | Photo credit: P.L.

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Luckin Coffee has sustained strong trading momentum in the third quarter after turning a corner on slower outlet growth and an operating loss earlier in the year.

According to its latest results, the value-focused operator achieved net revenues of RMB 10.18bn ($1.45bn) during the three months ended 30 September 2024, up 31% on the previous quarter and 41.4% higher than the same period in 2023.

GAAP operating income reached RMB 1.55bn ($222.1m) in the third quarter of 2024, up from RMB 961.7m in the same quarter of 2023. 

Luckin opened 1,382 net new stores during the period to reach 21,343 stores, which comprise 13,936 company-owned and 7,407 franchised stores, and combined achieved total quarter-over-quarter outlet growth of 6.9%.

In a press release, the Xiamen-based coffee chain reaffirmed its commitment to international expansion and highlighted the 45 company-owned stores it has opened in Singapore since March 2023, which achieved net revenues of RMB 91.4m during the period.

Notably, Luckin Coffee confirmed reports that it is ‘actively evaluating’ a US launch but indicated it would tread carefully in the home market of its major competitor in China, Starbucks.

‘Given the maturity, saturation, and competitiveness of the US coffee market, we intend to approach our expansion strategy there with careful consideration and a disciplined execution plan,’ the company said.

The coffee chain also confirmed it was exploring other international markets but cautioned its international segment would unlikely to be profitable in the near-term, citing its experience in China, where it took Luckin more than five years to achieve its first quarterly profit.

“Despite the many coffee options available in China, Luckin remains a preferred choice for customers, as reflected in our record average monthly transaction user count and the addition of 1,382 net new stores. In line with our commitment to invest in a high-quality supply chain and boost efficiency, we also broke ground in August on our new state-of-the-art Innovation and Production Center in Qingdao, a strategically important economic hub in China,” Dr. Jinyi Guo, Chairman and CEO, Luckin Coffee.

Highlighting fierce competition in China’s branded coffee shop market, particularly with fast-growing rival Cotti Coffee, Luckin saw company-owned store like-for-like sales growth fall to 13.1% compared to 19.9% growth posted for the same period in 2023.

Nevertheless, Luckin’s third quarter saw the chain serve a record 79.8 million transacting customers, up from 69 million in the previous quarter. The digital-first chain also continues to see strong delivery sales, with channel revenues reaching RMB 230.4m ($32.9m).