Introduction:In the first nine months of 2018, Luckin Coffee reported sales revenue of 375 million yuan, yet posted a net loss of as much as 857 million yuan, with its gross margin even turning negative at -115.5%. In response to public skepticism, the company stated that the losses were within expectations and emphasized that its subsidy policy was a key strategy for market capture. This article delves into Luckin’s financial data, user growth trends, and official statements, while also examining its coffee bean and equipment choices, offering you an insight into the true face of this rising brand.
According to a leaked B-round financing business plan of Luckin Coffee, in the first nine months of 2018, the brand achieved cumulative sales revenue of approximately 375 million RMB, but its net loss reached as high as 857 million yuan, with a negative gross margin of -115.5%—meaning the gross profit was -433 million yuan. These figures stand in stark contrast to those of the globally renowned coffee chain Starbucks, which has maintained a gross margin exceeding 50% for five consecutive years.
In the face of questions from the media and market investors, Luckin Coffee did not shy away but openly stated that the full-year loss would far exceed the currently disclosed 857 million yuan, emphasizing that aggressive subsidy spending for rapid market expansion is part of its established strategy and that the current financial performance aligns with company expectations.
According to Luckin’s financial projections, the total revenue for 2018 was expected to be 763 million yuan, and by 2021, this figure would skyrocket to 18.5 billion yuan—nearly 24 times that of 2018—demonstrating the company’s strong ambition for future market share. However, achieving such rapid growth will inevitably require substantial market investment and ongoing subsidy policies.
Previously, Beijing Business Today reported that as of August 2018, Luckin Coffee had amassed 1.3 million users. Meanwhile, third-party data firm Jiguang, in a report released on August 31, stated that the daily active users of the Luckin app were about 146,600, though it did not further disclose the number of users who actually completed transactions.
Addressing public concerns over financial data and loss figures, Luckin’s official response stated that it is certain the actual full-year loss will be significantly greater than the numbers already made public. The company further explained that rapidly gaining market share through a subsidy strategy is a predetermined direction for development, so the current loss status is expected and represents an unavoidable cost during the expansion process.
Data also shows that by that time, Luckin Coffee had accumulated over 12 million consumer users in less than a year, with total coffee sales surpassing 85 million cups. Although these achievements came with high losses, they also indicate that its market promotion and user growth strategies have had some effectiveness.
In its response, Luckin further pointed out that it has consistently insisted on using higher-quality coffee beans and professional-grade coffee machines, and has collaborated with multiple top global suppliers. These investments have also gained recognition from many consumers. The brand emphasized that in its future development, it will continue to provide subsidies to users in various forms at different stages, consistently delivering on its promise of high cost-performance and high convenience, while striving to offer coffee products of stable quality.
In summary, Luckin Coffee is currently in a phase of high investment and high growth expansion. Though the losses are significant, they are considered an acceptable cost within its overall strategy. For consumers, the clear short-term advantage is being able to enjoy relatively good-quality coffee at lower prices; whereas for investors or market observers, continuous attention is needed on the transformation of its profit model and long-term operational capabilities.
The above content is compiled by CoffeeHunters, a coffee news website.
