Introduction:In the second quarter of 2023, Luckin Coffee surpassed Starbucks China for the first time with a total net revenue of RMB 6.2014 billion, while also joining the "10,000-store club." This analysis will break down its store-franchising policy, the operational logic behind the RMB 9.9 promotion, and explore the market considerations behind its premium pricing strategy in Singapore, helping readers understand the competitive dynamics among chain coffee brands.
The Q2 2023 financial report shows that Luckin Coffee achieved a total net revenue of RMB 6.2014 billion, an annual growth rate of 88%, a figure that historically surpassed Starbucks China in revenue scale. More crucially, the brand’s number of stores also exceeded 10,836, including 7,188 directly operated outlets, officially making it the first chain coffee company in the Chinese market to reach the 10,000-store milestone.
According to U.S. GAAP, Luckin’s operating profit for the quarter was RMB 1.173 billion, with an operating profit margin as high as 18.9%, both reaching historical peaks. This growth momentum mainly came from the implementation of the new "store-franchising" model and an aggressive store expansion strategy, with a net increase of 1,485 stores in the single quarter, a sequential growth of 15.9%.
Notably, Starbucks China’s revenue for the same period, converted to RMB, was about RMB 5.96 billion (approximately USD 822 million), which, although up 51% year-on-year, still lagged behind Luckin’s performance. With the opening of its flagship store on Zhongshan Road in Xiamen in June, Luckin China officially crossed the 10,000-store threshold and simultaneously launched the "Celebration for 10,000 Stores" campaign, introducing a "RMB 9.9 coffee every week" promotion to attract consumers.
Luckin’s Chairman and CEO, Guo Jinyi, stated during the earnings call that in the second half of the year, the company will continue to deepen its customer value strategy and reward users through economies of scale. It was disclosed that since the launch of the RMB 9.9 campaign in June, the number of monthly active customers exceeded 50 million, demonstrating the strong appeal of the adjusted price range to the market. However, many store employees have also reported on social media that their workload has significantly increased during the promotion period.
To consolidate its market position, Luckin announced that the RMB 9.9 promotion will be normalized for at least two years. Guo Jinyi emphasized that the brand can maintain affordability while ensuring that profitability remains at a healthy level. This long-term strategy is expected to further influence the price distribution within the domestic coffee consumption market.
In terms of overseas expansion, however, Luckin has adopted a pricing logic that is markedly different from its domestic approach. Taking the Singapore market as an example, most products at its local stores are priced between 6 and 8.5 Singapore dollars (approximately RMB 31 to 44), with its signature Raw Coconut Latte originally priced at 8 Singapore dollars—significantly higher than the standard latte at Starbucks’ local outlets. Compared to local budget chain brands like Flash Coffee, Luckin’s prices are even double, a move that has sparked both positive and negative discussions among local consumers.
The above content is compiled by CoffeeHunters, a coffee news website.
