Revenue nearly 50 billion, but profits shrink: Where did the money go for Luckin with 30,000 stores?

No longer obsessing over Luckin Coffee’s 9.9 yuan price point and the increasingly fierce coffee price wars.

This article is an original first publication by Hongcan.com (ID: hongcan18), written by Ke Yule; edited by Fang Yuan.

Luckin Coffee may be facing its most complicated quarter since its “Ten Thousand Stores Era.”

On the evening of February 26, Luckin Coffee (LKNCY) released its unaudited Q4 2025 performance and annual financial report. The data remains impressive: annual revenue approaching 50 billion yuan, with an average of 23 new stores opening daily.

However, on the flip side of scale effects, Luckin is experiencing an awkward situation of growing revenue but not profits: in Q4 last year, total net revenue increased by 32.9% year-over-year to 12.777 billion yuan, but net profit declined by 39.1% year-over-year to 518 million yuan.

After surpassing 30,000 stores, how can Luckin continue to seek growth?

01. Scale is expanding, profits are shrinking

Over the past year, relying on the expansion of over 8,000 new stores and increased transaction volume driven by food delivery wars, Luckin Coffee has pushed its revenue scale to new heights.

The financial report shows that in 2025, Luckin’s total net revenue was 49.288 billion yuan, a 43.0% increase year-over-year, with net profit up 21.6% to 3.6 billion yuan.

“For Luckin Coffee, 2025 is about laying a solid foundation and achieving rapid growth. As China’s coffee market continues to accelerate, we stay focused and flexible, continuously executing a scale strategy centered on store expansion, customer growth, and product innovation,” said Guo Jinyi, co-founder and CEO of Luckin Coffee.

But on the other side of scale, profitability slowed significantly in the fourth quarter: revenue grew 32.9% year-over-year to 12.777 billion yuan, but net profit dropped 39.1% to 518 million yuan. This means that although more coffee is being sold, the profit per cup for the company is thinning.

The reasons include the rapid expansion of stores leading to increased operational costs such as rent and labor, seasonal factors, and importantly, the rising costs related to food delivery sales and distribution amid the delivery wars.

The financial report shows that in Q4 2025, delivery costs reached 1.631 billion yuan, a sharp increase of 94.5% compared to 839 million yuan in the same period in 2024. Sales and marketing expenses also rose 31.9% year-over-year to 756 million yuan, because as delivery volume increases, the company has to pay higher commissions to food delivery platforms.

However, Guo Jinyi stated that these fluctuations are within expectations. He also believes that in the long run, food delivery won’t be the main consumption mode for coffee; self-pickup will be. He emphasized this point as early as Q3 last year: “Over time, the coffee industry will naturally revert to a primarily self-serve model, although this transition will take some time.”

Another warning sign is that in Q4 2025, the sales growth rate of Luckin’s self-operated stores was only 1.2%. In contrast, in the first three quarters of last year, these figures were 8.1%, 13.4%, and 14.4%. This indicates that after several quarters of rapid growth, the expansion of store density has begun to dilute the growth potential of existing stores.

In fact, 2025 is indeed a year of scale frenzy for Luckin Coffee.

In terms of store expansion speed, Luckin remains in a high-growth phase, with a net increase of 8,708 stores globally, of which 8,599 are in China. The total number of stores increased by 39.0% year-over-year to 31,048.

For a long time to come, store expansion will remain a key strategy for Luckin. Guo Jinyi believes that the domestic coffee industry is still in its early development stage with strong upward potential. On one hand, compared to other mature markets, China still has room to improve in terms of market penetration and per capita consumption. On the other hand, the food delivery wars have validated and further stimulated coffee demand in China.

In overseas markets, as of last year, Luckin has over 80 stores in Singapore, making it the second-largest coffee chain there, and its business in Malaysia is reportedly growing rapidly. The U.S., across the ocean, is seen as a new market to explore, with Luckin currently operating 9 stores in the United States.

02. No longer obsessing over 9.9 yuan: where is the coffee price war headed?

Many signs indicate that the price war in the coffee sector is experiencing a divide.

Compared to the aggressive full-scale strategy early on, Luckin in 2025 has shown a stronger intention to manage pricing.

This shift is most directly reflected in Luckin consciously “tightening” its low-price strategy. In fact, as early as March 2024, Luckin restricted the coverage of its 9.9 yuan promotion, and last year, it focused more on new product launches, collaborations, and product line diversification to raise average selling prices and broaden the price range.

Last year, Luckin launched over 140 new products, with a focus on non-coffee items such as fruit teas, baked goods, and snacks. As the product matrix continues to diversify, in 2025, non-coffee beverages accounted for over 20% of total sales, reaching as high as 23.6% in Q4. These non-coffee products not only offset the gross margin pressure of coffee single items but also helped Luckin find new growth points amid the milk tea competition.

Industry segmentation also confirms this logic. Old players who previously gained advantages through low-price strategies are now adjusting tactics to improve profits. For example, on February 1 this year, Kudee officially canceled its entire 9.9 yuan promotion, leaving only some products with limited-time discounts.

Meanwhile, new entrants in the coffee sector are eyeing the market aggressively.

For instance, Guming has expanded its coffee product line significantly, launching limited-time promotions that once pushed coffee prices down to 2.9 yuan. The mini-program shows most of its coffee products are priced between 9.9 and 13.9 yuan, with the cheapest American coffee at only 7.9 yuan. In September last year, JD’s self-operated brand “Qixian Coffee” offered a “double cup American” set for just 9.9 yuan on its platform. Hote Mai also launched coffee products as low as 3.9 yuan last year. Wahaha launched a 9.9 yuan coffee monthly card, which can be exchanged for up to 210 cups, and was described as “selling coffee at the price of ‘boiling water.’”

Many of these brands are cross-industry entrants with long-standing operations in their original fields. Their supply chain and store scale are comparable to older players. By adding product lines into coffee, their models are lighter and costs lower. Once successful, they can rapidly expand on a large scale, exerting significant pressure on the existing market landscape.

Faced with increasingly intense price competition, Luckin is trying to find a new coordinate beyond pricing.

Guo Jinyi emphasized the importance of factors other than price in the competition in the coffee sector.

“Today’s freshly brewed coffee brands can no longer rely solely on pricing, blockbuster products, or single marketing campaigns for lasting success. Instead, long-term competitiveness increasingly depends on a comprehensive set of capabilities, such as brand recognition, customer experience, emotional connection, product development, and store coverage.”

He is confident that Luckin has strong competitive advantages in all these areas.

“Coffee is a highly mature category with high consumer awareness… We continuously strengthen our coffee identity through product innovation, customer experience, brand activities, and IP collaborations.” Guo Jinyi said. From June to October 2025, Luckin’s monthly active transaction users exceeded 100 million for five consecutive months.

Recently, Luckin opened its 30,000th store—the Shenzhen Xinghe Twin Towers Origin Flagship. This store features a global origin theme, with an Origin Lab, coffee master space, and an exclusive selection of boutique specialty coffee menus.

The company states, “This flagship demonstrates Luckin’s ability to lead industry development by advancing coffee craftsmanship and enhancing customer experience while scaling.”

There have also been rumors that Luckin’s backer, Dachen Capital, intends to acquire Costa Coffee and Blue Bottle Coffee, aiming to leverage these brands’ high-end positioning to complement Luckin’s scale and efficiency.

From pioneering the 9.9 yuan coffee to actively raising prices, it’s clear that Luckin Coffee is redefining the question: “Who is Luckin?”