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

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

Luckin Coffee may be facing its most complicated quarter since its “10,000 stores era.”

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

However, on the flip side of scale effects, Luckin is experiencing the awkwardness of increasing revenue without increasing profit: in Q4 last year, total net revenue grew 32.9% year-over-year to 12.777 billion yuan, but net profit declined 39.1% year-over-year to 518 million yuan.

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

Scale is expanding, profits are shrinking

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

The financial report shows that in 2025, Luckin’s total net revenue reached 49.288 billion yuan, up 43.0% year-over-year, with net profit increasing 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 slowdown was especially evident in Q4: revenue grew 32.9% year-over-year to 12.777 billion yuan, but net profit fell 39.1% to 518 million yuan. This means that although more coffee was sold, the profit per cup for the company was thinning.

△Image source: Hongcan.com

The reasons include rapid store expansion leading to higher rent, labor, and operational costs, as well as seasonal factors. An important factor not to be overlooked is that, amid the food delivery wars, sales and delivery-related costs related to delivery have also risen sharply.

The financial report shows that in Q4 2025, delivery costs reached 1.631 billion yuan, a significant 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, as the company paid higher commissions to food delivery platforms with increased delivery volume.

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 is. He emphasized this point as early as Q3 last year: “Over time, the coffee industry will naturally shift back 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 Q1, Q2, and Q3 last year, these figures were 8.1%, 13.4%, and 14.4%, respectively. This indicates that after several quarters of rapid growth, the further increase in store density has diluted the growth potential of existing stores.

△Image source: Luckin Q4 2025 financial report

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, becoming the second-largest coffee chain there, and its business in Malaysia is reportedly growing rapidly. Across the ocean in the U.S., it is seen as a new market to explore, with Luckin currently operating 9 stores in the United States.

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 divergence.

Compared to the aggressive full-scale expansion 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 prices and broaden the price range.

△Image source: Luckin Q4 2025 financial report

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 continued to diversify, non-coffee beverages accounted for over 20% of total sales in 2025, 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-like competition.

Industry-wide differentiation also confirms this logic. Traditional players who built advantages through low-price strategies are now adjusting tactics to improve profits. For example, on February 1 this year, Kudi officially canceled its 9.9 yuan promotion site-wide, with only some products continuing to be offered at special prices without limits.

Meanwhile, new entrants are eyeing the coffee market with aggressive moves.

For instance, Guming has expanded its coffee product line significantly, launching limited-time promotions that once pushed coffee prices down to 2.9 yuan. Currently, most of its coffee products are priced between 9.9 and 13.9 yuan, with the cheapest American 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. Some Hotei stores also launched coffee products as low as 3.9 yuan last year. Wallace even introduced a 9.9 yuan monthly coffee card, which could be exchanged for up to 210 cups, earning comments that it was selling coffee at “boiling water” prices.

△Image source: Guming Tea Drink Ordering Mini Program

Many of these brands are crossovers from other fields, with long-standing supply chains and store scales comparable to established players. By adding product lines, they enter the coffee sector with lighter models and lower costs. Once successful, they can rapidly expand, exerting significant pressure on the existing market landscape.

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

Guo Jinyi emphasized the importance of factors beyond 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 holds strong competitive advantages across these dimensions.

“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 Origin flagship at Shenzhen Xinghe Twin Towers. The store features a global origin theme, with an Origin Lab, coffee master space, and an exclusive selection of premium specialty coffees.

△Image source: Hongcan.com

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, Big C Capital, intends to acquire Costa Coffee and Blue Bottle Coffee, aiming to leverage their high-end positioning to complement Luckin’s scale and efficiency.

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

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