Q4 2025 Net Profit Plummets Sharply; How Can Luckin Coffee Sustain Growth?

Luckin Coffee’s Hidden Concerns Are Emerging. According to Luckin Coffee’s released performance, by 2025, its total net revenue will grow by 43%. However, it is important to note that Luckin Coffee’s operating metrics declined in the fourth quarter. In the fourth quarter, Luckin Coffee’s net profit dropped significantly by 39.1% year-over-year. Regarding performance details, Luckin Coffee told China Business Journal: “No comment at this time.”

Wang Zhendong, Chairman of Shanghai Feiyue Investment Management Co., Ltd., told reporters: “By 2025, Luckin Coffee achieved significant growth in revenue scale and store count. Currently, Luckin Coffee has over 30,000 stores, reaching its strategic goal in scale. But scale and profit are hard to balance. The Q4 performance also indicates that Luckin Coffee’s original large-scale expansion strategy has reached a point where adjustments are necessary.”

Q4 Net Profit Down 39.1%

On February 26, Luckin Coffee released its 2025 Q4 and full-year financial reports. Data shows that in 2025, total net revenue increased by 43.0% year-over-year to 49.288 billion yuan; under US GAAP, operating profit was 5.073 billion yuan, up 42.1%.

In terms of store count, Luckin Coffee’s store scale hit a new high in 2025. By the end of 2025, Luckin added 8,708 stores throughout the year, reaching a total of 31,048 stores, a 39% increase year-over-year. This scale places it ahead of competitors. According to the Narrow Door Restaurant Eye App, as of March 8, Cudy Coffee had 16,501 stores. According to the financial report, as of the third quarter of fiscal year 2025, Starbucks had 7,828 stores in China.

However, behind the annual results, Luckin Coffee’s operating metrics declined in Q4. In Q4 2025, total net revenue was 12.777 billion yuan, up 32.9% year-over-year; net profit was 518 million yuan, down 39.1%; GAAP operating profit was 821 million yuan, with an operating margin of 6.4%.

Regarding Q4 performance, Guo Jinyi, co-founder and CEO of Luckin Coffee, said at the earnings call: “This quarter, subsidies on delivery platforms shrank significantly during the industry off-season. Although the proportion of delivery decreased quarter-over-quarter, it remains at a relatively high level.” In Q4, Luckin’s total operating expenses reached 11.955 billion yuan, up 38.9%, with delivery costs at 1.631 billion yuan, up 94.5%. Meanwhile, self-operated same-store sales growth slowed to 1.2%.

Regarding the decline in Q4 2025 performance indicators, Lai Yang, member of the Expert Committee of the China Business Federation, told reporters: “The short-term pressure on profit in Q4 and the significant increase in delivery fulfillment costs objectively reflect the efficiency struggles during rapid expansion. Extreme low-price subsidies effectively achieved initial scale expansion but are unsustainable long-term as they violate basic input-output principles. As Cudy Coffee and Luckin Coffee shrink their low-price product lines, the fresh beverage industry is shifting from price competition to building healthier business models. This can improve store investment returns and, with the surge in delivery orders, companies must reorganize resources and optimize operations across the entire chain to absorb pressure.”

Wang Zhendong believes that under the background of rapid store expansion, Luckin Coffee’s profits are being diluted. He pointed out: “Luckin Coffee’s store expansion is very fast. When pursuing excessive scale, profits get diluted. Several years ago, the total number of coffee stores nationwide was less than 100,000. Based on that, Luckin Coffee’s current store count is nearly half of the total number of coffee stores from a few years ago. Additionally, other brands like Cudy Coffee, Lucky Coffee, etc., are also growing rapidly. In the current consumption environment, with a significant increase in market supply, profits will inevitably be diluted.”

Entering a New Stage

At the industry level, the previous 9.9 yuan price war is coming to an end. According to media reports, from February 2026, Cudy Coffee will only keep 3-7 products in the promotional zone, with other products returning to regular prices of 11.9 to 16.9 yuan. Rumors also suggest that Luckin Coffee’s 9.9 yuan coffee promotion is being scaled back.

Guo Jinyi said: “After experiencing rapid growth in 2025, China’s coffee market is releasing demand faster and becoming more diverse in competition. As a business centered on offline locations and comprehensive consumption experience, the barriers to competition for fresh brewed coffee are not from a single dimension but from end-to-end, full-chain systemic advantages.”

Lai Yang stated: “As the phase of extreme low-price to gain scale ends, the core of competition in the coffee industry has shifted to productivity driven by business intelligence. Facing increasingly dense store dispersal and homogenized competition, companies must seek structural growth in a low-margin era. Long-term business development requires healthy cash flow, transforming large physical store networks into precise, efficient digital interaction points. Only by continuously strengthening the supply chain foundation and ensuring maximum efficiency in functional consumption, while achieving precise supply-demand matching, can companies truly break through low-margin cycles and convert scale into sustainable profitability.”

While the Chinese coffee market is growing rapidly and the environment is constantly changing, Luckin Coffee faces many competitors. In the high-end market, there are brands like Starbucks and Peet’s. In the mid-range market, competition is fiercer, with companies like Cudy Coffee, Nova Coffee, and Lucky Coffee continuing to develop. Public data shows that by the end of 2025, Nova Coffee’s global store count exceeded 10,000.

From the current market landscape, chain industry expert and Hehong Consulting General Manager Wen Zhihong told reporters: “After the competition in 2025, the market pattern for fresh brewed coffee is becoming clearer. First, in terms of store count, revenue scale, and market penetration, affordable coffee has already dominated the market. Second, high-end brands like Starbucks cannot win in the price war in China, leading to a change in market control.”

Regarding the competition Luckin Coffee faces, Wang Zhendong said: “Luckin Coffee and Cudy Coffee are relatively homogeneous competitors. In the future, they will also compete in overseas franchise markets. Compared to Starbucks, Luckin Coffee already has a clear advantage in overall scale and market penetration. However, Starbucks still has advantages in membership systems and brand premium, especially in operating the third space. As the price war recedes, the value-added potential of these spaces will re-emerge, benefiting Starbucks’ development.”

How to Sustain Growth?

In fact, Luckin Coffee is continuously expanding its product categories. On March 4, the reporter saw on Luckin’s mini-program that, beyond coffee, Luckin has expanded into fruit and vegetable teas, light milk teas, mango sago, and other categories. Within coffee, there are also more segmented products like fruit C-style Americanos.

Additionally, Luckin is moving toward higher-end offerings. In February 2026, Luckin opened its first high-end origin flagship store in Shenzhen. On March 4, media reported that Luckin’s shareholder D1 Capital will acquire Blue Bottle Coffee, which will help Luckin develop into the high-end coffee sector.

Catering industry analyst Lin Yue told reporters: “For Luckin, first, it needs to innovate in categories and products, broadening the overall price range through different offerings, such as high-priced products to improve margins. Second, Luckin’s overseas market has huge potential. Going abroad will be an important growth path for Luckin in the future.”

According to a report by Lise Strategy Consulting released in the first half of 2025, Southeast Asia is becoming a main battleground for Chinese new tea drinks and fresh brewed coffee brands overseas. As a truly global category, the competition environment for fresh brewed coffee in Southeast Asia is more complex than for tea drinks. Compared to large-scale expansion of tea brands, Chinese coffee brands are still in the early stages of going abroad in Southeast Asia. Data from Luckin shows that by the end of 2025, overseas stores totaled 160, including 81 self-operated stores in Singapore, 9 in the US, and 70 franchise stores in Malaysia.

Regarding Luckin’s overseas expansion, strategic consultant Shen Yangdi told media including reporters: “In Southeast Asia, Luckin and Cudy Coffee differ slightly in pace and approach. Luckin entered Singapore in early 2023 and only reached Malaysia in January 2025. Cudy Coffee’s approach is more ‘scattershot,’ recruiting franchisees across Southeast Asia to rapidly enter many countries. Overall, Luckin tends to be more steady, first establishing a brand in high-potential markets and then gradually expanding. Compared to Cudy, Luckin’s approach is more cautious.”

Overall, regarding Luckin Coffee’s future development, Wang Zhendong said: “Currently, Luckin needs to shift toward high-quality development, moving from extensive, rapid expansion to more refined, higher-quality operations. After the price war subsides, the competition will no longer be solely about cost performance but will involve more complex factors, including brand premium. In the future, Luckin should reduce discounts, enhance brand premium, and continuously attract users.”