Trendy collaboration pushed up third-quarter revenue

The collaboration with the nation's top liquor brand has pushed up a surge in new customers and revenues in the third quarter for Luckin Coffee, which has plans to continue its affordable price strategy and store expansions.

According to the company's third-quarter financial results, the average monthly transacting customers in the quarter was 58.5 million, a jump of 132.9 percent from 25.1 million in the same quarter of 2022. The company has seen new customers of more than 30 million in the quarter.

The company has attributed the record high of new consumers and transacting customers to its latest phenomenal product. Luckin in September teamed up with liquor maker Kweichow Moutai to roll out a liquor-flavored coffee drink, which has sold 5.42 million cups — worth 100 million yuan ($13.66 million) — on launch day.

Total net revenues in the third quarter were 7.2 billion yuan ($986.8 million), an increase of 84.9 percent from 3.89 billion yuan in the same quarter of 2022.

Net new store openings during the third quarter were 2,437, including eleven new store openings in Singapore, resulting in a quarter-over-quarter store unit growth of 22.5 percent from the number of stores at the end of the second quarter of 2023. By the end of the third quarter, the company had operated 13,273 stores, including 8,807 self-operated stores and 4,466 partnership stores.

Revenues from self-operated stores in the third quarter were 5.14 billion yuan ($704.6 million), up 79.3 percent from 2.87 billion yuan in the same quarter of 2022.

Revenues from partnership stores in the third quarter were 1.84 billion yuan ($252.3 million), an increase of 104.7 percent from 899.1 million yuan in the same quarter of 2022.

"We are proud to report another strong quarter, where we achieved record revenue and increased our footprint with more than 2,400 net new store openings," said Guo Jinyi, chairman and chief executive officer of Luckin Coffee.

"Our new, innovative product offerings and marketing efforts continue to resonate with customers, driving significant growth in both revenue and monthly transacting customers."

As a result of Luckin's pricing strategy, the coffee chain house's operating profit margin in the third quarter fell from 15 percent in the same period last year to 13.4 percent.

Guo said in the fourth quarter, the company will focus on affordable pricing and expansion strategy to serve more customers and expand its global footprint. By the end of this year, it is expected the company's total number of stores to reach 15,000.