The delivery price war from a year ago continues to shape Luckin Coffee Inc. (LKNCY)'s operating performance.
On November 3, Luckin Coffee Inc. (LKNCY) released its financial results for the third quarter of 2026. By the end of the quarter, the company's total global store count reached 38,909, cumulative transacting customers surpassed 520 million, and monthly average transacting customers hit 123 million, setting a new record.
Some operational data from Luckin Coffee Inc. (LKNCY) as of the end of the third quarter deserves attention. What stands out in this earnings report is a striking contrast in certain figures: during the reporting period, the company's total net revenue reached 17.891 billion yuan, up 17% year-on-year, while operating profit hit 2.756 billion yuan, up 55.1% year-on-year. At the same time, same-store sales at Luckin Coffee Inc. (LKNCY)'s self-operated stores declined 11.1% year-on-year, compared with a 14.3% increase in the same period last year.
Some financial data from Luckin Coffee Inc. (LKNCY) as of the end of the third quarter (unit: RMB million). During the earnings call held on the evening of November 3, Luckin Coffee Inc. (LKNCY) Chairman and CEO Guo Jinyi proactively addressed the same-store sales decline: "Since July, the same-store decline has narrowed month by month, and the improvement trend continues to deepen." Guo stated that amid Luckin Coffee Inc. (LKNCY)'s rapid expansion, future same-store sales may show "wave-like" fluctuations.
Such changes have not altered Luckin Coffee Inc. (LKNCY)'s plans to continue expanding. Guo said during the earnings call that the ceiling for stores in China's coffee market remains very high, and Luckin Coffee Inc. (LKNCY) is "confident in maintaining a competitive pace of store openings," driven by customer demand, to continue expanding its store network and market share.
As delivery subsidies gradually recede, Luckin Coffee Inc. (LKNCY)'s profitability is improving. But as its store count approaches 40,000, with continued expansion and same-store sales declines occurring simultaneously, how should Luckin Coffee Inc. (LKNCY) balance scale growth with per-store operating efficiency?
In the third quarter of 2026, one notable operational shift for Luckin Coffee Inc. (LKNCY) was a clear decline in delivery cup volume, while self-pickup cup volume rebounded.
In terms of revenue performance, Luckin Coffee Inc. (LKNCY)'s self-operated store revenue in the third quarter was 12.940 billion yuan, up 16.8% year-on-year. But while overall revenue continued to grow, same-store sales at self-operated stores fell 11.1% year-on-year.
Why did this happen? Luckin Coffee Inc. (LKNCY) mainly attributed the cause to the "delivery price war" in the same period last year. "In the third quarter of last year, driven by high subsidies from the delivery price war, delivery cup volume and overall per-cup prices both rose, creating a high base," Guo said during the third-quarter earnings call when reviewing the situation. Because the per-cup price on delivery channels was relatively higher, after subsidies contracted, delivery cup volume dropped significantly. Although self-pickup cup volume rebounded somewhat, in terms of both sales volume and price, it still could not fully offset the impact of changes in the delivery business on same-store sales.
It is worth noting that the same-store sales pressure brought by the fading of delivery subsidies is not unique to Luckin Coffee Inc. (LKNCY). Yum China's third-quarter report, also released on November 3, showed that during the reporting period, Yum China's same-store sales fell 3% year-on-year, but same-store transaction volume still grew 3%, with operating profit up 13% year-on-year. Yum China likewise attributed same-store sales pressure to the high base formed by delivery platform subsidies last year.
The reduction in delivery cup volume means Luckin Coffee Inc. (LKNCY) has both losses and gains. As consumers shift from delivery to self-pickup, a sharp drop in delivery expenses has instead freed up profit space for Luckin Coffee Inc. (LKNCY).
The financial report shows that in the third quarter of this year, Luckin Coffee Inc. (LKNCY)'s delivery expenses were 1.789 billion yuan, down 38.1% from 2.889 billion yuan in the same period last year, a decrease of about 1.1 billion yuan over the year. Delivery expenses as a proportion of total net revenue also fell to 10.0% from 18.9% in the same period last year, a drop of nearly 9 percentage points.
The impact of lower delivery costs was directly reflected in improved profit margins. In the third quarter, Luckin Coffee Inc. (LKNCY)'s operating profit margin reached 15.4%, up 3.8 percentage points from 11.6% in the same period last year. At the same time, its self-operated store operating profit reached 3.019 billion yuan, up 55.5% year-on-year; the self-operated store operating profit margin rose to 23.3% from 17.5% in the same period last year.
It is worth noting that while Luckin Coffee Inc. (LKNCY)'s profit margin improved, several other operating costs were still increasing. The financial report shows that in the third quarter, Luckin Coffee Inc. (LKNCY)'s raw material costs rose 23.7% year-on-year, and store rent and other operating costs rose 26.7% year-on-year. Selling and marketing expenses also increased to 976 million yuan from 751 million yuan in the same period last year, up 30% year-on-year.
During the earnings call, Guo also compared the store profitability of this quarter with the third quarter of 2024. He said that although Luckin Coffee Inc. (LKNCY)'s store scale is now nearly twice what it was then, and the proportion of delivery business is also noticeably higher than at that time, the operating profit margin at the self-operated store level has basically recovered to the level of the third quarter of 2024.
Guo said during the call that from July to September this year, the monthly decline in same-store sales gradually narrowed, and after entering the fourth quarter, the improvement momentum strengthened further.
However, margin repair does not mean operating pressure has disappeared. For Luckin Coffee Inc. (LKNCY), whose store count is already approaching 40,000, how to restore growth at existing stores while continuing to expand remains an important issue.
At this earnings call, Guo spent considerable time responding to the same-store sales decline. "We will not view same-store metrics in isolation or statically," Guo said. For relatively mature restaurant companies, same-store growth is an important source of revenue and profit growth. But for China's coffee market, which is still in a rapid development stage, and for companies still expanding, performance growth comes not only from existing stores but also from a continuously expanding store network and improvements in overall operating efficiency.
Guo said that based on operating experience from recent years, Luckin Coffee Inc. (LKNCY) may show "wave-like" changes in same-store metrics in the future. The company believes that a short-term same-store sales decline does not necessarily mean the company's overall growth capability has weakened.
Lin Yue, chief consultant at Lingyan Management Consulting, said in an interview with the reporter that Luckin Coffee Inc. (LKNCY) proposed this concept based on past operating experience and data. From an industry perspective, same-store sales are affected by multiple factors such as store density, the competitive environment, and platform subsidies, and periodic fluctuations are fairly common, though the form and magnitude of fluctuation may differ across brands.
How can one judge whether a same-store sales decline is normal fluctuation or demand diversion caused by store expansion? Lin Yue said: "A relatively direct way is to see whether new stores have opened nearby or new brands have entered, how those stores' order volumes are trending, and then compare that with your own. If both sets of data decline in sync, then it is due to changes in demand in the trade area; if others rise while you decline, then you are being diverted."
Lin Yue also said: "Short-term wave-like fluctuations can be endured, but over the long term they are structurally unsustainable, because long-term negative growth means return attenuation, and the marginal benefit of per-store output is also diminishing." In his view, judging the future solely based on past historical experience may have certain limitations.
The third-quarter profit performance proves that Luckin Coffee Inc. (LKNCY) is improving profitability, while its expansion pace remains quite fast. In the third quarter, the company added 2,599 net stores, and its total global store count rose about 33% from the same period last year. In the third quarter, Luckin Coffee Inc. (LKNCY) added 56 net stores in overseas markets, bringing the total to 279. Among them, there were 103 self-operated stores in Singapore, 22 self-operated stores in the United States, and 154 associated stores in Malaysia.
Regarding overseas business, Guo disclosed during the call that with Singapore stores surpassing 100, Luckin Coffee Inc. (LKNCY) has become the chain coffee brand with the second-largest number of stores locally. At present, Luckin Coffee Inc. (LKNCY) has basically validated the unit economics model in the Singapore market, accumulating experience for further exploration of overseas markets.
As store scale continues to expand, how to improve per-store operating efficiency and achieve profitability while maintaining expansion speed will become an important indicator for testing the quality of Luckin Coffee Inc. (LKNCY)'s growth in the next stage. (All chart data in this article comes from Luckin Coffee Inc. (LKNCY)'s third-quarter report.)
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