"There is no one-size-fits-all solution in this market—no single winning move. The real winning move comes from relentless focus, sustained dedication, and the strength of an entire system without any weaknesses."
Hui Li, Chairman of Luckin Coffee, speaks softly and deliberately. The driving force behind China’s largest coffee brand appears reserved.
Meeting Li in late autumn in Beijing, he had just returned from Shenzhen after an overseas business trip. Though he looks to be in his early 40s, he is actually 57—a testament to his disciplined lifestyle, which includes three to four weekly workout sessions lasting one to two hours each, involving running, cycling, and sports.
During the hour-long conversation, Li never set his coffee aside. His assistant brought in an Americano, while the latte prepared for him remained untouched—until both cups were eventually emptied. Li admits to being a heavy coffee drinker, needing it constantly during meetings and even before workouts to boost performance. "On average, I probably drink six to seven cups a day," he estimates.
Coffee has undoubtedly been a defining chapter in Li’s life. He holds an undergraduate degree from Renmin University and an MBA from Yale School of Management. After graduation, he worked at Morgan Stanley and Goldman Sachs before joining Warburg Pincus in 2002. In 2016, he founded Centurium Capital, best known for its investment in Luckin Coffee.
Luckin Coffee was founded in Xiamen in October 2017. After leading two funding rounds in 2018, Centurium became Luckin’s largest external investor. In 2020, Luckin was embroiled in an accounting scandal. During its darkest hour, Centurium injected capital twice in 2021 and 2022, becoming the controlling shareholder.
Over the past five years, Luckin staged a remarkable turnaround—from facing delisting, losses, and massive penalties to achieving profitability and surpassing Starbucks as China’s largest coffee chain in 2023. On November 17, Luckin reported Q3 2025 revenue of RMB 15.287 billion ($2.1 billion), up 50.2% YoY, with GAAP operating profit of RMB 1.777 billion and an operating margin of 11.6%. Total stores reached 29,214.
Regarding recent IPO rumors, Luckin CEO Jinyi Guo stated during the earnings call, "The company currently has no definitive timeline for returning to the mainboard." Li also declined to comment on speculation that Centurium is considering a bid for Costa Coffee.
In April 2025, Li rejoined Luckin’s board as Chairman. Why did he step into the spotlight now? What was the secret behind Luckin’s comeback? Are there new expansion plans? What’s the logic behind its mix of company-owned and franchised stores?
In an exclusive interview, Luckin Coffee Chairman and Centurium Capital founder Hui Li addressed these questions. Below are edited excerpts:
**"Becoming Luckin’s Chairman Was a Natural Progression"** **Q:** You’ve mostly stayed behind the scenes. Why did you decide to step forward as Chairman in April 2025? **Li:** It was a natural progression. Although I left Luckin’s board in 2020, Centurium, as the controlling shareholder, has been guiding the company step by step. After years of adjustments, Luckin is now at a critical stage—whether in domestic expansion or its "going global" strategy. The board wanted me to play a bigger role.
**Q:** How are you involved in Luckin’s management? **Li:** Our involvement is primarily at the board level, but our board works closely with operations. We’ve built a modern corporate governance system where shareholders, the board, and management each have clear roles.
We engage frequently with the management team, holding monthly meetings. To make informed decisions, we stay close to the front lines. In 2023, I spent two to three months visiting over a dozen regional offices.
Luckin is unique in balancing corporate governance with the agility of a startup—essential in China’s fast-moving, competitive market. As Chairman, Luckin now demands more of my time, but it’s a team effort.
**Q:** What’s your management style? **Li:** Day-to-day operations are handled by the team. But transparency is central to Luckin’s culture—no unilateral decisions, just open debate.
Our board is distinctive in its proximity to operations. I’ve visited nearly all regional offices to stay close to the action. Ultimately, management makes decisions, but board guidance is crucial—whether to prioritize short-term earnings or long-term market positioning.
**Q:** With over 20 years in investing, how do you assess the Luckin investment? **Li:** (Laughs) For me, Luckin will likely be one of my most significant investments—perhaps the one I’ll reminisce about most in old age. But Luckin’s story is just beginning. I hope it becomes an enduring, truly great company.
**How Luckin Made Its Comeback** **Q:** Over the past few years, Luckin revived itself and achieved rapid growth. What were the key moves? **Li:** Luckin is now eight years old, with five years since the scandal. The real turnaround happened in those five years.
First, we overhauled governance, shifting from a family-style structure to a modern corporate system. This included revamping incentives, rules, management, talent, and underlying business logic.
"Truth and pragmatism" became core values, embedded in operations and enforced through technology. We also adjusted talent, management, and incentives. In early 2021, we allocated ~11% of shares for employee equity, broadening participation.
Second, we rebuilt the business model and unit economics, integrating front, middle, and back offices through digital collaboration. We broke down data silos, enabling true operational digitization.
We also invested heavily in supply chain upgrades.
**Q:** What was the biggest challenge in breaking data silos? **Li:** Organizational structure. Previously, data wasn’t interconnected—between departments or between business and finance. We redesigned the data architecture and removed barriers, creating a unified operational system.
But digitization is just the tool. Organizational synergy is the "1," and digitization adds the "0s." We digitized every link—supply chain, stores, customer ops, talent—to reshape efficiency.
For example, Luckin’s 29,000+ stores upload real-time equipment and inventory data to the cloud, boosting operational visibility.
**Q:** Did Luckin close stores during the restructuring? **Li:** In 2020, Luckin had 4,000+ stores; fewer than 1/3 remain. Many were opened hastily for scale. We closed the rest, consolidated, and rebuilt.
**Q:** What else was done? **Li:** Beyond store adjustments, we cut costs and improved efficiency. New products drove volume and unit profitability, replacing loss-making discounts. We also optimized supply chain costs and reopened stores in prime locations to achieve breakeven.
**Q:** How much has efficiency improved since 2020? **Li:** The old model was unsustainable—selling coffee at a loss. In 2019, revenue was under RMB 3 billion, but losses exceeded RMB 3 billion.
Now, even at RMB 10 per cup, profitability is possible. Efficiency gains—in operations, locations, R&D, supply chain, and labor—made the model viable.
For example, Luckin’s 170,000+ front-line staff (including delivery riders) are managed via digital scheduling, far outperforming peers.
Scale helps, but systemic efficiency is Luckin’s real edge—a reflection of post-2020 business model reinvention.
**Q:** How long did the transformation take? **Li:** It’s ongoing. Today, 700–800 R&D staff are embedded in business units.
**Q:** When did Luckin achieve breakeven? **Li:** Board adjustments were completed by August–September 2020. Revenue hit RMB 4 billion in 2020 and RMB 7.9 billion in 2021, achieving operational breakeven after accounting for legacy costs.
**Q:** Most companies wouldn’t survive such a crisis. How did Luckin hold together? **Li:** Unlike Western firms with mature governance, Chinese companies face bigger challenges in leadership transitions.
The key was rebuilding governance—establishing stable control and a strong board. Centurium’s capital injections in 2020–2022 stabilized ownership, ensuring strategic focus.
**Q:** As an investor turned operator, what did this shift mean for you? **Li:** It’s a challenge. Controlling a business differs from financial investing. Centurium is an industrial investor—we aim to build Luckin into a lasting enterprise.
**New Challenges** **Q:** How intense is China’s "coffee war" now? **Li:** Extremely competitive, with new factors—models, products, players—sparking battles yearly.
This year’s "delivery war" is ongoing but also an opportunity to convert consumers to freshly made drinks.
Luckin had 22,000+ stores in early 2025; now it’s 29,000+. We adjusted plans mid-year to accelerate expansion.
**Q:** When did you first hear about JD.com’s delivery push? **Li:** Around February.
**Q:** Initial reaction? How did Luckin adjust? **Li:** We saw it as disruptive. After observing, we shifted from private traffic to open platforms.
Third-party platform traffic now accounts for a larger share, though still lower than peers (some rely 80–90% on platforms).
**Q:** Who funds platform subsidies—you or the platforms? **Li:** Both. Subsidies are dynamic, varying by product, time, and region. Our digital ops enable precision targeting.
**Q:** Does this strain fulfillment? **Li:** Yes—it tests coverage, delivery, and experience. Platforms prefer capable partners. We’re leveraging this to expand coverage.
**Q:** Did Luckin bid for Starbucks China? **Li:** No.
**Q:** Could Starbucks’ local investors speed up its China growth? **Li:** China’s market is vast enough for multiple brands. Starbucks may localize further, but we’ll wait and see.
**Q:** With so many players, how do you view China’s coffee market? **Li:** It’s hyper-competitive but still nascent. Last year, China consumed ~250k tons of coffee beans vs. the U.S.’s 1.5M+ tons.
This is a high-growth, long-term opportunity—we’re nowhere near the ceiling.
**Q:** Does "price war" anxiety affect profits? **Li:** Pricing pressure exists, but we focus on self-improvement—meeting diverse needs while boosting efficiency.
Future competition hinges on efficiency. Profitability at RMB 12 or RMB 15 reflects different capabilities.
**Q:** Can Luckin profit at RMB 9.9 per cup? **Li:** It depends on the product, but even with heavy subsidies, we maintain profitability.
**Q:** Some say Luckin nets 13% at RMB 9.9. True? **Li:** Not per product. We look at gross margins. Overall, efficiency absorbs subsidy costs.
**Q:** Q3 2025 operating margin was 11.6% vs. ~15% in Q3 2024. Can you sustain this? **Li:** Margins vary by level. Store-level margins peaked near 30% in 2022; now they’re ~20%. Corporate operating margins are ~10–15%, which we manage.
**Q:** How do you balance rapid store growth with unit economics? **Li:** The board prioritizes long-term growth. Some unprofitable stores may be "early" rather than "wrong." We wait for demand to catch up.
**Q:** What’s Luckin’s ultimate store target? **Li:** It depends on customer growth. With 420M+ users and rising coffee consumption, the ceiling keeps rising.
**Q:** Why is 2/3 of Luckin’s network company-owned? **Li:** Self-owned stores dominate in dense, mature markets; franchises work in lower-tier cities where partners excel in site selection.
Franchisees leverage Luckin’s systems for rapid, profitable expansion.
**Luckin Can’t Rely Only on Coconut Lattes** **Q:** Has Luckin slowed its co-branding pace? **Li:** No. Co-branding is now an industry norm. Luckin launches collaborations every 1–2 weeks, with major Q4 tie-ups planned.
**Q:** Some say Luckin lacks enduring hits like its Coconut Latte. Thoughts? **Li:** We need a broad product matrix, not over-reliance on one item.
Beyond Coconut Lattes and fruit-flavored Americanos, our lineup includes flavored lattes, light milk teas, and fruit teas—all with strong repeat rates.
**Q:** What’s the role of light milk tea in Luckin’s strategy? **Li:** China’s coffee and tea markets overlap. Like Starbucks’ non-coffee drinks abroad, we cater to varied tastes.
Light milk tea is here to stay.
**Q:** Some say Luckin resembles a milk tea brand. Does this affect its global coffee positioning? **Li:** Coffee remains core, but we see a unified ready-to-drink market. We aim to be a mainstream player in this space.
**Luckin’s Global Push Isn’t a Gimmick** **Q:** How’s overseas expansion progressing? **Li:** It’s deliberate. We believe Luckin can become a global coffee brand.
Singapore was our first stop (2023). With 70+ stores, we’re nearing #2 locally and are profitable.
In 2025, we entered Malaysia (via franchising) and the U.S. (5 stores in NYC). The U.S. is a mature market where we’re testing waters.
**Q:** How does localization differ by market? **Li:** Challenges vary—operations, labor, supply chain. Some ingredients lack local suppliers. Compliance and labor rules differ.
We’re learning, investing in store networks, supply chains, and branding to build cost and experience advantages.
**Q:** Is overseas IT the same as China’s? **Li:** No. For compliance, systems are locally deployed.
**Q:** How do you localize suppliers? **Li:** Sometimes we bring Chinese suppliers abroad. For niche items like "thick milk," U.S. suppliers don’t exist yet.
**Luckin’s Growth Flywheel: Systems, Organization, Supply Chain** **Q:** How does Luckin adjust strategies so quickly (e.g., adding 8,000 stores this year)? **Li:** Operational agility stems from organizational synergy—aligned goals, values, and mechanisms embedded in operations.
In 2022, with 8,000+ stores and 30% margins, competition was light. By 2023, rivals emerged. We chose market leadership over short-term gains.
Surviving China’s market requires both governance and startup-like agility—Luckin’s comeback hinged on this balance.
**Q:** Luckin has a "big front end, small middle office" (20K+ HQ staff vs. 170K+ front-line). How does this test systems? **Li:** Luckin’s self-developed digital systems create generational efficiency gaps vs. traditional chains.
We’re digitizing what peers standardized industrially.
**Q:** How will Luckin’s organization support 30K–40K+ stores? **Li:** Rapid expansion isn’t new. In 2023, we doubled stores to 8,000. This year’s 35% growth (22K → 29K) is manageable.
Post-2020, we built organizational muscle to scale.
**Q:** What supply chain gaps remain for future growth? **Li:** Many upstream items (e.g., agricultural products) lack mature suppliers. As we innovate, we’re expanding sourcing.
For example, Luckin uses 70% of China’s commercial coconut supply. After shortages for Coconut Lattes, we secured an Indonesian island for sourcing and invested in processing.
We’re also nurturing domestic coffee machine suppliers to reduce reliance on imports.
Becoming a global brand requires filling many gaps.
**Q:** As the market leader now, what’s Luckin’s next "winning move"? **Li:** There’s no single move—it’s about relentless focus and systemic strength without weaknesses.
Ready-to-drink is a unique business—brand-heavy, operationally intensive, and product-driven.
Coffee is a long, asset-heavy chain—supply, product, stores, delivery, customer ops, branding, talent. No weak links can cap potential.
Luckin’s biggest edge lies in building systemic advantages.
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