The company Luckin Coffee ($LKNCY (+2%) ) is always an exciting one for me. I was invested shortly after the IPO and was then able to sell shortly before the discrepancies in the balance sheet were published. Since then, I am no longer entirely sure, but the company seems to have recovered strongly and can continue to expand its power in China against competitors such as Starbucks. Here is a summary of the latest figures:
Luckin Coffee can look back on an impressive 2024: total net sales increased by 38% to RMB 34.5 billion, while operating profit rose by 17% to RMB 3.5 billion. Aggressive expansion was a key contributor - with over 6,000 new outlets, the network grew to 22,340 locations, cementing Luckin's position as China's largest coffee chain. At the same time, the company attracted more and more customers: The number of monthly active users increased by 48% to 71.8 million, with almost 3 billion cups of coffee sold.#
Continuous innovation in the product portfolio was a key growth driver. A total of 119 new products were launched, accompanied by successful co-branding campaigns that generated 25 million new customers. In the fourth quarter, net sales reached RMB 9.6 billion (+36%), while the operating margin reached double digits for the first time (10.4%). Remarkable: Despite a traditionally weak season, same-store sales growth (SSSG) improved from -13% in the third quarter to -3% in the fourth quarter - and even to positive growth in December.
Luckin Coffee also continued to expand internationally. In China, 991 new stores were opened, including the first five locations in Hong Kong. In Singapore, the branch network grew to 51 locations, and with two openings in Malaysia, Luckin officially entered another Southeast Asian market. To secure the long-term supply of raw materials, the company signed an agreement with ApexBrasil to purchase 240,000 tons of coffee beans over the next five years.
A key topic was the Same-Store-Sales-Growth (SSSG). Management emphasized that like-for-like sales increased significantly in the second half of the year, were positive again for the first time in December and are expected to improve further in 2025. The main drivers are more mature stores and increasing customer loyalty. While prices remained stable, the sales volume per store increased continuously due to growing demand.
The discussion about rising coffee bean rising coffee bean prices. Higher raw material costs could put pressure on margins in the short term, but Luckin believes it is well positioned: A robust supply chain, economies of scale and investments in the value chain should cushion the effect. Surprisingly, the company is not planning any price increases despite rising costs and intends to maintain its popular 9.9 RMB coffee promotion. Instead, Luckin is relying on close partnerships with coffee farmers to ensure a fair distribution of the increased costs.
Another key topic was the margin development. In the fourth quarter, Luckin achieved a double-digit operating margin of 10.4% for the first time, which is a strong indication of the scalability of the business model. The operating margin at store level even amounted to 19.6 %. Analysts wanted to know whether this trend would continue. The management was optimistic: increasing efficiency in the stores, improved logistics and greater use of digital processes should help to further increase profitability.
The international expansion was also a hot topic of discussion. With its market entry in Malaysia, Luckin is relying on the franchise model and testing an alternative expansion approach for the first time. Analysts asked about the scalability of this model. The management sees great potential for franchise partners in regions with a high coffee culture, but retains control over the branch network for China and other core markets.
Conclusion: Luckin Coffee remains in the fast lane
With strong sales growth, consistent expansion and increasing margins, Luckin Coffee remains a dominant force in the Chinese coffee market. The company is proving that it can extend its market leadership through continuous innovation and an aggressive growth strategy. Luckin Coffee thus remains one of the most exciting growth stories in the Asian consumer market.
I hope this summary has helped you.
I will definitely stay tuned!
