eastwest connect

Luckin Coffee Q1 2023 financial report disclosed | Operating profit greater than 670 million yuan | The goal of 10,000 stores will be achieved in the first half of the year


It is learned on May 1 from Science and Technology Innovation Board Daily that
Luckin Coffee (OTC: LKNCY) just disclosed its financial report for the first quarter of 2023.

The financial report shows that as of March 31, 2023, Luckin Coffee’s total net income in the first quarter was 4.4367 billion yuan, a year-on-year increase of 84.5%; The operating profit under the US accounting standards (GAAP) was 678.4 million yuan, and the operating profit margin was 15.3%.

At the same time, the average monthly number of trading customers of Luckin Coffee in the first quarter was approximately 29.49 million, a year-on-year increase of 84.6%.

At the end of 2022, Luckin Coffee reopened the number of joint venture partners in the lower-tier-city market. This policy also put the growth of the number of Luckin stores on the fast track again. Before the opening of joint venture partners, in the third quarter of 2022, the number of net new stores opened by Luckin Coffee were 651; After the opening of the quota, in the first quarter of 2023, Luckin Coffee had a net increase of 1,137 stores, including two stores in Singapore, and the total number of stores increase by 13.8% month-on-month.

As of the end of the first quarter, the number of Luckin Coffee stores reached 9,351, including 6,310 self-operated stores and 3,041 joint-operated stores.
Among the new stores, there are 2 stores in Singapore. Luckin told reporters that the landing of the Singapore store is an important first step for Luckin Coffee to deploy overseas markets, and it is trying to run through the business model of Luckin in overseas markets through the Singapore market.

From the perspective of revenue composition, the revenue of Luckin Coffee’s self-operated stores in the first quarter was 3.1404 billion yuan, an increase of 74.9% over the same period in 2022. The store-level profit of self-operated stores in the first quarter was 791.6 million yuan, with a profit margin of 25.2%. The same-store sales growth rate of self-operated stores was 29.6%. The revenue of joint stores in the first quarter was 1.1354 billion yuan, an increase of 106.7% over the same period in 2022.

At the same time, Guo Jinyi, chairman and CEO of Luckin Coffee, said at the performance meeting that its “10,000 stores plan” will be realized in the first half of this year. This also means that Luckin Coffee will open more than 649 stores in the second quarter of 2023.

Coincidentally, just a few days ago, Starbucks founder Howard Schultz publicly stated during his visit to Peking University that the number of Starbucks stores in China will exceed 10,000. This means that after a long “fight” with Starbucks, Luckin Coffee will open 10,000 stores before Starbucks.

The two coffee giants chose to open stores in low-tier-city markets almost at the same time. Although faced with competition from emerging brands such as Cudi Coffee and Nova Coffee, at the performance meeting, Luckin Coffee Guo Jinyi said that more coffee brands entering the competition will bring consumers more choices, and Luckin Coffee will be more proactively participate in the competition and give back to customers with more friendly prices for a long time.

Recently, Luckin Coffee once again launched the 9.9 yuan coffee drinking campaign, which is regarded by the industry as directly facing the competition of Cudi coffee. After Luckin’s 9.9 yuan activity was launched, Cudi Coffee once again withdrew from the 8.8 yuan activity on Douyin.

At the performance meeting, Guo Jinyi said: “Luckin has established cost advantages and scale advantages, allowing Luckin to achieve competitive prices and cup volumes while maintaining a reasonable profit margin. It is difficult for other brands to compete with Luckin in this regard. Luckin Coffee’s 9.9 yuan campaign will continue for a long time.”