Luckin Coffee, Inc. Q3 FY2026 earnings call

• Financial Performance:

  • Total net income reached RMB 17.9 billion, a 17% increase year-over-year.
  • Operating profit exceeded RMB 2.7 billion, up 55% YoY, with an operating margin of 15.4%.
  • Non-GAAP net profit hit a record high of RMB 2.1 billion, with a non-GAAP net margin of 12%.
  • Store-level operating margins for self-operated stores returned to pre-subsidy levels at 23.3%.

• Store Expansion and Network:

  • Added nearly 2,600 new stores in Q3, bringing the global total to 38,909.
  • China store count reached 38,630 (25,277 self-operated, 13,353 partnership), a net increase of 2,543.
  • International presence expanded to 279 stores across 56 markets, including 103 in Singapore, 22 in the US, and 154 in Malaysia.
  • In Singapore, Luckin became the second-largest coffee chain by store count after surpassing 100 locations.

• Customer Metrics:

  • Average monthly transacting customers exceeded 120 million, setting a new record.
  • Cumulative transacting customers surpassed 520 million.
  • New transacting customers added in Q3 exceeded 28 million.
  • Average cups per customer continued to rise, indicating increased consumption frequency.

• Product Strategy:

  • Launched 41 new beverages and over 20 snack items in Q3.
  • Focused on high-quality coffee offerings, including Ethiopian Geisha cold brew.
  • Thai milk tea series sold over 13 million cups in its first week, demonstrating strong non-coffee demand.

• Brand and Marketing:

  • Leveraged IP collaborations, including Disney villains and World Cup sponsorships (Spain/Portugal).
  • Emphasized brand attributes of health, youth, and fashion through sports and cultural events.

• Sustainability and Social Responsibility:

  • Partnered with Singapore’s Institute of Mental Health and Old Bridge Hospital Charity Fund for mental health awareness.
  • Launched the “Starlight Project” in Guizhou to support rural youth football development.
  • Donated to disaster relief efforts following landslides in Tibet.

• Total Net Revenue: RMB 17.9 billion (up 17% YoY), representing 100% of total revenue.
• Freshly Brewed Drinks: RMB 12.4 billion, accounting for approximately 69% of total net revenue.
• Other Products: RMB 1.1 billion, accounting for approximately 6% of total net revenue.
• Others: RMB 158 million, accounting for approximately 1% of total net revenue.
• Self-Operated Stores Revenue: RMB 12.9 billion (up 17% YoY).
• Partnership Stores Revenue: RMB 4.2 billion (up 12% YoY).

• Management reaffirmed commitment to high-quality scale growth strategy.
• No specific quantitative financial guidance was provided for future quarters due to the dynamic nature of the market and subsidy normalization.
• Confident in maintaining industry-leading store expansion pace based on long-term coffee demand growth in China.
• Expect continued improvement in same-store sales trends as delivery subsidy impacts fade and pickup mix normalizes.

• Same-store sales pressure remains due to high comparison base from previous year’s aggressive delivery subsidies.
• Risk of short-term volatility in same-store sales during periods of rapid store expansion.
• Dependency on consumer adoption of coffee habits in China, which is still in early development stages.
• Operational risks associated with international expansion, particularly in adapting to local market conditions and regulatory environments.

Q: Goldman Sachs asked about the long-term upside for store openings in China given the current large scale and faster-than-industry opening pace. / A: Management stated that long-term expansion potential is driven by the growth of Chinese coffee consumption demand rather than a static store limit. They noted that coffee penetration and frequency are still low compared to mature markets, providing significant room for growth. The company plans to continue opening stores efficiently where demand exists, ensuring healthy unit economics while gaining market share.

Q: JPMorgan inquired about the drivers behind the Q3 same-store sales decline and the trend outlook for Q4 and beyond. / A: Management explained that the decline was primarily due to the high comparison base from last year’s peak subsidy war and a sharp drop in delivery volume (which had higher ASPs) as platform subsidies fell. However, they highlighted that same-store sales improved month-by-month from July to September. They view same-store sales as a dynamic metric to adjust expansion pace, not a sole indicator of health, noting that overall customer metrics and profitability remain strong.

Q: Analysts sought clarification on how management views the significance of same-store sales versus overall growth. / A: Management emphasized that for a rapidly expanding business like Luckin in an emerging market, growth comes from both new stores and operational efficiency, not just existing store performance. They described same-store sales as following a "wave-like" pattern—pressured during intense expansion phases but recovering as pacing moderates. They prioritize long-term market share and healthy store economics over short-term same-store fluctuations.