Key Points Summary
Lucky Coffee’s second-quarter financial report shows impressive results: revenue of 15.89 billion yuan (a year-on-year increase of 28.5%), over 5,000 new stores opened in the first half of the year (bringing the total number of stores to more than 36,000), and an average of 112.7 million customers per month (a year-on-year increase of 22.9%). However, the same-store sales of its own-operated stores declined by 5.3% due to the high base from last year’s delivery competition. Nevertheless, by controlling costs (with delivery fees decreasing by 3.1%), the profit margin of these stores still increased by 25.9%, remaining stable. Additionally, its healthy new products have been well-received by the market, with accelerated expansion in China to capture market share, while overseas expansion remains cautious. Management believes that the potential for the Chinese coffee market is still substantial.
Detailed Analysis
The Two Drivers of Growth: New Store Expansion and Increased Consumer Traffic
The core logic behind Lucky Coffee’s revenue growth in the second quarter is simple—opening more stores to attract more customers.
- New Store Expansion: A net increase of 2,714 stores in the second quarter (compared to 2,548 in the first quarter), bringing the total number of stores to over 36,000, with nearly 28 new stores opened each day. New stores directly generate additional revenue.
- Customer Traffic: An average of 112.7 million customers per month, an increase of more than 20 million compared to last year. This indicates that not only are new stores attracting customers, but existing customers are also making repeat purchases, and new customers are joining the brand.
These two factors combined contributed to a 28.5% increase in revenue.
Same-Store Sales Decline? Don’t Worry, It’s a Remnant of Last Year’s Subsidies
The same-store sales of its own-operated stores (those open for at least one year) decreased by 5.3%. This is not a sign of poor performance but rather a result of the high base set by last year’s delivery subsidy competition.
- In the second quarter of last year, Lucky Coffee and other brands competed with substantial delivery subsidies, making coffee more affordable than it is now, leading to higher sales volumes. With fewer subsidies this year, sales have decreased year-on-year.
- Fortunately, Lucky Coffee has been smart in controlling costs by reducing delivery fees from 1.67 billion yuan last year to 1.62 billion yuan (a decrease of 3.1%). This may be due to optimizing delivery routes or negotiating better terms with delivery platforms. As a result, despite the decline in sales volume, profit margins have increased by 25.9%, remaining the same as last year.
In other words, by reducing distribution costs, Lucky Coffee has made up for the loss from the subsidies.
Healthy New Products as a Strength: Catering to Young Consumers
Lucky Coffee is transitioning from being known for “affordable coffee” to offering “healthy coffee,” a strategy that resonates with younger consumers who are increasingly paying attention to ingredient lists.
- New products like Butter Americano and Small Green Orange Americano are low in calories and have simple ingredients (with minimal syrup or additives).
- Positive market feedback indicates that these new products have attracted health-conscious customers, either as new buyers or as existing customers purchasing additional cups, indirectly contributing to growth.
Expansion Strategy: Aggressive in China, Cautious Overseas
Lucky Coffee’s expansion strategy is strategic: accelerating in China and slowing down overseas:
- China: While other brands have slowed their store openings (with 16,000 fewer coffee stores as of June 2026 compared to January), Lucky Coffee has continued to expand. Management believes that the coffee penetration rate in China is still low, and there is room for further growth in consumption frequency, so they are continuing to open stores to capture market share.
- Overseas: With only 223 stores currently (89 in Singapore, 20 in the United States, and 114 in Malaysia), Lucky Coffee is still in the trial-and-error phase, focusing on refining its profit model per store and accumulating operational experience before expanding further overseas.
This is a typical approach of “stabilizing the domestic market before gradually entering new markets.”
Competitive Landscape: What Gives Lucky Coffee an Edge?
The coffee industry is highly competitive, with new tea brands (such as Luckin Tea and NaiXue) entering the market, while other coffee brands are slowing down or closing stores. However, Lucky Coffee remains confident due to its belief in the market’s potential:
- The penetration rate of coffee consumption in China and the frequency of consumption (number of cups per person per year) are much lower than in Europe and the United States, indicating significant room for growth. For example, Americans consume an average of over 300 cups of coffee per year, while Chinese consumers may drink only a few dozen.
- By offering affordable prices, convenient store locations, and continuously launching new products, Lucky Coffee has built a loyal customer base. As long as the market continues to grow, it can continue to gain a share of the market.
Conclusion
Lucky Coffee is in a position of steady progress: its revenue and store numbers are growing rapidly. Although same-store sales have declined due to last year’s impact, profit margins have remained stable. By focusing on healthy new products to attract customers and expanding aggressively in China, while being cautious with overseas expansion, Lucky Coffee maintains its competitiveness in a competitive market. For investors and consumers, the key concerns should be whether the company can continue to attract new customers, control costs effectively, and increase its market penetration rate.