After becoming the first coffee chain in China to open 10,000 stores in June, the domestic budget coffee chain Luckin surpassed Starbucks in the first half of 2023 to become China's highest-earning coffee company.
This week, businesses across all industries release their financial reports for the second quarter. Luckin reported a net income of 6,2 billion RMB (862 million USD), an increase of 88% year-over-year. During the second quarter, the operating profit was 1.17 billion yuan, and the operating profit margin reached 18.9%. During this time period, the brand opened an average of 16 new stores per day, bringing the total to 10,836.
This is the first time that Luckin's quarterly revenue has surpassed that of its largest competitor, Starbucks, which saw a net income of 5.9 billion RMB (822 million USD) on the Chinese market, a year-over-year increase of 51%. This year, only five years after its founding and a little more than a year after its emergence from insolvency, Luckin has made remarkable progress.
In order to remain competitive, many brands have reduced the price of a cup of coffee to just 9.9 RMB (1.38 USD) on the Chinese coffee market. Starbucks was by far the most dominant player just a few years ago, but is now confronting headwinds from the rapid rise of domestic upstarts such as Luckin and Mannin. In response to the success of Luckin's WeChat Mini-Program, which allows users to pre-order and collect delivery coffee, Starbucks has significantly expanded its own digital ordering through partnerships with Alipay, Taobao, and other local platforms.
In his response to the financial results, the newly appointed CEO of Luckin, Guo Jingyi, alluded to ambitious plans for global expansion. "We are committed to accelerating the development of China's coffee market, expanding Luckin Coffee's market share and brand influence, and promoting sustainable overseas expansion so that consumers around the world can enjoy the high-quality products and services of Chinese coffee brands."
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