On November 1, Luckin Coffee (OTC: LKNCY) released its third quarter financial report for 2023. Financial report data shows that in the third quarter, Luckin Coffee’s total revenue reached 7.200 billion yuan, a year-on-year increase of 84.9%. Under U.S. accounting principles (GAAP), the company's operating profit was 961.7 million yuan, with an operating profit margin of 13.4%.
In line with revenue growth, the scale of Luckin Coffee stores further expanded in the third quarter, with a net new store opening of 2,437 (including 11 newly opened in Singapore), and the total number of stores increased by 22.5% quarter-on-quarter. As of the end of the third quarter, Luckin Coffee had a total of 13,273 stores, including 8,807 self-operated stores and 4,466 joint-venture stores. It continues to maintain its leading position in the industry and is expected to have 15,000 stores by the end of the year.
A closer look at the driving forces behind Luckin Coffee's revenue growth and scale expansion are: First, Luckin Coffee has long-term polished standardization and digital capabilities, shaping a strong supply chain system and whole-industry chain quality control system; Second, Luckin Coffee's innovation-driven maturity and Complete brand building methodology.
On the one hand, Luckin controls every aspect from product research and development, supply chain management, warehousing and logistics to store operations to ensure that every cup of Luckin coffee is of consistent quality, creating a strong internal driving force.
From the store operation level, Luckin Coffee continues to improve the operational efficiency at the store level. Luckin Coffee's self-operated store revenue in the third quarter was 5.141 billion yuan, an increase of 79.3% from 2.8671 billion yuan in the same period in 2022. The store-level profit of self-operated stores was 1.1854 billion yuan in the third quarter, and the store-level profit margin of self-operated stores was 23.1%. In the same period of 2022, it was 771.8 million yuan. The store-level profit margin was 26.9%. The same-store sales growth rate of self-operated stores ranked third. In the third quarter it was 19.9%. Joint store revenue in the third quarter was 1.8408 billion yuan, an increase of 104.7% from 899.1 million yuan in the same period in 2022.
In terms of upstream construction, Luckin Coffee selects high-quality coffee beans from around the world, which come from different coffee producing areas and have different flavors and characteristics. In order to ensure the quality of coffee beans, Luckin Coffee has built its own fully automatic smart coffee roasting base, which can perform the best roasting according to different coffee beans. In March, Luckin Coffee launched the "Global Bean Hunting Plan", and a team of bean hunters traveled to various places to find fresh and high-quality coffee beans, bringing more choices and experiences to consumers.
Luckin Coffee’s “Global Bean Hunting Plan” traces the origin of high-quality coffee beans
Luckin Coffee also uses digital technology and supply chain management to reduce costs such as raw materials, labor, and logistics, and further improve operational efficiency.
Now, after years of polishing in thousands of stores, Luckin Coffee’s standardization capabilities have become mature. Highly standardized operations and high-quality supply together constitute the internal driving force for Luckin Coffee’s scale expansion and performance growth.
On the other hand, Luckin Coffee has achieved many successes in cross-border co-branding by virtue of its mature and complete brand-building methodology, continuously injecting new momentum into brand development.
Cross-border joint marketing has become one of the important strategies for brand building. It can not only gather brand reputation and attract more consumers, but also integrate new elements to bring more creativity to product innovation. According to the "2023 Cross-border Co-branded Marketing Trend Report" by SocialBeta, a third-party data agency, Luckin Coffee is one of the TOP10 youngest cross-border co-branded marketing brands.
In the third quarter, Luckin Coffee launched 12 freshly prepared drinks. The sauce latte co-branded with Kweichow Moutai set a new record for Luckin Coffee's single product, with sales of 5.42 million cups on the first day, and single product sales exceeding 100 million yuan. While new products continue to make breakthroughs, the classic latte series created by Luckin has also been favored by consumers for a long time. In September this year, the velvet latte series also reached the milestone of sales exceeding 200 million cups since its launch. In addition, the recently launched mascarpone cheese latte is co-branded with the classic animated IP "Tom and Jerry". The sales volume of a single product in the first week also exceeded 16.24 million cups, and it became a hot search on Weibo.
By combining with high-quality brands and IPs in different fields, Luckin Coffee not only brings innovative product experiences to consumers, but also continuously innovates product experiences and leads new consumption trends.
In short, with the dual effects of accelerated store expansion and continuous product innovation, Luckin Coffee continues to explore new market opportunities. This quarter, the number of new Luckin Coffee customers exceeded 30 million, and the average number of monthly transaction customers reached 58.48 million, setting another record high. As of the third quarter, Luckin Coffee’s cumulative customer base has exceeded 200 million. The average number of monthly transaction customers of Luckin Coffee hit a record high again, which reflects Luckin Coffee’s brand power and user stickiness.
After entering the "era of thousands of stores", Luckin Coffee has continued to maintain a steady growth trend, adheres to digitalization as its core, relies on the three pillars of "people, goods, and places" to gain insight into consumer demand, develop innovative products, and stabilize the supply chain system. Its stores have rapidly expanded Expand and continuously consolidate the core competitiveness of the enterprise.
Looking forward to the future, Guo Jinyi, chairman and CEO of Luckin Coffee, said: "The company's performance in the third quarter is still strong, revenue has broken records again, and store penetration has further increased. We will continue to increase investment and focus on customer value, social value and partner value. , and strive to build Luckin Coffee into an outstanding, world-class century-old coffee brand."