The troubled Chinese coffee chain has strengthened its position in the third quarter as net losses shrink to an all-time low
Luckin Coffee now operates 5,671 stores across China | Photo credit: via Shutterstock
Luckin Coffee appears to be regaining momentum as it battles to normalise its business
in the wake of the pandemic and a major company restructure. Reporting its third quarter results to 30 September 2021, the coffee chain said revenues were RMB2.35bn (US$364.7m), 105.6% higher than in the same period in 2020.
The company sold an average of 42.3 million items per month across its self-operated stores and unmanned coffee machines over the period. Average monthly transacting customers in the third quarter were 14.7 million, representing an increase of 79.2% from 8.2 million in the same quarter of 2020.
Luckin Coffee also reported its smallest net loss of RMB23.5m (US$3.6 million) over the period, which included a ‘one-off loss of RMB14.2 million (US$2.2 million) on an uncollectable deposit’ related to relocating its Beijing office – a 98.6% decrease from the RMB1.7bn net loss reported in the same quarter of 2020.
Luckin Coffee’s operating net loss was RMB6.7m (US$1.0m) in the third quarter of 2021, compared to an operating loss of RMB462.5m in the same quarter of 2020.
“We are seeing strong performance across the business in the third quarter with increased customer retention and order frequency, greater brand recognition, and our products achieving higher average selling price,” said Luckin Coffee Chairman and CEO Dr. Jinyi Guo.
“Further, we continued to execute against our strategic plan with the expansion of our Luckin Partnership stores contributing significantly to revenue growth. Our improved profitability is demonstrated through the significant reduction in operating losses for the quarter, as well as our store level operating margin increasing to over 25%,” Guo added.
Luckin now operates a total of 5,671 stores across China, comprised of 4,206 self-operated stores and 1,465 partnership stores. The number of self-operated stores increased by 6.4% from 3,952 stores as of the end of the same quarter of 2020 and partnership stores increased by 66.7% from 879 partnership stores as of the end of the same quarter of 2020.
In December 2021, Luckin Coffee received $240m from current investor, Centurium Capital, effectively handing control of the coffee chain to the Chinese investment firm, which now holds a 60% stake in the company.