China’s largest coffee chain ended 2022 with its first annual profit, 67% year-on-year sales growth and more than 8,200 outlets nationwide
Luckin Coffee achieved 67% sales growth to reach $1.9bn for the 12 months ended 31 December 2022 | Photo credit: P.L.
Luckin Coffee has turned its first full-year profit since the company was founded in 2017, achieving robust 2022 sales and outlet growth despite pandemic trading restrictions in its fourth quarter.
The coffee chain’s full-year profits reached RMB 1.1bn ($167m), despite facing the temporary closure of up to 1,500 stores a day due to Covid restrictions during the fourth quarter.
The turnaround follows Luckin Coffee’s operating loss of RMB 539m ($78m) in 2021.
The Xiamen-based coffee chain achieved 67% sales growth to reach RMB 13.3bn ($1.9bn) for the 12 months ended 31 December 2022.
Luckin Coffee’s full-year revenues from self-operated stores reached RMB 9.4bn ($1.4bn) while franchised outlets generated sales of RMB 3.1bn ($445m).
Average monthly customers grew 66% year-on-year to 21.6 million, rising to an average of 24.6 million in Luckin’s fourth quarter.
The value and tech-focused coffee chain opened 2,190 net new stores in 2022 to reach 8,214 outlets, 69% of which are company operated. However, many of Luckin Coffee’s sites are delivery-only or pick-up points with little or no in-store seating.
Luckin Coffee saw delivery expenses increase 62% in its fourth quarter to RMB 379m ($55m) due to rising orders. Delivery sales accounted for 11% of total fourth quarter sales from partnership stores, reaching RMB 91.7m ($13.3m).
“We delivered another year of strong operational and financial performance despite being materially impacted by Covid-19 in the fourth quarter of 2022. We had more than 2,100 net new store openings in 2022, bringing our total stores in China to more than 8,200 and demonstrating our ability to effectively navigate a dynamic and evolving business landscape and maintaining our leading position in the Chinese coffee market,” said Jinyi Guo, Chairman and CEO, Luckin Coffee.
Guo added that the recent lifting of ‘substantially all’ pandemic restrictions in China and increasing levels of consumer activity will lead to further ‘sustainable growth’ in 2023.
The Xiamen-based coffee chain opened 478 new stores in January 2023 to exceed 8,400 outlets nationwide.
Luckin Coffee is the largest coffee chain in China by outlets, ahead of Starbucks which operates 6,090 stores.
The Seattle-based coffee chain, which is seeking to reach 9,000 Chinese outlets by 2025, saw its first quarter revenues in the country fall 31% to $622m as a result of now lifted Covid trading restrictions across China.