Why Luckin Coffee’s low-cost business model is under pressure in China

The Chinese coffee giant is feeling the pinch of soaring delivery expenses, with headline first-quarter outlet and revenue growth offset by increasingly thinner margins

Luckin Coffee has posted another significant quarter of sales and outlet growth in China. However, it is now facing soaring costs for a channel that underpins its asset-light, digital-first convenience model – third-party delivery.

China’s largest coffee chain added 2,531 net new stores in its home market during the three months ended 31 March 2026 to reach 33,419 sites. It also added 17 net new stores to its international network, which comprises 83 outlets in Malaysia, 82 in Singapore and 12 in the US.