Luckin Coffee Inc. reported its first decline in quarterly operating profit since the beginning of 2025, as soaring delivery costs weighed on earnings.
In the fourth quarter of 2025, the Xiamen-based coffee chain reported a non-GAAP operating profit of 963.8 million yuan ($137.6 million), down from 1.1 billion yuan in the same period of 2024, on revenue of 12.8 billion yuan, up 32.9% year-on-year, according to its latest earnings report.
Same-store sales growth for self-operated stores was 1.2% in the fourth quarter, compared with 8.1%, 13.4% and 14.4% in the first three quarters of the year.
The profit decline was largely due to a surge in delivery costs amid a subsidy war in the food delivery market. Luckin’s delivery expenses were 1.6 billion yuan in the fourth quarter, representing a year-on-year increase of 94.5%, mainly driven by a rise in delivery volumes from the third-party food delivery platforms, according to the financial report.
Fourth-quarter earnings and same-store sales were hurt by “a combination of factors including seasonality, changes in food delivery platform subsidy dynamics, and also cup volume mix, so all of these factors are actually in line with our expectations,” said Guo Jinyi, CEO of Luckin, on an earnings call.
Despite the pressure on profitability, Luckin maintained its rapid expansion, opening 1,834 new stores in the quarter. As of the end of 2025, the company operated 31,048 stores globally, including 20,234 self-operated locations, making it the first Chinese coffee chain brand to surpass the 20,000-mark for self-run outlets.
Luckin is accelerating its international push, adding 42 overseas stores in the fourth quarter to reach a total of 160 as of the end of 2025. Singapore remains its largest foreign market with 81 directly-operated stores, where operations turned profitable at the store level in the second half of 2025. The company also has 70 franchise stores in Malaysia and nine directly-operated stores in the U.S., a market Guo described as still being in an “early exploration stage.”
Guo emphasised that industry players can no longer rely solely on low prices or hit products to win, adding that store location and density are the core drivers of demand conversion.
This article first appeared in Caixin Global.
