By MA Yue
Coffeehouse chain Luckin’s revenue last year grew 67 percent to 13.3 billion yuan (US$1.9 billion), with net profit reaching 1.16 billion yuan. Luckin lost 539 million yuan in 2021.
It is the first time Luckin has turned an annual profit. The growth is a result of aggressive expansion.
Rising from the ashes
By the end of 2022, Luckin had 8,214 cafes, 2,190 of them new last year. More cafes brought more customers, with over 200 million orders placed every month in 2022, up by two-thirds from the previous year.
Most of Luckin’s own stores are in first or second-tier cities, while its franchises are in small towns and lower-tier cities. Luckin’s own stores brought in 8.4 billion yuan, up 52 percent compared with 2021. The franchisees, on the other hand, had revenue of 3 billion yuan, up 135 percent.
CEO of Luckin GUO Jinyi said the company’s goal is to be the first coffeehouse chain in China to have 10,000 cafes. Starbucks aims to have 9,000 cafes in China in three years.
Guo took over as chairman and CEO in 2020 following a massive bookkeeping fraud that knocked as much as 80 percent off the company’s value. Guo immediately began to cut stores, including a fifth of stores in Beijing.
Luckin goes from strength to strength
After less than a year in charge, an attempted ouster failed to unseat Guo. Previous CEO and founder LU Zhengyao was widely rumored to be behind the attempted coup.
Since then, Luckin has gone from strength to strength.
The company went bankrupt in the US to facilitate debt restructuring, and the debt situation is now under control. The franchising model is proving very effective in small towns.
