Luckin Coffee Inc. recently held its fiscal year 2025 fourth quarter earnings conference call. The company stated that looking ahead to 2026 and its long-term development strategy, China's coffee market remains in a phase of rapid growth, containing significant structural opportunities for the future. In 2025, subsidy campaigns on food delivery platforms notably accelerated Chinese consumers' acceptance of coffee. Gaining market share continues to be Luckin Coffee's primary strategic focus. For 2026, within a complex and volatile market environment, the company will maintain a disciplined and agile approach, concentrating on key areas such as stores, costs, and pricing levels to drive healthy business performance.
Regarding store expansion, Luckin Coffee will utilize its unique, industry-leading digital site selection and planning system to implement refined strategies, maintaining an efficient and competitive pace for new store openings to capture demand in the rapidly growing market. Concurrently, the company will persistently and closely monitor store performance to ensure a healthy ramp-up and maturation cycle. On pricing, Luckin will sustain competitive price points while broadening its price range to optimize the overall pricing structure, allowing flexible responses to diverse market demands. The company will also continue enhancing the consumer experience to support its overall pricing and operational performance. For instance, it plans to introduce more diversified combo meal options, increased customization choices, and professional coffee bean flavor selections.
During the Q&A session, an analyst inquired about the significant store expansion in Q4 2025, which exceeded expectations with a net addition of over 8,000 stores, demonstrating strong competitiveness and execution. However, the analyst noted that same-store sales performance appeared weaker than anticipated and sought further details on the reasons behind this trend, the outlook for 2026 regarding new store openings, same-store sales trends, and store-level and corporate-level profit margins, as well as strategies for navigating the fluid market conditions.
In response, Luckin Coffee reiterated its view that China's coffee market is still in a rapid growth phase with substantial long-term structural opportunities. The company attributed the accelerated consumer adoption of coffee in 2025 partly to delivery platform subsidies, which fueled robust demand and growing coffee consumption, validating its strategic perspective. Therefore, capturing market share remains the top priority. For 2026, the company emphasized a disciplined yet flexible strategy focused on stores, costs, and pricing to ensure healthy performance.
Regarding store expansion, Luckin will leverage its advanced digital systems for precise site selection and planning, maintaining an efficient store opening pace to meet rising market demand while ensuring healthy store maturation. On volume, the supply-side strategy centers on customer demand, driving product innovation and enriching the product portfolio to reach more customers and cover additional consumption occasions. On the demand side, digital capabilities will enable more targeted and market-relevant marketing strategies. These efforts aim to strengthen emotional connections through brand innovation, improve customer reach and conversion efficiency, and ultimately enhance retention and purchase frequency.
Pricing strategy involves maintaining competitiveness while optimizing the overall price structure to cater to diverse market needs, supported by continuous improvements in the consumer experience, such as more varied combos, customization, and premium bean options. The company acknowledged that, considering the evolution of delivery platform subsidies, the time needed for order mix to normalize towards self-pickup, and the high base established in 2025 due to extensive subsidies, same-store performance and profitability might face short-term volatility and challenges in 2026.
On the topic of market competition, an analyst observed increasing diversification, including more cross-category competition from tea and coffee brands, and asked for perspectives on this evolution and its implications.
Luckin responded that the freshly-made beverage sector is one of the few industries in China with significant long-term structural opportunities and growth potential. As consumer habits continue to develop, more players entering the market is natural. Furthermore, increased participation aids broader consumer education and deeper market penetration, ultimately expanding the overall market size. Long-term competitive dynamics are also evolving. Since Luckin's founding, China's coffee industry and consumer behavior have transformed rapidly. Today, freshly brewed coffee brands can no longer rely solely on pricing, single hit products, or one-off marketing campaigns for sustained success. Instead, long-term competitiveness increasingly depends on a comprehensive set of capabilities, such as brand recognition, customer experience, emotional connection, product development prowess, and store coverage. Ultimately, delivering a holistic experience across these dimensions will determine long-term success, supported by robust digital operations and economies of scale.
After five years of development, Luckin believes it has begun building systematic competitive advantages across all dimensions. Leveraging its digital capabilities, the company has established direct, frequent, and efficient interactions with customers, enabling deeper consumer insights, better understanding of evolving tastes and preferences, and more targeted product launches, marketing campaigns, and customer engagement initiatives. On the product front, guided by customer demand, Luckin continuously drives innovation, focusing on enhancing coffee professionalism and flavor experience. Its frequent new product releases are not merely SKU expansions but reflect strengths in supply chain resilience and product development capabilities, including bean sourcing, roasting expertise, recipe R&D, flavor expression, and customization. From expanding global origin layouts to building China's largest self-operated roasting network and assembling a professional coffee master team, the company has established a strong infrastructure to support long-term competitiveness.
Fundamentally, freshly brewed coffee is a category reliant on convenient locations and efficient customer fulfillment. The breadth of consumption occasion coverage and the proximity of stores to consumers are key to converting demand into actual sales. With approximately 30,000 stores nationwide, Luckin has extensive coverage from higher-tier to lower-tier cities and towns. Its significant scale advantage positions it well to capture this ongoing demand growth.
Regarding global expansion, an analyst inquired about the progress of overseas expansion and future strategies and plans.
Luckin noted that compared to overseas mature markets, mainland China's coffee market remains the most attractive globally in terms of growth and potential, serving as its core business foundation. The digital and scale advantages built amidst China's complex competitive landscape will also form the core strengths for its overseas expansion. Therefore, the company is advancing internationalization with a long-term perspective, committed to building sustainable and replicable operational models.
Overall, Luckin's overseas development has achieved initial results. In Singapore, its first self-operated international market, after three years of exploration, the company had opened over 80 stores by the fourth quarter, becoming the second-largest coffee chain locally by store count. Through innovative products, convenient digital services, and value-for-money pricing, it has grown its customer base, cup volume, and average selling price. Since the second half of last year, it has achieved stable store-level profitability, largely validating the business model.
Building on its brand influence in Singapore, Luckin entered Malaysia in 2025 via a master franchise model. By year-end, it had opened 70 stores, meeting its first-year target. Leveraging experience from Singapore, it assisted local partners in establishing a highly localized operational system, with market performance steadily improving. As the business enters an accelerated expansion phase, both parties are confident about the future, providing a strong reference for franchising in more international markets.
The United States, as one of the world's largest and most mature coffee markets, represents an important long-term opportunity. Luckin began exploration in mid-2025 and had opened 9 stores by year-end. The company is proceeding with significant patience and discipline, focusing on laying a solid foundation in product, supply chain, consumer insights, and organizational capabilities. It remains in the early stages, prioritizing business model validation and accumulating operational experience to pave the way for future scaled expansion.