Luckin Coffee rode China’s 2025 “delivery war” to rapid top-line growth, but the euphoria has begun to ebb. The company reported full-year revenue of RMB 49.29 billion, up 43% year-on-year, and fourth-quarter revenue of RMB 12.78 billion, a 32.9% increase. Yet profitability weakened: full-year net profit attributable to shareholders was RMB 3.60 billion, concentrated in the second and third quarters, while fourth-quarter net profit slid to about RMB 520 million, down roughly 39% year-on-year.
The delivery-driven spike that fuelled Luckin’s expansion came from generous platform subsidies and heavy customer acquisition. Average monthly transacting customers rose from 74 million in Q1 to 92 million in Q2 and 112 million in Q3, helping the company reopen the expansion taps and add 8,708 stores in 2025. By year-end Luckin operated more than 31,000 outlets, of which about 20,200 were company-owned and 10,800 franchised.
That scale, however, has a cost. Materials, store rent and delivery expenses all climbed sharply as store counts and order volumes expanded. In 2025 these expense lines reached RMB 18.783 billion for materials, RMB 11.242 billion for rent and RMB 6.879 billion for delivery, rising by 33.4%, 31.6% and 143.8% respectively. Luckin’s self-delivery model amplifies the exposure: the company benefits more from platform subsidies because most stores are company-operated, but it also bears higher logistics and fulfilment costs.
The unwinding of platform subsidies left an immediate mark. With the delivery war cooling in Q4, same-store sales at company-owned outlets slowed to 1.2% year-on-year, down from 14.4% in the prior quarter. Management warned that as platform promotions become more rational and targeted, maintaining the recent cadence of same-store growth will be challenging in 2026.
Competition is intensifying on multiple fronts. Specialist rivals such as Kudi, Nova and Luckin-neue challengers have been expanding rapidly; public data indicate Kudi’s store count passed 18,000 and several rivals exceeded 10,000 outlets in 2025. Legacy foreign players are also recalibrating: Starbucks China changed hands last year and has doubled down on localised operations. At the same time a wave of cross-sector entrants — new tea chains, retail grocers and e-commerce players — are experimenting with low-price coffee offerings to capture delivery demand.
Luckin’s response is to preserve its scale advantage and lean on product value and overseas growth. Management said the chain will continue to prioritise high-quality, cost-effective products while expanding footprint to create a defensive “moat” against competitors. International expansion accelerated in 2025 with 30 new Singapore stores, 70 in Malaysia and 9 in the United States; Singapore operations are reportedly close to breakeven and have become the company’s most promising overseas pilot.
For investors the market has already signalled caution: Luckin’s US-listed stock fell for two straight sessions after the results, a cumulative drop of about 6.8%, valuing the company at roughly $10.1 billion as of February 27. The near-term dilemma is clear — how to convert the temporary gains from delivery subsidies into durable customer habits and profitable store economics once those subsidies ebb.
The larger question for China’s retail coffee sector is whether scale-driven strategies built on delivery incentives are sustainable. Luckin’s model—heavy company ownership of outlets combined with aggressive use of platform subsidies—won quick market share but left the company sensitive to swings in promotional intensity and logistics cost. How Luckin tightens unit economics, trims delivery costs, and deepens loyalty among in-store and pickup customers will determine whether its rapid growth translates into long-term market leadership.