Luckin looks to itself in search of growth

Franchises made 899 million yuan, more than double last year’s number.

Photo by Fan Jianlei

Photo by Fan Jianlei

By ZHAO Xiaojuan

 

Coffee house chain Luckin saw both its revenue and profit grow in Q3, with margins from franchises outperforming the company’s own shops, according to its quarterly financial report.

Revenue in Q3 grew 65.7 percent year on year to 3.9 billion yuan (US$540 million), a record high, with GAAP net profit up 15 percent to 585 million yuan. Luckin now has 7,846 shops, with 651 newly opened in Q3.

Nearly 70 percent of shops are owned by Luckin. These contributed 2.8 billion yuan of turnover, 53.9 percent more than last year. Franchises made 899 million yuan, more than double last year’s number.

GUO Jinyi, president and CEO of Luckin, said most franchises are in lower-tier cities or towns. With profit growing faster than Luckin’s own shops, the company is becoming more cautious in selecting franchisees. 

Turnover from self-owned shops in Q3 grew 19.4 percent, a new low in two years. Last year, the digits were above 70 percent. 

A franchiser in Shandong Province told Jiemian News that Luckin is demanding both location and funding and does not accept applications from provincial capitals.

The pandemic is taking its toll on operations, Luckin said. In July, some 100 shops were closed every day, in November, the number rose to 500.