Luckin Coffee Inc. (LKNCY): Earnings review: 2Q strong beat with resilient SSSG/margin despite fast store expansion; delivery cost decline ahead of expectation; Buy

Research evidence excerpt

Luckin Coffee Inc. (LKNCY): Earnings review: 2Q strong beat with resilient SSSG/margin despite fast store expansion; delivery cost decline ahead of expectation; Buy

Goldman Sachs Luckin Coffee Inc. (LKNCY)

Key takeaways from the earnings call

Recent trend: Delivery-platform competition has continued to normalize, with subsidies

withdrawn faster than mgmt’s initial expectation at the start of the year. On the

competition side, management noted the focus has also returned to product and

customer value.

2H/3Q26 Outlook: While the high base effect will continue to be a headwind for 3Q25

SSSG (Jul-Aug 2025 saw intense delivery subsidy), management holds a cautiously

optimistic view and will flexibly optimize operation strategy based on the market

environment and customer demand trends. Meanwhile, with continuous delivery mix

decline and improving fulfillment efficiency, margin recovery would be well supported.

Product and operational initiatives, including larger-cup upgrades and Little Butter

Americano, are also supporting both ASP and cup volume.

Thoughts on store network expansion: Mgmt views store network expansion as

supporting the company to meet growing coffee demand (with China’s coffee

penetration still at early stage) and enhance its competitiveness. Meanwhile, backed by

replicable operation module and digital/AI capability, the company is able to open store

precisely, ramp up quickly and continuously enhance operation quality. Mgmt reiterated

strong confidence in China’s coffee penetration and consumption-frequency growth,

and expects to maintain a competitive store-opening pace while preserving store

quality.

Product Updates:

n The company launched 28 freshly brewed beverages and over a dozen light-food