Luckin Coffee (Minutes): In the second half of the year, committed to reducing the cost increase caused by the shift towards delivery services.

$Luckin Coffee(LKNCY.US) The following is the transcript of the Luckin Coffee FY25 Q2 earnings call. For an analysis of the earnings report, please refer to "Luckin: The 'Little Blue Cup' Surges, Is the 'Coffee King' on a Smooth Path?"

I. Review of Core Financial Information

II. Detailed Content of the Earnings Call

2.1 Key Information from Management Statements

1. Strategic Overview:

The company continues to focus on expanding market share and scale, driving performance growth through clear strategies, defined goals, and solid execution. By leveraging scale, operational efficiency, fulfillment, and supply chain advantages, the company accelerates user acquisition and consolidates its market-leading position.

2. Store Expansion and Business Advancement Pace:

As of the end of the second quarter of 2025, the total number of operating stores reached 26,206. Domestically, there was a net addition of 2,085 stores, bringing the total to 26,117 (16,903 self-operated, 9,214 joint-operated).

Internationally, there was a net addition of 24 stores, bringing the total to 89 (63 self-operated in Singapore, 2 self-operated in the United States, 24 joint-operated in Malaysia). The opening of two self-operated stores in New York City marks a significant milestone in the international expansion strategy. The company will adopt a rigorous and prudent approach, focusing on validating consumer responses to brand positioning (ordering experience, product mix, and pricing strategy), aiming to establish a unique value proposition and build localized operational capabilities to support future scale expansion. Looking ahead, the company is committed to maintaining an industry-leading expansion speed, further strengthening scale advantages, and laying a solid foundation for long-term market share growth.

3. Product Innovation:

Over 20 fresh fruit drinks and snacks were launched in the second quarter.

The signature "Orange C Americano" was upgraded, with cumulative sales exceeding 350 million cups by the end of the quarter.

The newly launched non-coffee product "Green Juice Fruit and Vegetable" sold over 11.2 million cups within two weeks.

4. Customer Growth:

In the second quarter, more than 28.7 million new transaction customers were added.

The average monthly transaction customer count increased by 32% year-on-year, reaching nearly 91.7 million, a record high.

The cumulative transaction customer base has exceeded 380 million.

The "Luckin AI" smart assistant was launched to enhance customer experience.

5. Market Outlook:

New developments in the ready-to-drink market pave the way for long-term stable growth in China's coffee industry.

Looking ahead, the company will continue to focus on expanding market share and driving healthy business growth. By fully leveraging scale efficiency and continuous product innovation, the company is well-positioned to further consolidate its leadership in the Chinese coffee market.

2.2 Q&A Session

Q: Since the second quarter, the impact of delivery platform subsidies on the ready-to-drink industry has garnered widespread attention. It has brought new developments to the industry. How should we assess the impact of delivery subsidy activities on Luckin Coffee?

A: This is a key topic of recent investor interest. For Luckin Coffee, whether it's pickup or delivery, they are merely different ways for customers to obtain coffee. We always adhere to a customer-first core value, committed to deeply understanding customer needs and providing excellent service. Since the second quarter, food and delivery platforms have launched numerous subsidy measures, allowing consumers to enjoy high-quality coffee at more affordable prices, leading to a sharp surge in customer demand in a short period. This surge in demand has placed significant pressure on the flexibility of the supply chain, the stability of service, and the reliability of fulfillment.

Fortunately, thanks to our long-term investment in operational infrastructure, especially over the past two to three years, Luckin Coffee has strong capabilities in these areas. We operate over 26,000 stores in all cities across China, and standardized store operating procedures ensure efficient and consistent beverage preparation.

Our deeply rooted supply chain ensures stable product supply, while a mature delivery system supports timely and reliable fulfillment of delivery orders. All these advantages make Luckin Coffee a preferred partner for major food delivery platforms, and the recent subsidy activities initiated by the platforms have, to some extent, created a relatively favorable external environment for our scale-driven strategy. This is directly reflected in the positive momentum we achieved in key operational metrics this quarter, such as new customer acquisition, dormant user activation, and a significant increase in active customer purchase frequency. Looking ahead, although the duration and scale of food delivery platform subsidies remain uncertain, and the market landscape may become increasingly complex, the fundamental demand from consumers for delicious, affordable, and convenient coffee remains unchanged. We will continue to leverage scale and operational efficiency, combined with our strong capabilities in product innovation, brand development, and supply chain execution, to seize evolving market opportunities. In the long term, we believe that our competitive advantages in private domain traffic, digital user operations, and consistently delivering high-value products and quality services will enable us to respond more flexibly and resiliently to future changes in platform dynamics or market conditions, achieving long-term stable growth and promoting healthy and sustainable development of the Chinese coffee market.

Q: Since the beginning of this year, the industry has developed rapidly. Under the current environment and market conditions, what new expectations does the company have for store expansion and financial metrics?

A: The ready-to-drink market in China is one of the fastest-growing and most competitive industries. Since the second quarter, the introduction of many food delivery platform subsidies has once again sparked new developments in the industry. In response to these changes, our company quickly adjusted its strategy, effectively capturing the surge in consumer demand while significantly accelerating the pace of store expansion. As previously mentioned, we added over 2,000 net new stores in the second quarter alone, and over 3,800 in the first half of this year, both figures exceeding our original plan set at the beginning of the year. Looking to the second half of the year, we will continue to closely monitor market developments, seize industry opportunities, and maintain a positive and competitive pace of store expansion to sustain our industry-leading position. We firmly believe that the continued expansion of supply and demand in the Chinese coffee market will lay a solid foundation for our stable and sustainable long-term growth.

Luckin Coffee is still a very young company, and the Chinese coffee market is still in its early stages of development, which presents us with tremendous growth opportunities. We will continue to maintain an entrepreneurial mindset, closely monitor market changes, and focus clearly on surpassing industry growth and expanding market share. Overall, supported by ongoing delivery platform services and our own scale advantages, operational efficiency, and strong execution, we remain cautiously optimistic about our performance for the year. We are committed to achieving high-quality rapid revenue growth. Meanwhile, by fully leveraging our scale effects and continuously improving operational efficiency, we aim to mitigate the potential cost impact of tilting towards delivery and strive to maintain healthy and sustainable profitability.

<End Here>

Risk Disclosure and Statement of This Article:Dolphin Research Disclaimer and General Disclosure