Listing, “Encirclement,” And RMB 2.89 Billion Delivery Fees: Luckin Coffee Has No Way Back In 2025

China’s Coffee Market In 2025 Is Unfolding With More Drama Than A Commercial Series.

On One Side Is Starbucks China, Which After 26 Years In The Country Has Ceded 60% Of Its Controlling Stake To Boyu Capital, Ending Its Era Of Independent Leadership. On The Other Side Is Luckin Coffee, Once Disgraced By Financial Fraud, Now Boldly Announcing Plans For A Second Listing In The United States.

This Retreat And Advance Represent A Direct Clash Of Two Business Models And Two Growth Logics. Starbucks’ “Third Space” Narrative Is Fading In China, While Luckin’s “Quick Access And Affordable” Model Is Redefining How Chinese Consumers Drink Coffee.

Luckin’s Confidence Appears Solid. Its Latest Q3 2025 Financial Report Shows Total Net Revenue Surged 50.2% Year-On-Year To RMB 15.29 Billion, Setting A New Quarterly Record, Though Net Profit Remained Nearly Flat. Net New Store Openings Reached 3,008, Bringing The Total To 29,214 By Quarter’s End—Second Only To MIXUE BINGCHENG Among China’s Chain Freshly Prepared Beverage Players.

Luckin’s Current Growth Is Largely Driven By Traffic And Subsidies From Food Delivery Platforms, A Strategy Requiring Heavy Ongoing Channel Costs. This Explains CEO And Co-Founder Guo Jinyi’s Concern About Growth Sustainability Once Subsidies Fade. It Is Not Only A Matter Of Switching Growth Engines But Also A Test Of Growth Quality And Business Model Independence.

When Growth Relies Heavily On External Platforms, Will Luckin Have Enough Brand Stickiness And Operational Efficiency To Maintain Momentum Once Subsidies Recede? Is This Surge, Ignited By Food Delivery Battles, Paving The Way For A Rebirth Through Relisting, Or Is It Merely An Illusionary Mirage?

Performance Surge: Victory Of Model Or Inertia Of Subsidies? Luckin’s Financials Reveal A Dangerous “Shift From Substance To Illusion,” Using Offline Cost Structures To Support An Online Growth Frenzy.

The Growth Figures Are Enticing. This Quarter, Self-Operated And Partnership Store Revenues Rose 47.7% And 62.3% Respectively, While Same-Store Sales Rebounded From -13.1% To +14.4%, Reflecting Improved Store Efficiency.

Yet The True Picture Lies In Margins. While Revenue Soared Over 50%, Operating Profit Grew Only 12.9%, With Both Operating And Net Margins Significantly Compressed. At The Store Level, Operating Profit Margin For Self-Operated Outlets Fell From 23.5% A Year Ago To 17.5%.

The Turning Point Stems From Swelling “Platform Bills.” Delivery Expenses Reached RMB 2.889 Billion This Quarter, Up 211.4% Year-On-Year, Accounting For 19% Of Revenue. This Means RMB 19 Out Of Every RMB 100 Earned Went To Delivery.

This Cost Structure Is Not Simply Trading Price For Volume But A Restructuring Of The Growth Model. Luckin’s Once-Proud High Efficiency And Self-Channel Model Through In-Store Pickup Is Being Diluted By Third-Party Online Channel Costs.

Ironically, Luckin Had Already Withdrawn From Its Self-Led “RMB 9.9 Price War” Against COTTI COFFEE, Yet Was Dragged Back Into Platform-Driven Subsidy Battles.

In The First Half Of This Year, COTTI COFFEE, With Nearly All Drinks Priced At RMB 3.9, Became The First Brand On JD.COM’s Food Delivery Platform To Surpass RMB 100 Million In Sales, Forcing Luckin To Follow Or Risk Losing Users And Orders.

Even Though Luckin’s Same-Store Sales Grew 14.4% In Q3 2025, This Was Weaker Than The 19.9% Growth In Q3 2023 During The Height Of The RMB 9.9 Price War With COTTI COFFEE, Showing Food Delivery Battles Had Less Impact Than Direct Price Wars.

Nevertheless, Luckin’s Current Strategy Prioritizes Market Share And Scale Over Short-Term Profit. “In The Short Term, The Rising Share Of Delivery Does Negatively Affect Margins,” Guo Jinyi Admitted, Adding That Delivery Is Only A Temporary Lever. “This Is A Stage In Industry Development And Strategic Advancement, And Overall I Think It Is Acceptable.”

Essentially, Luckin Is Using “Strategic Concessions” In A Still-Expanding Market To Achieve Two Goals: Suppress Competitors’ Survival Space And Capture Dominant User Mindshare. With Gross Margin Near 64%, Its Growth Remains The Result Of An Effective Business Model Combined With Sustained Investment, Though Far From Effortless.

Management Acknowledges That This Year’s Subsidy Battles Created A High Base. Guo Jinyi Believes Costly Delivery Cannot Be A Long-Term Path, And Challenges Will Arise Once Subsidies Fade.

This Highlights The Dilemma In The Tea-Coffee Sector: When Platforms Control Traffic, How Can Brands Balance Dependence With Autonomy?

Competitive Encirclement: Starbucks’ Shift And Cotti’s Pursuit - Coffee’s Narrative In China Has Undergone A Profound Paradigm Shift.

For Years, Starbucks’ “Third Space” Model—Blending Social Attributes, Experiential Economy, And Identity Symbolism—Dominated. Yet This Heavy-Asset, High-Premium Approach Failed To Produce A National Brand, Conf ining Coffee To Niche Circles And Urban Landscapes.

Luckin Disrupted By Decoupling “Space” From “Beverage,” Positioning Itself As A Precise Starbucks Substitute, Redefining Coffee As A Cost-Effective Daily Functional Drink. Through Small Quick-Pickup Stores And Aggressive Internet-Style Subsidies, Luckin Democratized Coffee, Transforming It From Cultural Symbol To Everyday Commodity.

This Was Not Mere Brand Competition But A Paradigm Shift Driven By Capital, Technology, And Local Insight. Its Path Mirrored DIDI And MEITUAN: First Using Capital To Build Scale And Habits, Then Seeking Profitability.

By January 2022, Luckin’s Store Count In China Surpassed Starbucks. In Q2 2023, Luckin’s Revenue In China Exceeded Starbucks China For The First Time. In July 2025, Luckin Entered Starbucks’ Home Turf, Opening Two Pilot Pickup Stores In Manhattan’s Midtown, While Starbucks China Was Reduced To Selling Control.

But This Is Not The End. Victory Has Spawned New Battles, And Luckin Now Faces Multidimensional Competition. Frontally, Starbucks Is Fighting Back. Under Boyu Capital, Starbucks China Aims To Expand To 20,000 Stores, Accelerating Its Push Into Lower-Tier Markets.

Starbucks’ Pivot Means The Coffee War Has Shifted From Model Competition To Full-Scale Conflict. When The “Third Space” Champion Also Plays Channels And Down-Market Expansion, All Brands Must Reassess Their Moats.

Laterally, COTTI COFFEE Shadows Luckin Closely. Created By Luckin’s Founder Lu Zhengyao, COTTI COFFEE Replicates Luckin’s Playbook Entirely—From Store Locations To Pricing, Marketing, And Expansion Pace—With The Clear Aim Of Slowing Luckin’s Advance.

Even In Manhattan, Where Luckin Is Testing U.S. Waters, COTTI COFFEE Has Already Opened Eight Stores. This Shadow Competition Drains Luckin’s Strategic Resources And Focus.

Beyond Coffee, Tea Giants Like MIXUE BINGCHENG And GUMING Are Aggressively Entering The Coffee Market. LUCKY COFFEE’s Global Store Count Surpassing 10,000 Proves Tea Brands Can Succeed In Coffee.

These Rivals Bring Massive Channel Networks, Deep Market Penetration, Mature Supply Chains, And Stronger Willingness For Price Wars. Luckin’s Americanos Start At RMB 9.9, While GUMING Offers Coffee For RMB 8.

Luckin’s Response Is To Expand Product Boundaries, Launching Tea Drinks Like “Light Jasmine” As Both Growth Exploration And Defensive Counterattack. Yet This Also Means Entering Unfamiliar Territory.

As Model Advantages Erode, Products Homogenize, And Price Wars Become Routine, The Ultimate Battleground Shifts To Supply Chains. This Is No Longer Solvable By Marketing Blitzes But Requires Enduring Systems Of Upstream Integration, Cost Control, And Digital Efficiency.

Whether Luckin Can Build A Deep And Wide Supply Chain Moat Amid Encirclement Will Determine If This Revolution Ushers In A New Era Or Becomes Another Quickly Replicated Template.

Luckin Coffee’s Rise And Fall Is One Of China’s Most Dramatic New Retail Stories. Its Initial Success Came From Applying The Internet’s “Burn Cash For Scale” Model To Offline Retail During The Peak Of The New Retail Concept. In May 2019, Just 18 Months After Founding, Luckin Listed On Nasdaq, Setting The Fastest Record For A Chinese Company Going Public In The U.S.

But This Capital-Fueled Frenzy Collapsed Under Fraudulent Performance. In April 2020, Muddy Waters Released A Short-Selling Report Exposing RMB 2.2 Billion In Fabricated Financials. Fake Transactions And Inflated Revenue Caused Luckin’s Stock To Crash Overnight, Triggering Class-Action Lawsuits, Massive Fines, Management Upheaval, And Nasdaq Delisting In June.

Luckin Became Synonymous Not With Innovation But With Greed And Deception, Leaving A Stain Requiring Long-Term Redemption.

Over The Past Five Years, Luckin Embarked On A Difficult Self-Rescue, Shifting From Rough Expansion To Refined Operations. Objectively, Its Comeback Has Been Impressive, But Capital Markets Scrutinize Far More Harshly Than Consumers.

Since 2023, To Counter COTTI COFFEE’s Close Competition, Luckin Accelerated Expansion Via “Store-Attached Franchising.” By July 2024, Stores Surpassed 20,000, And By September 2025 Reached 29,214—Averaging One New Store Every 1.1 Hours Over Two Years.

HUAYUAN SECURITIES Estimates Luckin’s Maximum Store Capacity At About 39,000 Given Stable Urban Disposable Income, Leaving Fewer Than 10,000 Stores Of Growth Potential.

Growth Inevitably Hits Ceilings. Even MIXUE BINGCHENG, After Surpassing 40,000 Stores By End-2024, Faced Declining Single-Store Efficiency And Slowed Expansion To Focus On Profitability.

Clearly, Capital Markets Now Prioritize Sustainable Profit Growth. Scale Alone Is Insufficient; Each Store Must Maintain Healthy Profitability. Affected By The Food Delivery Battle, Luckin’s Growth Engine Shift Highlights Dependence On Subsidies And Delivery Channels. Markets May Accept Short-Term Strategic Investment But Will Not Endlessly Endorse “Trading Profit For Share.” The Strong Rebound Of Same-Store Sales From 2024’s Negative Growth To Double-Digit Growth Is A Positive Signal, But It Must Prove Sustainability Rather Than A Subsidy-Driven Spike.

Perhaps Due To Uncertainty Around The Delivery War, Guo Jinyi Quickly Tempered His Listing Statements. At A Recent Xiamen Entrepreneurs’ Day Event, He Said The Company Was Actively Pursuing A Return To The U.S. Main Board. By The Q3 Earnings Call, He Noted The Company Would Continue To Monitor U.S. Capital Markets And Currently Has No Clear Timeline For Returning To The Main Board.

This Reflects Luckin’s Deeper Predicament: Before Subsidy-Driven Growth Proves Sustainable, A Rushed Listing Could Expose Fragility In Its Business Model And Squander Hard-Won Market Trust. The Astonishing Rally On The Pink Sheets Embodies Expectations Of Business Recovery And Speculation On A Main-Board Return, Rather Than A Full Endorsement By Mainstream Capital Of Governance Transparency And Growth Quality.

If Luckin Ultimately Returns To U.S. Markets, It Will Not Be A Simple “Feel-Good” Reversal, But A Prolonged Campaign To Repay Credibility Debt With Time, Performance, And Sincerity—Seeking A Revaluation Of Its True Worth. This Path May Be Far More Arduous Than Business Expansion.