Third-quarter earnings call, November 3, 2026: record non-GAAP profit of RMB 2.1 billion, with store-level margin of 23.3% back near pre-delivery-war levels

Luckin Coffee reported third-quarter results showing that the business can lose a double-digit share of same-store volume and still deliver record profit. Same-store sales at self-operated stores fell 11.1% year-over-year against last year's peak of delivery-platform subsidies. Yet store-level operating margin rose 5.8 percentage points to 23.3%, and non-GAAP net profit rose 51% to a quarterly record of more than RMB 2.1 billion. Management's argument is that the subsidy-era revenue was low quality and that the post-subsidy model, with a much larger store base, earns the same unit margins as before. The numbers largely support that claim, though the top line is clearly still working through a difficult comparison.

Margin Recovery Is the Real Story

Total net revenues grew 17% to RMB 17.9 billion, with GMV up 20% to RMB 20.7 billion. Operating profit rose 55% to about RMB 2.8 billion on a GAAP basis, and the GAAP operating margin reached 15.4%, up 3.8 percentage points. On a non-GAAP basis, operating profit rose 58% to RMB 3 billion, with the margin up 4.4 percentage points. The transcript renders the non-GAAP margin figure inconsistently, so the exact level should be confirmed against the release. Net profit rose 45% to RMB 1.9 billion, a 10.4% net margin.

The mechanics are straightforward. Delivery expenses fell 38% in absolute terms to RMB 1.8 billion and dropped to 10% of net revenues from 19% a year ago, as orders shifted from delivery back to pickup. Self-operated store-level operating profit rose 56% to RMB 3 billion. Management stressed the comparison with the third quarter of 2024: the delivery mix is still much higher today, and the store network has nearly doubled, yet self-operated store-level margin has broadly returned to that earlier level. CEO Guo Jinyi framed this as validation of the "scale growth model."

The margin recovery was not free of costs elsewhere in the P&L. Cost of materials rose to 38% of revenue from 36%, which the CFO attributed to lower average selling prices as delivery mix fell. Store rental and other operating costs rose to 22% of revenue from 20%, reflecting lost scale benefits from last year's subsidy-inflated volumes. Sales and marketing rose 30% to RMB 976 million, or 5.5% of revenue, on "higher traffic-related investment following the subsidy war." G&A rose 36% to RMB 1.1 billion, on higher share-based compensation, payroll and R&D. Operating leverage came entirely from the delivery line.

Same-Store Sales: Improving, but No Numbers Given

The 11.1% decline in same-store sales was the main concern heading into the call. Management said July and August of last year marked the peak of the subsidy war, so the comparison base was hardest in this quarter. It added that the decline narrowed each month from July to September, and that "the pace of improvement has picked up further" in the fourth quarter. It gave no quantified guidance for fourth-quarter or full-year same-store sales, and it did not say when the metric might turn positive. In response to a question from JPMorgan's Jessie Xu, management spent as much time arguing that the metric deserves less weight as it did describing the trajectory.

That argument has some merit but should be read with caution. Management said that for a company still scaling quickly in an early-stage coffee market, growth comes from new stores and efficiency gains as well as existing stores, so it does not "look at same-store sales growth in isolation or as a static measure." It also described a "wave-like pattern": when store openings accelerate and competition intensifies, same-store sales come under pressure, and when openings moderate, they recover. As evidence, it cited the acceleration of openings from the second half of 2023 to the first half of 2024, followed by a rebound to positive same-store growth by the end of 2024 as expansion slowed. The implication is that same-store sales are partly a function of Luckin's own expansion pace. Management said the metric helps it "dynamically adjust the pace of our store expansion," which suggests the opening cadence could slow if comps stay weak. After nearly 2,600 net adds this quarter, investors should watch for that.

Expansion Continues at Pace

Luckin ended the quarter with 38,909 stores globally, up 33% year-over-year. In China it added 2,543 net new stores for a total of 38,630, split between 25,277 self-operated and 13,353 partnership stores. Management said stores opened this year have kept "healthy operating performance." Asked by Goldman Sachs' Michelle Cheng about long-term store potential, it declined to give a terminal store count. It said the ceiling is set by coffee demand, not a fixed number, and that as more people drink coffee more often, "there will be more room for us to open new stores with healthy unit economics."

Customer metrics support that stance. Luckin added more than 28 million new transacting customers, taking the cumulative base to over 520 million. Average monthly transacting customers exceeded 120 million, a record, and average cups per transacting customer also hit a new high. This matters because it shows that new stores are not simply spreading a fixed customer base more thinly. Revenue growth is still outpacing what a flat same-store base would imply, but the gap between 17% revenue growth and 33% store growth shows how much each incremental store dilutes average productivity.

Segment Detail and Product Mix

Self-operated store revenue rose 17% to RMB 12.9 billion. Partnership store revenue rose 12% to RMB 4.2 billion, or 24% of total net revenues, helped by higher cup volumes but dampened by lower delivery service fees. Product sales rose 19% to RMB 13.6 billion, with freshly brewed drinks at RMB 12.4 billion, or about 69% of net revenues.

On products, management highlighted a Thai Milk Tea series launched in August that sold more than 13 million cups in its first week, a record for new products this year. It also pointed to an Ethiopian Gesha Cold Brew and related cold brew products as efforts to reinforce the coffee brand identity. The company launched 41 freshly made beverages and more than 20 snack items in the quarter. The non-coffee success supports the strategy of broadening day-part and occasion coverage, though it also shows that the newest volume driver this quarter was a milk tea, not coffee.

International: Singapore Economics "Largely Proven Out"

Overseas, Luckin added 56 net stores for a total of 279, comprising 103 self-operated stores in Singapore, 22 in the U.S. and 154 partnership stores in Malaysia. Management said it is now the second-largest coffee chain in Singapore by store count and that store-level economics there have "largely proven out." No profitability figures were disclosed, and the international footprint remains below 1% of the network, so the contribution to group earnings is immaterial for now. Management said it will expand internationally "at a varying pace," which signals no push for aggressive rollout, particularly in the U.S.

Balance Sheet and Capital Return

Operating cash flow was RMB 4.1 billion in the quarter. Total cash, including restricted cash, term deposits and short-term investments, stood at RMB 14.3 billion versus RMB 9 billion at the end of 2025, and net cash was RMB 11.1 billion. The board approved a new one-year, $500 million repurchase program, which takes effect only after the existing $500 million authorization is fully used. As of September 30, Luckin had repurchased about 96 million Class A shares, or 12 million ADS, for $391 million under the current program, so roughly $109 million remains on the existing authorization before the new one begins. Together the two programs imply capacity of about $609 million of further purchases, supported by the cash build.

What to Watch

The quarter largely settles the question of whether profitability could be rebuilt once platform subsidies faded. It has not settled how fast same-store sales recover, what the expansion pace will be if they do not, or how much more marketing spend will be needed to keep traffic. Management gave no figures on any of these. The fourth-quarter comparison eases, and the next print should show whether the month-by-month narrowing in comps reaches low single digits or better, with margins holding near 23% at the store level.