Luckin Coffee Overseas Franchising and Supply Chain Localization

📌 Background

By 2026, Luckin Coffee reached a scale of 36,000 stores, with Q2 total net revenue of approximately 15.9 billion RMB, a year-on-year increase of 28.5%, signaling that domestic growth is nearing its ceiling. Industry competition has shifted from store density to product quality, operations, and user value, prompting leading brands to accelerate their search for a second growth curve overseas. Luckin is leveraging a franchise model combined with supply chain localization and a digital membership system to export its proven domestic operational capabilities to markets in Southeast Asia, the Middle East, and beyond.

👤 Target Customers

Overseas franchisees, young coffee consumers abroad, and the overseas Chinese community. Franchisees pay franchise and operational fees, while consumers pay for coffee products.

💰 Revenue Streams

1) Franchise fees and raw material supply revenue from overseas stores; 2) Coffee sales and merchandise revenue from directly operated stores; 3) Service fees for supply chain solutions and digital system exports.

🧮 Cost Structure

Overseas store construction and rent, investment in localized supply chain facilities, cross-border logistics and warehousing, brand marketing and digital system development/maintenance, and regional management team costs.

🛡️ Moat

Supply chain scale and management experience accumulated from 36,000 stores; a proprietary digital ordering and membership system that can be migrated as a whole; cost advantages from bulk procurement supporting a high-quality, low-price strategy.

🔑 Keys to Success

• Ability to execute supply chain localization
• Franchisee selection and operational empowerment system
• Adaptation of the digital membership system for overseas markets

⚠️ Risks

• Overseas store profitability model has not yet been fully validated
• Low-price strategy may trigger price wars in overseas markets
• Long development cycles and high investment requirements for localized supply chains

🏢 Cases

• Luckin Coffee's Q2 2026 financial report shows total net revenue of approximately 15.9 billion RMB, a year-on-year increase of 28.5%
• Luckin's store count reached 36,000 as it continues to expand into overseas markets

📊 SWOT Analysis