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Introduction

Luckin Coffee Inc. is a coffee chain originated from China since 2017 that has become the leading coffee brand in China. The company leveraged the Chinese market with technology-centric and on-demand business focus. Luckin Coffee aimed to not merely sell coffee, the company embedded itself into the daily lives of Chinese people, through a solid foundation prioritizing convenience, affordability, and intense expansion. The core of the business model of Luckin Coffee focuses on a cashier-less store ecosystem, to differentiate itself from numerous coffee brands. The company operates pick-up only stores located in commercial districts, office buildings, and university campuses.

Luckin Coffee expanded into Hong Kong in 2023, marking the brand’s milestone of expanding outside mainland China. Facing the near-matured coffee market of Hong Kong with high demand from diverse consumer base, the competition is intense from international and local coffee brands.

The report assesses the strategy of Luckin Coffee with the Balance Scorecard. The objectives are divided into the four key perspectives: Financial, Customer, Internal Processes, and Learning & Growth. The balanced view of performance analyzes beyond financial measures, to ensure the brand’s operational activities are aligning with long-term goals.

Analysis of Company Strategic Objectives

From the company website, the company stated affordability, convenience, and technology as primary focus. Additionally, Luckin Coffee upholds the following objectives:

Rapid Local Expansion and Market Penetration

Luckin Coffee’s strategy focuses on aggressive expansion of store locations, to achieve scale and brand presence, with small-sized and pickup-oriented stores. To illustrate the ambition of Luckin Coffee, according to Yu (2025), Luckin’s successfully “overtaken Starbucks on the mainland, with more than twice as many outlets”, showcasing the ambition of Luckin Coffee in revolutionizing the coffee market in mainland China.

Product Innovation

Luckin Coffee focuses on developing locally-inspired beverages to differentiate the brand and build customer loyalty, based on innovation rather than simply low cost.

The company suffered notable investor trust from the massive fraud, suspected by short-sellers. The stock price of Luckin Coffee, listed on LSEG, has shown recovery since the exposure of scandal news in 2020. The company demonstrated effort in building solid foundation of performance to gain investor trust and rebuild reputation in the market.

Rebuilding Governance, Trust, and Transparency

Financial

The financial perspective of Luckin Coffee Inc. will focus on the measures of its efficiency in supply chain, pricing power, operations and building customer loyalty due to company’s aggressive pricing strategy and rapid expansion.

Monthly transacting customers (MTC)

Monthly transacting customers measures the number of individual customers who made at least one purchase in a given month which shows the size of active customer base. The growth of MTC indicates the success of company’s customer acquisition and retention. Also, more transacting customers drive revenue and shows the market share of firm. Hence, achieving the goal of deepening customer loyalty and frequency.

Operating cash flow

Due to the rapid expansion and financial restructuring of company, maintaining a positive and growing operating cash flow is essential. It shows the ability of its core business can fund the operations, investments, and growth without using external financing. This metrics can act a test of firm’s business model to provide the financial stability needed for future expansion.

Gross profit margin

Luckin Coffee Inc. focused on the aggressive pricing strategy and the control of the cost of product. This metric reflects company’s ability to balance affordability with profitability. An improving gross profit margin indicates efficient supply chain and effective pricing power which is essential for achieving sustainable profitability.

Customer

Luckin Coffee’s growth model relies on high-frequency consumption and price-driven competitive positioning, the customer perspective incorporates measures of performance that translate customer behavior into economically meaningful outcomes.

Customer Retention & Repeat Purchase Rate

Retention is financially critical because the marginal cost of keeping a customer is significantly lower than acquiring a new one. Tracking metrics such as repeat purchase frequency or cohort retention allows controllers to assess whether the customer base is becoming more loyal, which stabilizes cash flows and reduces volatility. Higher retention also reflects operational consistency and product satisfaction.

Customer Lifetime Value (CLV) Adjusted for Acquisition Cost (CAC)

From a financial control viewpoint, the sustainability of Luckin's scale relies on whether the average customer creates net positive economic value. Measuring CLV relative to CAC provides visibility into profitability of the cohorts acquired, especially in an app-based model with high initial promotional spending. A rising CLV/CAC ratio indicates monetization efficiency of customers, healthier unit economics, and stronger long-run cash flow prospects.

Rather than just measuring satisfaction or repeat visits, an economics-focused BSC would measure the share of wallet-the proportion of total coffee expenditure-customers spend with Luckin versus its competitors. Higher SOW indicates stronger customer preference, improved competitive positioning, and deeper market penetration. Economically, this metric captures Luckin’s ability to convert customer demand into recurring revenue while exploiting economies of scale.

Share of Wallet in the Urban low-cost Coffee Market

Internal Process

Fulfilment Time

To reinforce the brand’s commitment to convenience, the internal fulfilment time is the most critical measurement. A speedy service leads to customer satisfaction, thus to better handle vast volume of orders during peak hours. Unlike the majority of coffee shops, the brand promotes its speed rather than cozy environment. Luckin Coffee’s app-first approach and automated ordering system at over 41,000 locations. The brand showcases the integration of traditional industries and digital transformation, which successfully reduce wait time.

Luckin Coffee faces intense competitive from a near-mature market in Hong Kong and some urban mainland China cities, aggressive product innovation is one of the tactics to stand out. Continuously introducing new products drives engagement, repeat purchases, and retain customers; thus successfully penetrating the coffee market. For instance, the most successful new product of Luckin Coffee is their Coconut latte, with 2 million sales per day. Therefore, non-stop trial-and-errors of new product attract and retain customers.

Luckin Coffee balances market coverable, customer convenience, and operational costs by strategically managing store portfolio. The brand shifted from blind expansion to profitable growth, closing underperforming stores and expanding more profitable “pick-up” stores. The internal process improvement, i.e., a mix of different store types – offering balancing business model, maximizes the ROI per store.

New Product Launch Frequency

Store Network Optimization

Learning & Growth

For a fast-growing coffee brand, Luckin Coffee emphasizes learning and growth in a company- wide scale. The following performative measures validates the objective.

Employee Training Hours

Luckin Coffee spends significant amount of money on employee training to ensure operational excellence and accuracy. According to Bennett (2025), the company conducts training on sales, productivity, customer satisfaction and engagement, and knowledge growth; and the results demonstrated success, further benefited both employees and the business itself.

Rapid Innovation Cycle

The company upholds strong focus on continuous product innovation. The locally-inspired products are catering to varying customer preferences, further emphasizing the customer-centric value of the brand. Luckin Coffee introduced 119 products in one-year time, continuously refreshing its menu. Furthermore, the company establishes various departments to streamline product innovation, e.g., product analysis, R&D, menu management, and product testing. The newly introduced products keep the brand exciting, further standing ahead of trends and rivalries.

Technology-Centric

Luckin Coffee utilizes an app for end-to-end customer service, ensuring a hassle-free experience for consumers. The brand introduced Luckin pop MINI (瑞划算) and Luckin Coffee Express (瑞即購), unmanned coffee vending machines, targeting to expand coverage. Furthermore, the company emphasizes a speedy service, requiring orders to be done within 2 minutes, an automatic distribution system works as an analytical tool for store managers to handle workload during peak hours, while most importantly to ensure timeliness and quality simultaneously.