Image Source: Visual China

BEIJING, May 25 (TMTPOST) — Chinese coffee chain Luckin Coffee achieved profitability in Q1, bringing in a net profit of around 19.8 million yuan, the company’s 2022 Q1 earnings report shows.

The earnings report shows that Luckin Coffee achieved revenues of 2.4 billion yuan in Q1, registering year-on-year growth of 89.5% from last year’s 1.27 billion yuan. Net profit was 19.8 million yuan, a drastic improvement compared with the net loss of 232.5 million yuan in Q1 last year.

This is the first time for Luckin Coffee to achieve profitability in a quarter.

Guo Jinyi, Luckin Coffee’s board chairman and CEO, believes that the company was able to achieve profitability because of chain stores’ management ability and new products. “Q1 was a quarter in which Luckin Coffee’s chains struggled with sales. But Luckin Coffee rolled out 34 new drinks in the first quarter, which helped us achieve the sales performance,” Guo said.

It is worth noting that Luckin Coffee’s new drink that combines coconut juice with coffee latte sold 4.95 million units in the first week after its launch, far exceeding expectations.

In Q1, Luckin Coffee imported over 3,000 tons of high-quality coffee beans from Ethiopia, becoming a major buyer of Ethiopian coffee beans, In April 2021, Luckin Coffee’s first coffee bean roasting plant entered operation in Fujian Province. The plant is designed to have a production capacity of 15,000 tons. Luckin Coffee is currently screening sites for its second coffee roasting plant.

Guo stated that investments in the upstream of the coffee bean industry can help ensure quality of the ingredients and reduce cost.

In Q1, Luckin Coffee opened 566 new outlets, registering a year-on-year increase of around 33%. As of Q1 2022, Luckin Coffee has 6,580 outlets, 4,675 of which are under the direct management of Luckin Coffee.