How does Luckin Coffee grow so fast in S’pore while keeping its coffee so cheap?

Its expansion comes despite reporting a loss here in 2024

Chinese coffee chain Luckin Coffee has only been in Singapore for three years, but it has established a strong foothold in the city. It has grown by 30 stores in the past year, bringing its total number of stores here to 81.

This is despite offering its coffee at deeply discounted prices and reporting losses of up to RMB¥47 million (S$8.8 million) in Singapore by 2024, which is remarkable in the context of Singapore’s notorious F&B landscape.

So what goes into the Chinese brand’s playbook to grow in such a challenging market?

A small number of cafe operators can match

Luckin’s pricing power comes at a scale few store operators can match.

With more than 30,000 stores worldwide—more than Starbucks—the company benefits from large purchase volumes that significantly reduce its cost per cup, allowing store prices as low as S$4, and promotional discounts for users such as S$0.99 for the first coffee.

In 2024, Luckin Coffee signed its biggest deal in the brand’s history—a five-year deal to buy 240,000 tons of Brazilian coffee beans starting in 2025, worth RMB¥10 billion (S$1.87 billion).

CEO Guo Jinyi also claimed that the company accounts for 40% of China’s total imported coffee beans and 60% of Brazil’s imported coffee beans in China by 2024. At this level of purchasing power, Luckin may be able to secure very low costs compared to many coffee operators.

Cost effectiveness also extends beyond the coffee bean.

By 2025, low-cost consumables such as packaging materials and straws cost the company RMB¥210 million (S$39 million) across its 30,000 store network. This translates to S$1,307.64 per store per year, or about S$3.58 per store per day.

Starting in 2021, Luckin also reduced costs by reducing reliance on third-party suppliers and building more of its own manufacturing capabilities.

It has opened smart indoor roasting plants in Fujian and Jiangsu, with an annual roasting capacity of more than 45,000 tons.

In Aug 2024, Luckin also established an Innovation and Production Center in Qingdao with a total investment of approximately RMB¥3 billion and an expected annual roasting capacity of 55,000 tons.

According to its 2025 annual report, another roaster is under construction in Fujian. Once all four are operational, the total roasting capacity will far exceed 155,000 tonnes per year.

This direct integration allows Luckin to control more of its supply chain in-house, reduce middleman costs, and ultimately lower overall manufacturing costs in its store network.

An operating model that keeps costs down

Have you ever struggled to find a seat at Luckin Coffee? That is by design. Most Luckin stores are small in order to keep operating costs low.

About 99% of its stores are 20-60 sqm drop-in stores, with limited or no seating. These stores are strategically located in office buildings, commercial districts, residential areas, and university campuses, allowing the brand to grow quickly while keeping lease and maintenance costs low.

In fact, store opening costs account for 0.2% of total operating costs by 2025.

In Singapore, this format offers a clear advantage: small units mean cheaper rents compared to full-format cafes, which is very important in a market where retail rents are notoriously bad.

Beyond its physical footprint, Luckin’s digital operating model also enables leaner cost structures. The company works with an app-first system where customers order and pay entirely through its platform.

This reduces reliance on cashiers, lowers the risk of order errors, and allows for highly targeted in-app promotions and personalized marketing to users.

Apart from its app, Luckin Coffee is also available on third-party delivery platforms. According to its 2025 report, delivery orders have doubled from 17.1% of total orders in 2024 to 34.7% in 2025 across its network, indicating that Luckin is expanding its reach beyond its store footprint.

Expansion is not as expensive as it seems

Even with low set-up costs, opening 30 stores in Singapore within one year may seem aggressive. However, it is not as capital intensive as it might seem for a large coffee company under its operating model.

In Singapore, most stores are run by franchise partners. These partners pay upfront fees and cover most of the setup and operational costs themselves. This means that each new store is not fully funded by Luckin, which helps the brand to scale quickly with direct and indirect spending.

At the same time, any remaining losses in overseas markets have been effectively absorbed by its largest Chinese business.

For the 2024 fiscal year, Luckin’s Singapore operations reported a loss of RMB¥47 million (S$8.8 million).

However, this is less in the context of the group.

By 2024, Luckin has made more than RMB 34.5 billion (S$6.4 billion) in total revenue, and about RMB¥3.5–3.9 billion (S$653-S$728 million) in operating profit driven primarily by its China business. Against that scale, Singapore’s losses are negligible.

Singapore is not the group’s profit center, but is part of a long-term international expansion strategy.

Standing out in Singapore’s competitive coffee scene

From America’s Starbucks to China’s Cotti Coffee, and even local coffee houses, the competition for market share among coffee brands in Singapore is not short, as Singaporeans have many options to choose from.

So what makes someone choose Luckin over other specialty coffee shops and those in our local coffee shops?

Although Luckin’s coffee does not start at RMB 10 (S$1.87) per cup as it does in China, at S$4.80 for an Americano, it is still cheaper than many other coffee suppliers, including Starbucks, where prices start at around S$6.30.

This also does not include the personalized discounts that Luckin offers to users who order through its mobile app.

Luckin’s CEO Guo shared why Singapore was specifically chosen as Luckin’s next big market:

Singapore serves as an important testing ground for building our brand, refining our operating systems, and understanding overseas business models.

The city serves as Luckin’s launch point for Southeast Asian countries, where it shares that it will operate a franchise model.

Although individual figures for 2025 for Luckin’s operations in Singapore are not available and are combined with those in Malaysia and the United States after further expansion, the coffee giant shows no signs of slowing down.

In China, the journey from loss-making in 2020 to explosive market leader took Luckin nearly five years. In Singapore, a city of six million people with a coffee shop on almost every corner, the competition is fierce.

But for Luckin, the heightened competition is precisely the point—if the model works here, it can work anywhere in Southeast Asia.

• Read other articles we’ve written about Singapore businesses here.

Featured Image Credit: Sentosa/ Tatler Asia