Luckin’s coffee buzz got a little shaky

The caffeine high is fading

Luckin Coffee just served up a classic “good news, bad news” quarter. Revenue climbed 35% in Q1, helped by a 39% jump in store count to 33,596 locations, but same-store sales for its self-operated shops slipped 0.1%. That’s the kind of number that says the company is still growing fast — but the easy wins are getting a little less easy.

China’s delivery subsidy sugar rush wore off

The real culprit wasn’t some internal stumble. It was the end of a subsidy war in China’s takeout market. JD.com kicked off the delivery arms race, Alibaba-backed Ele.me revamped its game, and Meituan had to pile on with its own deals. That meant cheap coffee deliveries everywhere, and Luckin got to ride the wave. Now those subsidies are being scaled back, and the hangover is showing up in the same-store data.

Expansion is doing the heavy lifting

Luckin opened 2,548 new stores during the quarter, pushing its footprint to 33,596 shops by the end of March. That’s aggressive, even by “growth at all costs” standards. The catch? Monthly transacting customers rose 25%, slower than revenue, which suggests the chain is still fighting to turn bargain hunters into repeat regulars.

Investors still liked the script

Despite the softer same-store sales, the market gave the report a standing ovation: Luckin shares jumped 16% after the results. A big reason was the company’s first-ever $500 million buyback, equal to roughly 5% of its market cap. Big picture: Luckin is still growing like a weed, but once the discount confetti stops falling, the business has to prove it can keep customers hooked without the sugar high.