Luckin Coffee (瑞幸)’s margins squeezed as delivery platforms reportedly siphon revenue

Delivery fees are eating profits

It has been reported that Luckin Coffee (瑞幸) is seeing much of its revenue flow straight to third‑party food‑delivery platforms, undercutting profitability even as the chain doubles down on aggressive expansion. Luckin’s 2025 results show annual net revenue approaching 50 billion yuan, up 43% year‑on‑year, yet full‑year net profit grew only 22% and fourth‑quarter net profit plunged nearly 40% year‑on‑year. Delivery costs are the headline culprit: delivery fees reached 16.31亿元 in Q4 and 68.79亿元 for the year (both large year‑on‑year jumps), shrinking Luckin’s net margin to about 7.3%.

Platform economics and promotional warfare

Luckin depends on third‑party instant‑delivery platforms rather than in‑house logistics, so every delivered cup carries a material variable cost — rider commissions, packaging and platform service fees — and those costs vary wildly by platform and by promotional activity. It has been reported that the same Luckin product can be priced very differently across channels (for example, small‑program delivery fees of 6 yuan versus free delivery on some Meituan/Taobao listings, or 1 yuan on JD), and platform coupons and zero‑price promotions further erode per‑cup returns. At store level employees and riders describe delivery shares of roughly 60% of orders; when promotional subsidies flood the market, footfall and profitability do not rise in tandem.

Strategy, competition and the crossroads ahead

Faced with “growth at the cost of margin,” Luckin’s major shareholder 大钲资本 recently acquired the global store business of Blue Bottle Coffee (蓝瓶咖啡), a move that has been framed as either a bold diversification or a risky rescue. Luckin is also broadening beyond coffee — more than 140 SKUs launched in 2025 and non‑coffee drinks now account for over 20% of cups — while continuing rapid store openings (9,212 net new stores in 2025). But analysts warn that in China’s hyper‑competitive café and delivery ecosystem — where the top ten fresh‑brew brands operate some 78,000 stores — scale no longer guarantees healthy margins. Is this a strategic hedge or a high‑stakes gamble? For Western readers, the story highlights a wider trend in China’s on‑demand economy: platform subsidy wars and fragmented channel pricing can transfer value from merchants to delivery networks, and regulation or a shift in consumer behavior could rapidly reshape who benefits.