S$4 coffee, 81 stores: How is Luckin Coffee expanding rapidly in S’pore while keeping its coffee so cheap?

Its expansion comes despite reporting losses here in 2024

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

This is despite offering its coffee at heavily discounted prices and reporting losses amounting to RMB¥47 million (S$8.8 million) in Singapore in 2024, all the more notable in the context of Singapore’s notoriously tough F&B landscape.

What, then, goes into the Chinese brand’s playbook for expanding in such a challenging market?

A scale few café operators can match

Luckin’s pricing power comes from a scale few café operators can match.

With over 30,000 stores globally—more than Starbucks—the company benefits from massive purchasing volumes that significantly reduce its cost per cup, enabling retail prices as low as S$4, and even promotional offers such as S$0.99 coffee for first-time users.

In 2024, Luckin Coffee signed its largest procurement deal in the brand’s history—a five-year agreement to purchase 240,000 tonnes of Brazilian coffee beans starting in 2025, valued at RMB¥10 billion (S$1.87 billion).

CEO Guo Jinyi has also claimed that the company accounted for 40% of China’s total coffee bean imports and 60% of Brazilian coffee bean imports into China in 2024. At this level of purchasing power, Luckin is likely able to secure significantly lower costs compared to most café operators.

Cost efficiencies also extend beyond coffee beans.

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

Since 2021, Luckin has also reduced costs by cutting reliance on third-party suppliers and building more of its own production capabilities.

It has opened in-house intelligent roasting plants in Fujian and Jiangsu, which have an annual roasting capacity exceeding 45,000 tonnes.

In Aug 2024, Luckin also broke ground on an Innovation and Production Centre in Qingdao with a total investment of approximately RMB¥3 billion and an expected annual roasting capacity of 55,000 tonnes.

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

This vertical integration allows Luckin to control more of its supply chain in-house, reduce intermediary costs, and ultimately lower overall production expenses across its store network.

An operating model that keeps costs lean

Ever struggled to find a seat at a Luckin Coffee outlet? That’s by design. Most Luckin stores are intentionally small to keep operating costs low.

Around 99% of its outlets are compact pick-up stores of 20–60 sqm, with limited or no seating. These stores are strategically located in office buildings, commercial districts, residential neighbourhoods, and university campuses, allowing the brand to expand rapidly while keeping rental and renovation costs low.

In fact, store pre-opening expenses accounted for just 0.2% of total operating expenses in 2025.

In Singapore, this format provides a clear advantage: smaller units mean cheaper leases compared to full-format cafés, which is especially crucial in a market where retail rents are notoriously high.

Beyond its physical footprint, Luckin’s digitalised operating model also enables a leaner cost structure. The company operates on an app-first system where customers order and pay entirely through its own platform.

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

Besides its own app, Luckin Coffee is also available on third-party delivery platforms. According to its 2025 annual report, delivery orders doubled from 17.1% of total orders in 2024 to 34.7% in 2025 across its whole network, which shows that Luckin is extending its reach beyond its physical store footprint. 

Expansion doesn’t cost as much as it looks

Even with lower set-up costs, opening 30 stores in Singapore within a single year might seem aggressive. However, it’s not as capital-intensive as it might appear for the coffee giant under its operating model.

In Singapore, many outlets are run with franchise partners. These partners pay upfront fees and take on much of the setup and operating costs themselves. This means each new store is not fully funded by Luckin, helping the brand scale more quickly with less direct capital outlay.

At the same time, any remaining losses in overseas markets are effectively absorbed by its much larger China business.

In financial year 2024, Luckin’s Singapore operations reported losses amounting to RMB¥47 million (S$8.8 million).

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

In 2024, Luckin generated over RMB 34.5 billion (S$6.4 billion) in revenue overall, alongside approximately 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 effectively marginal.

Singapore is not a profit centre for the group, but part of a longer-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 amongst coffee brands in Singapore is nothing short of steep, as Singaporeans have so many options to choose from.

So what makes one choose Luckin over other specialty coffee shops and those at our local coffee shops? 

While Luckin’s coffee doesn’t start from 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 café operators, including Starbucks, where prices start at around S$6.30.

This also does not account for the personalised discounts Luckin offers to users who order through its mobile app.

Luckin CEO Guo shared why Singapore was specifically chosen as the next big market for Luckin: 

Singapore serves as a critical testing ground for building our brand, refining our operational systems, and understanding overseas business models.

The city-state serves as Luckin’s launchpad into Southeast Asian countries, where it shared that it will adopt a franchise model.

While individual 2025 figures for Luckin’s Singapore operations are not available and are grouped with those of 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 an explosive market leader took Luckin roughly five years. In Singapore, a city-state of six million people with a coffee shop on nearly every corner, the competition is steep.

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

• Read other articles we’ve written on Singaporean businesses here.

Also Read: This is the only S’pore cafe to make the World’s 100 Best Coffee Shops list, twice in a row

Featured Image Credit: Sentosa/ Tatler Asia