Luckin unveils its "Going to the Countryside" plan: Supply and marketing cooperatives become its new springboard

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On February 8th, Luckin Coffee’s 30,000th store nationwide was announced to open in Shenzhen’s Galaxy Twin Towers.

From ten thousand stores to thirty thousand stores, Luckin took only a year and a half to push the scale ceiling of China’s coffee industry to unprecedented heights.

But behind these record-breaking numbers, Luckin’s actions are starting to become “un-Luckin-like.”

This new store, dubbed the “Origin Flagship Store,” occupies 420 square meters over two floors, equipped with semi-automatic machines, veteran baristas, exclusive specialty and pour-over menus, projecting a distinct high-end image.

Market speculation suggests Luckin intends to revisit the “big-store model” amid fierce industry competition, absorbing overflow social demand from brands like Starbucks and filling in its “slow scenario” gap.

However, in terms of creating more incremental growth, Luckin’s focus remains on county-level markets where coffee penetration is still low.

Recently, Luckin announced it had signed a strategic agreement with Supply and Marketing Daji Group Co., Ltd., clearly stating it will bring the coffee consumption experience down to county and township levels.

As a “veteran force” with decades of experience in county-level commerce and the supply and marketing cooperative system’s only nationwide listed company, Supply and Marketing Daji will undoubtedly be a powerful springboard for Luckin’s deepening entry into county markets.

The competitive landscape of coffee in county regions may thus witness a new evolution.

Luckin’s “New Allies”

When Luckin reached the milestone of 30,000 stores and looked around, the battleground was no longer just a one-on-one faceoff with Cotti Coffee.

In 2025, Lucky Coffee and NOWWA Coffee will also join the “Ten Thousand Store Club,” becoming formidable new rivals.

The former backs on Mixue Bingcheng's supply chain and sweeps through lower-tier and rural markets with extreme cost-performance, "rural encircling urban"; the latter, utilizing "store-in-store" light asset models, precisely captures franchisees eager to boost performance.

This competitive landscape evolution sends out two signals: First, coffee consumption potential in lower-tier markets still has room to grow.

Second, seeking partners with strategic synergy and integrating resources through group operations has become a key breakthrough for scaled competition.

Supply and Marketing Daji may be the "direct elevator" Luckin found for its county market strategy.

This company, formerly Xi’an Minsheng, after capital ups and downs such as HNA’s involvement, in 2024, officially changed actual controller to All-China Federation of Supply and Marketing Cooperatives.

In the first three quarters of 2025, Supply and Marketing Daji’s revenue fell 15% year-on-year to 1.2 billion yuan, net loss turned profitable, but due to a decline in fair value of commercial real estate and asset impairment provisions, full-year 2025 is still expected to be in the red.

From the asset structure, Supply and Marketing Daji owns over 2 million square meters of properties and has built a four-level network system extending from provincial capitals to counties and townships.

Besides flagship department assets in Xi’an, Haikou, etc., its reach extends through supermarket chains, civil defense commercial sites, and hundreds of Shunkelong stores, densely distributed in the core of county commerce.

Moreover, the company manages five operational logistics parks, including Xiangzhong International, Jiangyong, Wufeng, with a total operation area over 700,000 square meters.

Under policy tailwinds to deepen modern circulation systems and boost county-level consumption, Supply and Marketing Daji’s desire to revitalize inefficient assets aligns closely with Luckin’s endogenous need for grassroots growth, achieving logical synergy.

Supply and Marketing Daji holds many inefficiently operating old properties and grassroots sites, urgently needing revitalization through digitization and chain transformation.

Introducing Luckin can not only turn traditional spaces into social consumption venues and boost asset returns, but also precisely reach young county consumers.

For Luckin, traditional expansion via site-by-site negotiations is time and labor-intensive. Cooperating with Supply and Marketing Daji enables integrated, efficient, and scaled channel deployment.

The cooperation focuses on three aspects: Scenario co-building—leveraging Supply and Marketing Daji’s physical network to create unique coffee spaces; Channel sinking—integrating the supply and marketing system for brand penetration; and Supply chain connectivity—streamlining logistics to build an urban-rural collaborative distribution network.

The capital market logic is smooth, but the essence of business, this cooperation still faces a series of real-world challenges.

China’s coffee training system operations mentor, Coco, told All Weather Technology: “The key is, how many Supply and Marketing Daji sites match Luckin’s site model? How high are the renovation thresholds? In county towns, Lucky Coffee and NOWWA are battling closely—what brand will local consumers choose to spend on?”

“Checkpoint” County Coffee

For Luckin and others, the urgency to go lower originates from the shift in growth drivers.

According to monitoring by GeoQ Zhitu, Luckin’s expansion from 20,000 to 30,000 stores focused not on new cities, but on densifying existing provincial and municipal stores.

In this process, the number of provinces/municipalities with over 1,000 Luckin stores grew from 5 to 11.

In Q3 2025, Luckin added over 42 million transactional customers, with a monthly average of 112 million transaction customers, both hitting record highs.

Even with strong increments driven by intensive delivery subsidies, the growth rate of raw material purchases for Luckin’s affiliated stores has begun to lag behind its store growth rate.

This means the dilution effect of single-store output is becoming apparent.

“If the economic fundamentals don’t significantly change, and nationwide demand for coffee quality doesn’t cross a threshold, market incremental opportunities are indeed limited.” said Coco.

Currently, Luckin has entered 1,550 counties and county-level cities, covering over 80% of all counties nationwide, with county-level stores exceeding 7,400. But in vast lower-tier markets, the size difference with locally rooted brands like Lucky Coffee isn’t yet significant.

A chain coffee brand insider told All Weather Technology: The significance of seizing county-level windows lies not only in tapping increments, but also in capturing the “consumer education” narrative, “trying to play Starbucks’ decades-ago urban role.”

At present, “coffee wars” in lower-tier markets haven’t begun dense “street battles” like in major cities: Lucky Coffee’s advantage locations are concentrated in Henan and Shandong, while Guming built an impenetrable distribution radius in the Yangtze River Delta.

The reality is, there are few players truly capable of systematically developing this vast market.

The most expensive part of sinking markets is not rent, but logistics. Lucky Coffee and Guming’s ability to establish stable low-price advantages fundamentally relies on “bringing the supply chain to rural areas.”

Lucky Coffee draws on Mixue Bingcheng’s bulk purchase and bargaining power to push freshly ground coffee to 5.9 yuan per cup.

Guming achieves high-frequency, short-distance delivery by densifying regional warehouses and building its own cold chain, and during promotions can offer cups for as low as 2.9 yuan.

They may not need to deliberately “sink,” since their business models are rooted in these broad market interiors. This built-in gene means their supply chains naturally match the consumption scenes and cost structures of county and township markets, creating their own natural operating radius.

By contrast, for much of its existence, Luckin’s core weapon was the “grab-and-go” model based on high-potential sites.

This model strips space redundancy, keeping only the shortest production and pickup paths, shrinks floor area and raises performance, and quickly covers the market with relatively low prices and high-density outlets.

However, lower-tier cities often lack high-frequency business office scenarios to support grab-and-go needs; coffee demand there is less for “energizing,” more for “socializing.” In county towns, coffee shops often serve as afternoon tea, gathering, or even matchmaking venues.

When cup volumes can’t be sustained by high-frequency rigid demand, Luckin’s previous high-performance myth loses its foundation.

This means that, besides leveraging platforms like Supply and Marketing Daji for channel sinking, Luckin must make key choices in product pricing and spatial attributes.

One route to breakthrough is escaping mud of extreme low prices, shifting the competitive model to “social space,” increasing “space value” to support higher per-cup premiums.

Recently listed snack bulk brand “Ming Ming Busy” emphasizes its offering of leisure and entertainment; Starbucks keeps pushing its “third space” concept in county markets.

But these alone may not be enough.

“Luckin-style digital efficiency and Guming-style supply chain networks are directions all future coffee brands must ‘study,’” says Coco. With cup volume uncertain and logistics high-cost in sinking markets, models relying on external suppliers may be unsustainable.

This explains why Luckin has frequently “brandished its sword” toward the supply end in the past two years.

In 2024, Luckin locked in premium bean sources worth over 10 billion yuan from Brazil. On the production side, roasting bases and fruit processing plants from Kunshan to Baoshan, Yunnan started operation.

In June 2025, Luckin began construction of its fifth factory in Xiamen, with planned annual roasting capacity of 55,000 tons, set to become the largest in the country.

Building “global origin clusters” is also increasingly frequent: securing coconut milk supply in Indonesia’s Bangka Islands, establishing a jasmine flower direct sourcing base in Hengzhou, Guangxi, to target original flavors for best-sellers like “coconut latte” and “jasmine tea coffee”—aiming for deep upstream control of key raw materials for long-term, stable marginal cost advantages.

When Luckin eventually squares off directly with Lucky Coffee in county markets, this fully integrated supply chain will be its trump card for scaling beyond 30,000 stores and overcoming competitive barriers.

Risk Warning and DisclaimerThe market carries risks; investment must be cautious. This article does not constitute personal investment advice nor considers individual users’ unique investment goals, financial conditions, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein fit their specific situation. Investments based on this are at your own risk. ```