Luckin Coffee’s Q1 2022 financial report showed a positive sign for the company’s development. The growth in its stores opening marked the company’s position in China’s coffee market.

On May 24, 2022, Luckin Coffee (LKNCY) released its unaudited financial report for Q1 2022. The net revenue of Luckin Coffee for this quarter was CNY2.4 billion ($360.9 million), up 89.5% compared with CNY1.3 billion ($195.5 million) in Q1 2021.

The Q1 2021’s net loss was CNY232.5 million ($34.9 million). In contrast, Luckin Coffee reported a net profit of CNY19.8 million ($3 million) in Q1 2022, indicating that this was the first time that the company’s quarterly operating profit turned positive since its establishment.

The first quarter used to be Luckin Coffee’s hardest period in a year due to the decrease in purchases during the Lunar Chinese New Year. However, this quarter has been markedly different for the company, and indicated its potential to grow in the future.

In Q1 2022, Luckin Coffee opened in a total of 556 new stores, up 9.2% compared with the previous quarter. As of the end of the first quarter, the number of Luckin Coffee stores was 6,580, including 4,675 self-operated stores and 1,905 affiliated stores. This indicates that Luckin Coffee has the highest number of coffee stores in China.

Compared with the well-known coffee company, Starbucks (SBUX), Luckin coffee has more than 1023 stores in China. The revenue of self-operated stores for Q1 2022 was CNY1.7 billion ($255.6 million), up 66.2% year-over-year. The revenue of affiliated stores was CNY549.3 million ($82.6 million), up 239.3% year-over-year. The average number of monthly transaction users of Luckin Coffee was 16 million, up 83% year-over-year.

However, due to COVID-19, Luckin Coffee is facing difficulty in maintaining its stores. Some temporary stores of Luckin Coffee were experiencing shutdowns due to several reasons. Especially during the serious lockdown of parts of the regions in Beijing and Shanghai, Luckin Coffee’s retail stores were seriously affected.

However, Mr. Guo, Luckin Coffee’s chairman and CEO, commented on the Chinese coffee market as an incremental market with extremely high growth potential. Luckin Coffee also expressed its incentives in exploring new, other areas to grow its business.