Chongqing - China's coffee market is undergoing a dramatic structural shift. On November 24, budget coffee chain Lucky Cup announced it had surpassed 10,000 stores worldwide—becoming one of the country’s first homegrown "10,000-store" café brands. The milestone highlights a broader trend: affordable coffee is expanding at breakneck speed, while the premium segment is showing clear signs of fatigue.
What is driving this "hot-and-cold" divide in China’s coffee consumption?
Lucky Cup announces that its global store count has surpassed 10,000. (Photo provided by the interviewee)
Budget Coffee Boom
Founded in 2017 under the Mixue Group, Lucky Cup has built its identity around “high-quality, low-price” freshly brewed coffee. Most drinks are priced between 6–8 RMB (0.85-1.13 USD), covering classic, trendy, and innovative offerings.
This year, the brand has aggressively expanded nationwide. In just ten months, its store count doubled, now covering more than 300 cities across China—from Tier-1 hubs to smaller urban centers and lower-tier markets—making it one of the fastest-growing players of 2025.
“In Chongqing alone, Lucky Cup now has 90 contracted stores—more than double the number at the start of the year,” a company representative said. The brand’s rapid rise is fueled by both product and operational efficiencies, alongside strong supply-chain support from Mixue Group.
Lucky Cup is also among the few brands in the industry to control raw material sourcing, operate its own roasting facilities, and maintain in-house logistics. Shared access to five production bases and 29 warehouse centers enables a 12-hour distribution network, ensuring fresh beans and highly efficient operations.
But Lucky Cup is not the only beneficiary of the low-price boom.
According to long-term tracking of 27 coffee chains, 3,725 new stores opened in September alone—up 103% year-on-year. Market concentration is increasing: Luckin Coffee remains the industry leader with 27,000 stores, followed by Cotti Coffee with 14,000.
Premium Coffee Cools
In stark contrast, premium coffee brands are facing pressure.
Starbucks’ fiscal year 2025 results show that, although revenue in China grew 5% year-over-year to USD 3.105 billion, same-store sales declined by 1%. Foot traffic rose by 4%, but the average ticket dropped 5%.
To address weakening momentum, Starbucks launched its first large-scale price adjustment in China in more than 20 years. Since June 10, prices for selected non-coffee beverages—such as Frappuccinos, shaken teas, and tea lattes—have been cut by an average of 5 RMB, with some drinks now as low as 23 RMB.
Other high-end or specialty brands are also quietly adjusting strategies. Peet’s Coffee, Manner, and others have reportedly trimmed prices or closed underperforming locations.
“Coffee options are everywhere,” said consumer Ms. Chen. “With chains and neighborhood cafés selling drinks for as little as 9.9 RMB, why would I spend over 30?”
Why the Divide?
Experts say the divergence stems from a fundamental shift in how coffee is consumed in China.
The related report, released by China Insights Consultancy, shows that coffee consumption is spreading from white-collar workers in top-tier cities to young customers and residents in lower-tier cities. Coffee is transitioning from a “social luxury” to a daily necessity.
As coffee becomes more of an everyday beverage, consumers place far greater emphasis on value for money. High-frequency purchases make sustained high price points harder to justify, allowing low-priced, high-quality brands to dominate mainstream demand.
Product strategy also plays a role. Budget brands have been quick to cater to local tastes with rapid product iterations. Lucky Cup’s coconut latte alone has sold more than 100 million cups, generating over 1 billion RMB in revenue. The brand’s dual model—combining blockbuster classics with seasonal new releases—keeps the menu fresh and the brand competitive.
Looking ahead, analysts believe competition will continue to intensify and gradually shift from front-end store expansion to back-end supply-chain capabilities. As brands confront rising costs, product homogeneity, and price wars, supply-chain stability and efficiency will become the industry’s most critical advantage.