China Restaurants: FMD Expert Call Takeaways: Resilient Performance Despite Subsidy Normalization; Improving Pricing Trend
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Goldman Sachs hosted a franchisee expert call covering fresh-prepared beverage operators in Guangdong, including Luckin Coffee, Cotti Coffee, and Chayan Yuese. Despite the normalization of consumer subsidies, the expert call highlighted that industry performance remains resilient, showcasing improving pricing trends and stable demand through late 2025 and early 2026.
During the fourth quarter, daily cup volumes at the expert's stores grew 10% year-over-year for Luckin and 20% to 25% for Cotti. Moving into January and February 2026, volume growth moderated but remained positive at approximately 5% for Luckin and 10% for Cotti.
Pricing dynamics are showing distinct improvement. Luckin's average selling price recovered to over RDB 13 in the fourth quarter, up from roughly RMB 12.5 in prior quarters, aided by reduced discount channel reliance. Cotti's planned phase-out of universal RMB 9.9 promotional pricing starting in March is expected to impact demand only marginally, as alternative discount channels remain available.
Operational optimization continues, with Luckin reducing its delivery ratio to 40% from previous highs. Lowering this ratio toward an ideal 25% to 30% threshold should structurally enhance store profitability.
While established brands navigate market maturity, the expert expressed strong optimism regarding expansion opportunities for Guming and Mixue Bingcheng. Their broadening consumer acceptance and effective product strategies signal ample runway for store network growth in both upper-tier and lower-tier cities.