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spk00: Ladies and gentlemen, welcome to Luckin Coffee's fourth quarter and full year 2023 earnings conference call. All participants will be in listen-only mode during management's prepared remarks, and there will be a question and answer session to follow. Today's conference is being recorded. At this time, I would like to turn the call over to Ms. Alicia Guo, the head of investor relations of Luckin Coffee for prepared remarks and introductions. Please go ahead, Alicia.
spk02: Hello, everyone, and thank you for joining us on today's call. Locking Coffee announced its fourth quarter and full year 2023 financial results earlier today. Today, you will hear from Dr. Guo Jingyi, Chairman and CEO of Locking Coffee, and Ms. An Jing, CFO of Locking Coffee. After the company's prepared remarks, the management team will conduct a question and answer session based on questions submitted via the company's webcast. We will be referring to a slide presentation on today's call, which can be found via a conference call webcast link, as well as on the company's IR website. The IR website link is investor.lkcoffee.com. During today's call, the company will be making some forward-looking statements regarding future events and results. Statements that are not historical facts including but not limited to statements about the company's beliefs and expectations are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in the company's filings with the SEC. With respect to any non-GAAP measures discussed during the call today, the accompanying reconciliation information related to those measures can be found in the earnings press release issued earlier today. During today's call, Dr. Guo will speak in Chinese and his comments will be translated into English. Now I would like to turn the call over to Dr. Guo Jingyi, Chairman and CEO of Locking Coffee. Dr. Guo, please go ahead.
spk01: 大家好,欢迎参加今天的业绩沟通会。 感谢各位对瑞幸咖啡的持续关注与支持。 我是瑞幸咖啡的董事长兼CEO郭景义。 2023年对公司是极具里程碑意义的一年。 In terms of scale, Ruixin Coffee's number of stores doubled on the basis of last year, creating new high. In terms of performance, in the face of a fierce industry competition environment, Ruixin Coffee has created new high with unique business models, endless product innovations and scale advantages. The overall profit level is healthy and controllable, in line with company expectations and strategic development direction. This quarter, Ruixin continues to give back to consumers. Through the 10,000-storey Tongqing discount event, more consumers enjoy high-quality coffee at a more affordable price. Our new transaction number has created a new record in history. We have also successfully created multiple newspaper products and refreshed the sales record of Ruixin single products. Hello everyone, welcome to today's earnings conference call, and thank you for continuing to support Locking Coffee. I am Locking's Chairman and CEO, Guo Jingyi.
spk02: 2023 was a significant milestone year for Locking Coffee. In terms of scale, the number of Locking Coffee stores doubled from the previous year, reaching a new record high. In terms of performance, despite facing intense industry competition, Locking Coffee achieved another year of record-breaking revenue thanks to its unique business model. Continuous product innovation and skill advantage. The overall level of profit remained healthy and manageable, aligning with our expectations and the direction of our strategic development. In the fourth quarter, Lock-In Coffee continued to reward consumers through the 10,000-store celebration event promotion, allowing more consumers to enjoy high-quality coffee at preferential prices. Meanwhile, our number of new transacting customers also reached a historical high. We successfully created several blockbuster products, breaking records for single item sales at Locking Coffee. Going forward, we will continue to steadily progress according to our established strategy, while expanding market share and consistently providing consumers with high-quality, affordable, and convenient coffee offerings. By doing so, we aim to drive continuous development of the Chinese coffee market while simultaneously rewarding our customers.
spk01: The increase in profits has fallen, but it is in line with the company's expectations. The total income of 7.6 billion yuan increased by 91.2%, the operating profit rate by 3%, the operating profit rate by 13.5%, the sales growth rate by 13.5%, and the number of stores increased by 2,975, and the total number of transactions by 6.2 million.
spk02: Specifically, Locking Coffee experienced robust year-over-year revenue growth in the fourth quarter. However, due to factors such as seasonality, promotional events like the 10,000-store celebration event, and intense industry competition, The profit growth rate experienced a decline in line with the company's expectations. The total net revenue reached RMB 7.06 billion, marking a 91.2% year-over-year increase. The operating profit margin stood at 3%, with a self-operated store operating profit margin of 13.5%. Same-store sales growth was 13.5%, with 2,000 975 net new store openings. In addition, monthly average transacting customers surpassed the 62 million. Our CFO, Anjing, will share further financial details later on this call.
spk01: Looking back on the year of 2023, Ruixin has achieved breakthroughs. It has created many new achievements in the Chinese coffee market. Our revenue has exceeded 2 billion yuan, and our operating profit has exceeded 3 billion yuan. The number of new stores has increased significantly in 2022. In 2023, the number of new stores will exceed 8,000 and the total number of stores will exceed 16,000. This will continue to consolidate the chain coffee brand position with the largest number of Chinese stores. At the same time, our total number of trading users has reached 2.3 billion, which is the absolute leading position in the industry. We would like to express our sincere gratitude to you.
spk02: Looking back at 2023, Locking Coffee made breakthrough progress, achieving several remarkable milestones in the Chinese coffee market. Our revenue surpassed RMB 20 billion, with operating profits exceeding RMB 3 billion, achieved significant growth compared to 2022. In 2023, We opened over 8,000 new stores, bringing our total store count to over 16,000, reinforcing our position as the coffee chain brand with the largest number of stores in China. Meanwhile, our total cumulative transacting customers reached 230 million. firmly placing us in a leading position in the industry. These achievements would not have been possible without the support of our shareholders, partners, and the dedication of nearly 110,000 locking employees who have accompanied us every step of the way, working diligently to drive the company forward. We express our heartfelt gratitude to all of you.
spk01: In the fourth quarter, Ruixin Coffee has increased to 2,975 stores. The total number of stores in China is 16,218, and it continues to run in the market. Of these, Ziying Store has 10,598 stores, and Lianying Store has 5,620 stores. As the Chinese coffee market increases, We will continue to focus on customer demand and door-to-door quality while continuing to encrypt the number of door-to-door in high-end cities and accelerate the expansion of the down-to-earth market through the chain mode to further expand the market share. It is expected that in 2024, the number of Rui Xin Coffee's door-to-door will exceed 20,000. From the development of overseas markets, in the fourth quarter, Singapore's door-to-door has reached 30, and on the basis of the third quarter, it has increased by 12. In the fourth quarter, Locking Coffee added 2,975 new stores, bringing the total domestic store count to 16,218.
spk02: maintaining our leading position in the market. Among the total number of stores, there were 10,598 self-operated stores and 5,620 partnership stores. As competition intensifies in the Chinese coffee market, we will continue to closely monitor customer demands and store quality. Additionally, we plan to further increase the number of stores in high-tier cities and accelerate expansion into lower-tier city markets. Through the partnership model to expand our market share, we anticipate that by 2024, the number of locking coffee stores will surpass 20,000. In terms of the development of our overseas market, in the fourth quarter, Locking Coffee has reached a total of 30 stores in Singapore, adding 12 new stores from the third quarter. In the future, we will continue to expand our footprint in the Singapore market, optimizing our store model while also eyeing other overseas markets. including but not limited to Southeast Asia. Our goal is to allow more consumers to enjoy our high-quality coffee worldwide.
spk01: In terms of products, in 2023, Ruixin Coffee will launch 102 new products, with a sales of more than 2 billion items, and a limited number of drinks of more than 1.9 billion cups. By the end of 2023, Ruixin Coffee will have 8 SKU sales of over 100 million, In addition, Jiangxiang Latte refreshes its RuiXing single product record, with 45830,000 cups sold throughout the year. The single product sales amount has surpassed 900 million yuan and has won many industry awards such as the 2023 Thai Media Annual High Quality Product Award. In the future, we will insist on product innovation and continue to provide customers with higher quality and more rewarding consumer experience. With the rapid deployment of stores and the continuous innovation of products, the number of new trading users for Ruixin this quarter has exceeded 26 million, and the number of trading customers per month has exceeded 62 million. In 2023, the number of new trading users for the whole year will exceed 95 million, creating a new record. We continue to promote the brand while the number of new users continues to increase, and we continue to deepen the popularization of coffee culture. This year, Unique Coffee has become an exclusive coffee partner between AuWang China and Southeast Asia.
spk02: In terms of product, Locking Coffee launched 102 new products in 2023, the number of total items sold in 2023 exceeding 2 billion, with a number of freshly made beverages sold surpassed 1.9 billion cups. By the end of 2023, Locking Coffee had 8 SKUs with sales exceeding 100 million units. In addition, the Jiangxiang-flavored latte broke our single-item sales record, selling 45.83 million cups throughout the year. This resulted in its single-item sales revenue surpassing RMB 900 million and earning numerous industry awards, including the 2023 EDGE Awards Annual High Quality Product. Moving forward, we will continue to uphold product innovation, consistently providing customers with higher quality and more satisfying consumption experiences. Thanks to the dual effect of accelerated store expansion and continuous product innovation, Locking Coffee acquired over 26 million new transacting customers during this quarter, with our average monthly transacting customers exceeding 62 million. Throughout 2023, we had more than 95 million new transacting customers, marking another historic high. Along with the continuous growth of new customers, we have been consistently promoting our brand and deepening the popularization of coffee culture. This year, Locking Coffee became the Australian Open's official coffee partner in China and Southeast Asia.
spk01: Ruixin Coffee donated 5 million yuan to the China Village Development Fund for emergency rescue in the Zhuozhou area, community health prevention, over-settlement of people affected, and reconstruction of disaster-affected areas. On December 19, the 6.2 earthquake in Jishishan County, Linxia Province, Gansu Province, Ruixin again donated 5 million yuan to the China Village Development Fund, becoming one of the first companies to respond to disaster needs in the catering chain industry. In 2023, we have gained a series of honors and awards in the field of sustainability. In the future, Ruixin Coffee will use digitized genes as a starting point to promote company's positive development, cooperate with partners and consumers to continue sustainable development practices, lead to industry progress, and create sustainable value for young consumers, and gather strength for a better tomorrow. This is the main situation of the performance of the fourth quarter. Next, CFO An Jing will introduce financial data to you.
spk02: Along with the continuous improvement of our operational and financial performance, Locking Coffee is also actively involved in corporate social responsibility measures, driving the development of the company's public welfare brand and the execution of public interest initiatives. This past summer, due to the impact of typhoon Doxury, Zhejiang City in Hebei Province suffered severe flooding. Locking Coffee donated RMB 5 million through the China Foundation for Rural Development to support emergency rescue, community health and epidemic prevention and transitional resettlement of affected populations, as well as post-disaster reconstruction. On December 19, 2023, following the 6.2 magnitude earthquake, In Jishishan County, Linxia City, Gansu Province, Locking Coffee once again donated RMB 5 million through the China Foundation for Rural Development, becoming one of the earliest enterprises in the restaurant chain industry to respond to disaster relief needs. In 2023, our sustainable developments were well recognized and we have received a series of honors and awards. Going forward, leveraging our digital DNA, Locking Coffee will start from facilitating healthy company development and collaborate with partners and customers to continuously practice sustainable development, leading the industry's progress. Together with the younger generation of customers, we aim to create sustainable value and unite our strength towards being a force for a brighter future. These are the key highlights of our performance in the fourth quarter. Next, I would like to invite our CFO, An Jing, to present the financial data and commentary.
spk03: Thank you, Jingyi. Good morning, afternoon, and evening, everyone. Thank you for joining us today. I'm Anjing, the CFO at Locking Coffee. And today, I will be sharing information regarding our fourth quarter and the full year 2023 financial performance. Before we start, I would like to extend my heartfelt thanks to our dedicated team, loyal customers, esteemed partners and investors for their continued support. Now, it will take some time to highlight our 2023 fourth quarter and full-year financial results in detail. Let's start with our financial highlights. Despite the impact from seasonality, we are pleased to see that our fourth quarter 2023 results continue to exhibit strong year-on-year business growth. In the fourth quarter of 2023, Our total net revenues reached nearly RMB 7.1 billion, reflecting a remarkable 91.2% increase from the same quarter of 2022. This growth was driven by various factors, including an increase in productive sales, rapid expansion of stores in operation, and a surge in monthly transacting customers. Revenue from self-operated stores in the first quarter reached RMB 5.1 billion, representing an increase of 89.2% from RMB 2.7 billion in the same quarter of 2022. Same-store sales growth for self-operated stores in the fourth quarter of 2023 reached 13.5%. Additionally, revenues from partnership stores in the fourth quarter of 2023 amounted to RMB 1.8 billion, a substantial 109.1% increase from the same quarter in 2022. Operating income in the first quarter was RMB 212.7 million with operating income margin of 3%. Well, our financial achievements in the first quarter of 2023 are in line with our expectations. Our primary strategic priority is to remain focused on expanding our market share to serve more customers. This strategic approach aligns with our dedication to providing an enhanced experience for a growing customer base, solidifying our positions in the market, and ensuring sustainable long-term success. As we reflect on the fiscal year 2023, our journey has been defined by remarkable growth and unwavering commitment. with total net revenue soaring to nearly RMB 25 billion, representing an impressive 87.3% increase from fiscal year 2022. Our focus on expanding market shares and serving our ever-growing customer base has been the cornerstone of our success. Revenues from self-operated stores in the fiscal year 2023 were RMB 17.9 billion, which represents an 82.7% year-over-year increase. Same-store sales growth for self-operated stores in the fiscal year 2023 achieved an impressive 21%. Revenues from partnership store in fiscal year 2023 were RMB 6.2 billion, representing a substantial 102.8% increase from fiscal year 2022. Operating income for fiscal year 2023 reached RMB 3 billion, with an operating income margin of 12.1%. By upholding our commitment to providing exceptional service and expanding our reach, we are positioned for the continued success in the dynamic landscape of the coffee industry. We prioritized expanding our market share, resulting in 2,975 net new store openings and a quarter-over-quarter store unit growth rate of 22.4%, concluding the first quarter with 16,248 stores. As of the end of the fourth quarter, we and our partners operated our business in more than 300 cities across China and in one overseas market. We believe that our expansion into new cities is a strong reflection of our commitment to diversify our geographic presence and capture new market opportunities. For the full year of 2023, in the pursuit of excellence, we opened 8,034 new stores, achieving a remarkable year-over-year store unit growth rate of 97.8%. Our dedication to providing exceptional service and enriching the coffee experience has propelled us forward Making FIXO year 2023 a testament to our commitment to market leadership and sustainable growth. In the fourth quarter of 2023, average monthly transacting customers reached 62.4 million, a substantial 154.2% increase from the fourth quarter of 2022. This notable increase highlights the popularity of our brand and the increasing interest in our products. average monthly transecting customers in fiscal year 2023 were 48.4 million, representing an increase of 124.1% from 21.6 million in fiscal year 2022. As we continue to focus on enhancing the customer experience, this remarkable increase in monthly transaction customers reflects the success of our customer-centric approach and the effectiveness of our strategy in reaching and engaging a wider audience. Looking ahead, we are positioned to leverage this momentum, implementing innovative initiatives to further elevate customer satisfaction, foster brand loyalty, and continue our trajectory of impressive growth in the coming quarters. Next, I would like to spend some time on the details of our margin profiles. On a group level, our reported overall operating margin in the first quarter of 2023 was 3%, compared to 8.5% in the same period last year. The job in our profitability profile was mainly driven by the decrease in average selling price as we continued our 10,000 store celebration event campaign, as well as the weak traffic in the winter season, while the decrease was to some extent offset by the benefits of economies of scale. However, we are pleased to see our reported operating margin for the full year of 2023 reached 12.1%, compared to 8.7% in last year. We believe the full-year margin improvements were largely driven by our active approach to introduce new products and attracting new customers, operating efficiency, and scale benefits. Meanwhile, we reported a net profit margin of 4.2% in this quarter, compared to 1.5% in the same period last year. In the fourth quarter, we reported an income taxed at benefits of RMB 31 million. resulting from the release of valuation allowance against deferred-tax assets in the fourth quarter. Thanks to the largely reduced uncertainty of the company's business performance, after a certain number of the company's operating entities have turned cumulative losses into cumulative profits, For the full year of 2023, our net profit margin increased to 11.4% from 3.7% last year. From a store-level view, our store-level operating profit margin of self-operated stores was 13.5% and 22.2% in Q4 and the fixed year 2023, respectively. Meanwhile, overall operating expenses increased at the result of our business expansion. We are pleased to see our expenses ratio continue to be more efficient and resilient due to economies of scale and our technology-driven operations during this quarter. Our general and administrative expenses as a percentage of revenue decreased from 11.1% in the fourth quarter of last year to 8% in the fourth quarter of this year due to scale benefits. On an absolute value basis, our G&E expenses increased by 36.6% year-over-year, as we spent more on payroll costs, expenditures for office suppliers, R&D expenses, and tax surcharges and stamp duties. As a result of business expansion, While G&A expenses increase or offset by a decrease of share-based compensation for restricted share units and options issued to management and employees. Compared to last year, we spent 1.3 times more on sales and marketing expenses, as we continued to strategically invest in branding to increase brand awareness, enlarge product education coverage, and bolster our current positioning through various channels, attracting new customers and retaining current customers. Meanwhile, in this quarter, we spent more on commission fees to third-party delivery platforms, which is in line with interest delivery orders. We recorded a negative RMB 41.5 million, about a negative USD 5.8 million of loss and expenses related to the previously reported fabricated transactions and related restructuring. as the company wrote off approximately USD 6.3 million in the fourth quarter of 2023, following the final settlement with certain end-riders relating to defense costs, including but not limited to alternative fees and expenses incurred in investigating and defending the fabricated transactions and restructuring. The company had successfully completed its provisional liquidation in March 2022. Last but not least, let's talk about our balance sheet and cash flow statements. During the fourth quarter, we had a net operating cash outflow of RMB 926.7 million compared to a net operating cash inflow of RMB 48.3 million in the same quarter of 2022. This is mainly due to the increased purchase of raw materials to meet our rapid footprint expansion and business growth, as we fully redeemed the offshore nodes in 2022 following the restructuring and paid federal class settlements. We now have no interest in bearing debt, and we ended 2023 with about RMB 3.8 billion of cash in bank and on hand, including cash and cash equivalents, restricted cash, term deposits, and short-term investment. We will continue to review our liquidity requirements on an ongoing basis to ensure that we can meet all our business needs and providing additional growth potential. We have confidence that our expanding markets presence and a solid cash position together with our strategic capital allocation approach can create exceptional shareholder return while maintaining balance sheet flexibility to fund our critical investments and create a competitive advantage. Finally, I would like to thank the entire team for their hard work and execution, which drove our strong 2023 results. Well, we expect volatile market dynamics and competition to continue in the China coffee market. We remain confident in the market opportunities and our strategy as we look to 2024. Our current pricing strategy and business expansion plans, combined with our strategic promotional calendars, and innovative product offerings provide us with competitive advantage in the market as well as additional growth potential. I will now turn it over to Jingyi for concluding remarks followed by Q&A. 瑞幸咖啡创造了一个又一个的里程碑,是瑞幸伙伴团结奋斗的结果。
spk01: Of course, it is also inseparable from the support and trust of large consumers, partners and investors. At present, the Chinese coffee market has entered an important strategic opportunity for rapid development. Facing intense industry competition, Ruixin, as the leading brand in the Chinese coffee market, will continue to accelerate the layout of door-to-door network, increase supply chain layout investment, and continue to strengthen digital advantages. We will continue to pay attention to business growth and market share, provide long-term value to customers, shareholders and other relevant interests, and also pay more attention to social responsibility and carry out sustainable development practices. We hope to use better products and better prices to provide you with good and priceless coffee. Our vision is to create a world-class coffee brand. We are also working towards becoming a world-class century-old brand with long-lasting business. Finally, senior vice president of public affairs and strategic cooperation, Mr. Wu Gang, will resign due to personal reasons. We take this opportunity to thank him for the important contributions he made in the past few years and wish him all the best in his future work.
spk02: Locking Coffee has achieved one milestone after another, a result of the combined efforts of our hardworking employees, love of our customers, support of our partners, and trust of our investors. At present, China's coffee industry has entered a critical stage of high-growth strategic opportunities. Despite fierce industry competition, Locking Coffee is a leading brand in the coffee market in China, is committed to accelerating store network expansion, investing in supply chain development, strengthening digital advantages, optimizing costs, and improving efficiency. All these efforts aim to further expand and solidify our competitive advantages. Ultimately, building an absolute market-leading position will also achieve long-term, healthy, high-speed, and sustainable growth. Going forward, we will continue to focus on business growth and market share, delivering long-term value for our customers, shareholders, and other stakeholders. Additionally, we will remain focused on social responsibility and practice sustainable development. We will continue to deliver better quality and better prices, and provide customers with coffee that is delicious and affordable. Our vision is to create a world-class coffee brand, and we're delivering as we work toward that goal. Lastly, Mr. Wu Gang, our senior vice president currently in charge of public affairs and strategic cooperation, will be departing from the company for personal reasons. We would like to take this opportunity to thank him for his significant contributions for the past few years. and wish him all the best in future endeavors.
spk00: Ladies and gentlemen, we will now begin the Q&A session. I will turn the call over to Alicia Guo at Luckin Coffee, who will moderate today's Q&A session.
spk02: Thank you. Now let's begin with the first question. How does the company view the significant drop in profit in Q4? And are there plans for pricing adjustment?
spk01: Thank you for your question. Based on the company's strategic decision to continue to return customers and expand the market, due to seasonal factors, product combination structure adjustment, the profit of the fourth quarter has fallen. This is both the industry's objective pattern and completely in line with the company's strategic expectations. We are generally satisfied with the performance results of this quarter. In this quarter, WeChat Coffee has more than 62 million monthly transactions, The number of new users in 2023 is more than 90 million. The Chinese coffee industry is in a strategic period of rapid growth. Industry competition is also very intense. The development pattern is far from complete. Based on the above judgment, we will pay close attention to market changes and continue to focus on customer value. We hope that by providing high-quality products to consumers, we can adopt a more scientific and friendly strategy to reduce the cost of decision-making for users and further expand user skills and continue to improve consumer quality. In the current competitive environment, Yuxing, as the leader of the Chinese coffee market, will insist on the current development strategy and pricing strategy to return customers for a long time and expand market share. We are confident to continue to consolidate the market leading position and work hard to create long-term value.
spk02: Thank you for your question. Based on the company's strategic decisions to continuously reward customers and expand the market, our fourth quarter profits experienced a decline due to seasonal factors and adjustments in product portfolio structure. This decline aligns with both the objective industry trends and the company's strategic expectations. The company is satisfied with the overall performance and results in this quarter. In the fourth quarter, our average monthly transacting customers exceeded 62 million and new transacting customers exceeded 90 million in 2023. China's coffee industry is experiencing rapid growth with huge growth potential and surging competitiveness. and the market is far from saturated. Based on these assessments, we will closely monitor market changes, continue to focus on customer value, and aim to provide high quality products while using scientific and user-friendly pricing strategies to further reduce the decision-making cost for users, expand our user base, and enhance overall consumption frequency. Facing the current intensified competition, Locking Coffee as the market leader will continue with our current store expansion and pricing strategies and commitment to providing long-term returns to our customers to further enlarge our market share. We're confident that we can maintain and solidify our market leading position and strive for long-term value. Thank you, Dr. Guo. Let's move on to the next question. In 2024, is the company continuing the store expansion strategy from 2023?
spk01: in the role of coffee market education, the consumer's habit of using coffee will be further cultivated. Ruixin, as the leading representative of the industry, has led to a localization and improvement of Chinese coffee products, and reduced the threshold of acceptance of coffee. Although from a local point of view, Ruixin Coffee is already the first brand in the Chinese coffee channel, but whether from the stage of industry development and the cultivation of consumer habits, The coffee track still has a lot of room for expansion. In 2023, RuiXing added 8,034 stores. The rapid expansion of stores has brought about rapid growth and scale effects for new users. Looking back at the data in the past few years, the coffee consumption habits of Chinese consumers have been trained to have periodic characteristics. However, with the unique product innovation capability, brand value experience, and the continuous promotion of the advantages of door-to-door network coverage, the Chinese coffee market has shown an accelerated growth trend. It is also because of these long-term customers that we have built a strong customer base that we dare to continue to expand.
spk02: Thank you for your question. The current coffee market in China is still in the early stages of development. As China's urbanization rate continues to rise steadily, the consumer base for freshly brewed coffee is large and steadily growing. Benefiting from coffee market education, consumer habits related to coffee consumption will be further cultivated. As the leading representative in the industry, Locking Coffee has spearheaded the localization and improvement of coffee products in China, thereby lowering the barriers to coffee acceptance. Although in terms of the overall store counts, Locking Coffee has already become the top brand in China's coffee industry. There is still significant room for expansion in the sector, both in terms of the current stage of industry development and the cultivation phase of consumer habits. In 2023, Locking Coffee had 8,034 net new store openings. Rapid store expansion brings the rapid growth of new customers and skill benefits. Reflecting on data from the past few years, the coffee consumption habits of Chinese customers exhibit cyclical patterns. However, driven by Luckin Coffee's unique advantages including product innovation, brand experience, and extensive store network coverage. The coffee market in China has shown an accelerated development momentum. It is precisely these potential new growth customers that forms the strong customer base that emboldens us to continue expanding our store presence. In 2024, while closely monitoring store profitability, we will continue rapid store expansion, proactively respond to market competition, and better meet customer demands. Thank you, Dr. Guo, Ms. An. That is all the time we have for today's earnings conference call. We thank you for your participation on today's call. We look forward to providing you with regular business updates. I look forward to speaking with you again next quarter.
spk00: This concludes our call today. You may now disconnect.
Disclaimer