Luckin Coffee Inc

Ladies and gentlemen, welcome to Luckin' Coffee's second quarter 2025 earnings conference call. All participants will be in a listen-only mode during management's prepared remarks, and there will be a question and answer session to follow. Please be advised that today's call is being recorded. Now, I'd like to turn the call over to Ms. Nancy Song, Head of Investor Relations of Luckin' Coffee. Nancy, please go ahead.

Thank you, and hello, everyone. Welcome to Locking Coffee's second quarter 2025 earnings conference call. We announced our financial results earlier today before the last market opened. The earnings release is now available on our IR website and via newsware services. Today, you will hear from Dr. Guo Jingyi, co-founder and CEO of Locking Coffee, who will share a strategic overview of our business. Following that, Ms. Anjing, our CFO, will discuss our financial results in greater detail. Afterwards, we will open up the call for questions. During today's call, we will be making some forward-looking statements regarding future events and expectations. Any statements that are not historic facts, including but not limited to statements about our beliefs and expectations, are forward-looking statements. These statements involving hearing risks and uncertainties. Further information regarding these and other risks is included in our findings with the SEC. In addition, for non-GAAP measures discussed today, the reconciliation information related to those measures can be found in our earnings press release. During today's call, Dr. Guo will speak in Chinese and his comments will be translated into English. Now, I'd like to turn the call over to Dr. Guo Jingyi, co-founder and CEO of Locking Coffee. Dr. Guo, please go ahead.

大家好,欢迎参加今天的业绩沟通会。 感谢各位对热情咖啡的持续关注和支持。 Hello, everyone.

Welcome to today's earnings conference call. Thank you for your continued interest in and support of Locking Coffee.

大极度,公司深度聚焦市场份额和规模增长。 Relying on clear strategy, clear goals, strong execution, and speedy performance improvement, the total revenue reached 12.4 billion yuan, which is 47% of the total growth. In a rapidly changing market environment, we use scale, efficiency, delivery, and public chain advantages to speed up user acquisition. The number of monthly transactions and customers has risen, supporting the company's stable operating performance. to consolidate the leading position in the industry. With the coming of the era, with the push of the demand release, the power supply index continues to improve. In this quarter, the sales growth rate of ZYM's power supply sales has achieved a 13.4% double growth, and the scale effect has also led to a clear change in management. The profit and loss rate has increased by 62%, reaching 1.7 billion yuan.

In the second quarter, we continue to focus on expanding market share and scale, effectively driving strong results through sharp strategies, clear objectives, and solid execution. Our total net revenues reach RMB 12.4 billion, representing a 47% year-over-year increase. Amid a rapidly evolving market environment, We leveraged our strength in scale, operational efficiency, fulfillment, and supply chain to accelerate user acquisition, with average monthly transacting customers reaching a new record high. This supported resilient performance as we reinforced a leading position in the market. With the arrival of the peak season, growing customer demand continued to enhance same-store metrics. leading to a 13.4% same-store sales growth for self-operated stores in the quarter, supported by notable operating leverage from economies of scale. Our operating profit increased by 62% year-over-year to RMB 1.7 billion, and operating margins expanded further to 13.8%.

接下来,我将详细介绍公司的运营进展。 稍后CFO安静。 Next, I will provide a detailed overview of our operational progress.

Afterwards, our CFO Anjing will share additional financial details. In the second quarter, leveraging our key advantages across people, products, and places,

We capitalized on industry momentum to accelerate business extension. On the storefront,

we decisively see the opportunity of rising demand to speed up new store openings, extending our presence in high-quality locations across high-tier cities, while deepening our reach into lower-tier markets. As of the end of the second quarter, our total store count reached 26,206, maintaining our market leadership in China.

According to the report, China's market has increased by 2,085 stores. The total number of stores has reached 26,117. 16,903 of them are self-serve, and 9,214 are joint-serve. The opening of stores this quarter once again shows that with the continuous cultivation of Chinese coffee consumption habits, there is still a huge space in China that can be dug up. The brand and product power of Ruixin Coffee as well as digital selection capability and execution capability will ensure that we can continue to launch high-quality, accurate and good electricity. Next, we will continue to maintain the leading expansion speed of the industry, and further expand the scale of the store's competitive advantage in order to raise the basis for long-term market share.

Domestically, we added 2,085 non-new stores, bringing our total store count to 26,117, including 16,903 self-operated stores and 9,200 photon partnership stores. The accelerated pace of store openings underscores the vast, still untapped potential of China's coffee market, where consumer habits continue to evolve and mature. Lock-in strong brand recognition and product appeal, combined with our data-driven site selection and strong execution capabilities, enable us to consistently open high-quality stores in strategic locations. Looking ahead, we aim to maintain an industry-leading expansion pace, further strengthen our scale advantages, and lay a solid foundation for long-term market share gains.

This quarter, the international market has increased to 24 stores, with a total of 89 stores. Of these stores, there are 63 Singapore self-serve stores, two American self-serve stores, and 24 Malaysian self-serve stores. This quarter, two American self-serve stores fell to New York, marking a key step in the Rui Xin international strategy. The American market has a mature coffee consumption culture, Ruixin is still in the early stage of exploration, so it will steadily fight on the strategic front. The key point is to verify the acceptance of American consumers' positioning of brands, digitized order flow, product combination, and pricing strategy, and gradually establish a unique value proposition and customer experience of Ruixin, and at the same time accumulate experience in local operation in the United States, and establish a foundation for subsequent scale deployment.

Internationally, we added 24 new stores in this quarter, bringing our total store count to 89, including 63 self-operated stores in Singapore, two self-operated stores in the US, and 24 franchise stores in Malaysia. Notably, the self-opening of two stores in New York marked a significant milestone in Lockheed's international expansion strategy. The US is a highly developed coffee market, and we remain in the early stages of exploration. Our approach will be disciplined and deliberate, with a focus on validating consumer response to our brand positioning, digital ordering experience, product portfolio, and pricing strategy. Through this early phase, we aim to establish Lock-In's unique value proposition and customer experience in the U.S. market, while building localized operational capabilities to support future scale expansion.

In terms of products, in the second quarter, we have a total of more than 20 limited-edition drinks and a few light drinks. We continue to use high-quality coffee as the core and only follow the consumer trend, enriching product guidance to meet the needs of customers in all times and all scenarios. This quarter, around the positioning of professional, young, and fashionable and healthy brands, we continue to strengthen health attributes. In May, RuiHsing launched the white-card, ice-card system to boost refreshing and low-heat, upgrade the product formula, and added a new bubble water option to further enhance the product attraction of the fruit and juice gourmet series. Among them, the long-term explosion of orange water gourmet, after upgrading, the orange content is higher and the taste is richer. As of the second quarter, more than 3.5 billion cups have been sold in total. All the products from

We launched over 20 freshly brewed beverages and several snacks in the second quarter. While maintaining a strong focus on high-quality coffee, we continued to diversify our product portfolio to keep pace with evolving consumer trends and meet customers' needs across all day parts and consumption scenarios. This quarter, we further strengthened the health-conscious effect of our brand, reinforcing our positioning around professionalism, youth, fashion, and wellness. In May, we introduced the Light Ice Coffee Season, featuring refreshing low-calorie beverages with upgraded formulas and a new sparkling water-based option, enhancing the appeal of our popular fruity Americano series. Notably, Our signature bestseller, Orange Americano, was upgraded with higher orange content and a richer flavor profile. By the end of the second quarter, it has surpassed 350 million cumulative cups sold. New innovations, such as Pineapple Americano, Summer Watermelon Cobu, and Lychee Americano, further enriched our flavor offerings. On the land coffee side, The launch of our kale fruits and veggies team provided consumers with a refreshing, health-focused alternative. Within just two weeks of launch, it recorded over 11.2 million capsules with solid user retention and repeat purchase rates.

In terms of customer service, we intend to offer high-quality products and services with rich emotional value. In a complex and diverse market environment, we have always maintained our customer attraction and continuously expanded our user base. Since the second quarter, the cross-border IP alliance cooperation between Baimianbaobao and Duolingo has effectively inspired customers' emotional resonance and consumer desire, and further mobilized users' vitality and demand potential. This quarter, the number of new transaction customers has exceeded 28.7 million. The total number of trading customers has increased by 32%, reaching nearly 91.7 million, creating a new record. By the end of the quarter, Ruixin's total number of trading customers has surpassed 3.8 billion, which has laid a solid foundation for the company's long-term high-quality development. In addition, this quarter's domestic ATP small program has also launched the Lucky AI smart body,

On the customer front, we continue to strengthen our appeal and extend our user base, supported by our high-quality products and services, convenient, fulfillment, and offerings that deliver meaningful emotional value, even amid a dynamic and complex market environment. Since the second quarter, a series of creative and buzzworthy IP collaborations, including those with SpongeBob and Duolingo, have sparked strong emotional relevance and purchasing intent, further driving user engagement and unlocking consumption potential. During the quarter, we added over 28.7 million new transaction customers, while monthly average transaction customers grew 32% year-over-year to nearly 91.7 million. reaching a new all-time high. By the end of the quarter, our cumulative transaction customers' base exceeded 380 million, establishing a solid foundation for our long-term, high-quality growth. In addition, we launched Lucky AI, a smart assistant available via our domestic app and mini-program, which enables personalized beverage recommendations and voice-based ordering. making the customer experience even more intelligent, convenient, and engaging.

为了更好的支持规模化扩张, 我们不断加强高品质供链的建设。 今年6月,瑞幸的第四座烘焙工厂, 厦门创新产业园,正式动工建设。 公司在核心供链制化方面又迈出了坚实一步。 该项目投产后,于福建平南烘焙基地, Jiangsu Kunshan Brewing Plant, Shandong Qingdao Coffee Innovation Production Center, form a 4G-cooperative production and supply network. The annual total coffee brewing capacity will rise to 15.5 trillion tons, and will create the largest coffee brewing capacity record in the Chinese coffee industry. This will further enhance the efficiency and quality of RuiXing's supply chain, and the core competitiveness of the long-term development of Hangshi.

To support our continued large-scale expansion, we are continuously enhancing our high-quality supply chain infrastructure. In June, we broke ground on Lockheed's fourth roasting facility, the Xiamen Innovation Industrial Park, marking another significant step forward in advancing our self-operated core supply chain. Once operational, the Xiamen facility will form a coordinated production network with our existing roasting plants in Pingnan, Wuzhen Province, Kunshan, Jiangsu Province, and the Coffee Innovation Manufacturing Center in Qingdao, Shandong Province. This integrated network will elevate our total annual coffee roasting capacity to 155,000 tons, setting a new record for the largest roasting capacity in China's coffee industry. This expansion will further strengthen our supply chain efficiency and quality control capabilities, reinforcing the poor competitiveness that underpins our long-term sustainable development.

In addition, we continue to actively promote ESG practice and assist in the green transformation of coffee's entire value chain. In May of this year, Ruixin's Jiangsu Kunshan Roastery base received a LEED Bojin Award certification. has become an important step towards creating a green value chain. In June, Ruixin's Yunnan Baoshan Fresh Fruit Processing Factory has been certified by the World Natural Fund for Eco-friendly Factory Demonstration. We have joined hands with experts in the field of eco-friendly coffee, to deliver an eco-friendly environment that protects Yunnan coffee production sites and promotes the green development of the coffee industry. At the same time, we continue to help Yunnan coffee reach the global market. Innovation.

we continue to advance our ESG initiatives, supporting the green transformation of the entire coffee value chain. In May, our roasting facility in Kunshan Jiangsu Province was awarded with LED Platinum certification, marking an important step towards building a sustainable value chain. In June, Our green coffee bean processing plant in Baoshan, Yunnan Province, was recognized as an eco-friendly factory flagship by the WWF. We also co-hosted a roundtable with experts from both the ecological and coffee sectors to promote shared values around environmental protection in Yunnan's coffee growing regions and to foster sustainable industry development. At the same time, we remain committed to bringing Yunnan coffee to the global stage. As a strategic partner of the inaugural 2025 GEMS of Yunnan Green Coffee Competition, Yunnan's COE pilot program, we actively supported this international green bean competition debut in Yunnan. Marking the first time, Yunnan coffee origins were included in the globally recognized evaluation system. This effort aims to accelerate the sustainable internationalization of the Yunnan coffee industry.

本季度以来,限制饮品行业发生了新变化, 加速了咖啡消费的市场教育和习惯培养, 有助于推动咖啡行业的长期蓬勃发展。 作为国内门店数量最多的连锁咖啡品牌, 我们凭借着酷涩的门店运营效率, strong supply chain flexibility, and mature trading systems, effectively grasped the opportunities of the industry, and realized the rapid growth of enterprises. The data-driven user survey, leading digital operations, and efficient organizational execution also allow us to flexibly respond to various market changes, serve customers well, and retain customers, ensuring the sustainable growth of high-quality products. Facing the huge potential of the Chinese coffee industry,

Since the second quarter, new developments in the freshly brewed beverage market have accelerated consumer education and habit formation around coffee consumption, paving the way for the long-term vibrant growth of China's coffee industry. As the largest coffee chain in China by store count, we have effectively captured these industry tailwinds to accelerate our expansion, supported by strong store-level operational efficiency, a resilient supply chain, and a well-established fulfillment network. Innovation. Our data-driven user insights, advanced digital operations, and highly efficient organizational execution will allow us to respond quickly to shifting market dynamics, as well as to better serve and retain our customers, which will support our high-quality sustainable growth. Looking ahead, we remain focused on expanding market share and driving healthy business growth. By fully leveraging our scale efficiencies and continuous product innovation, We are well positioned to further solidify our leadership in China's coffee market.

最后,再次感谢各位消费者, 合作伙伴和投资人的信任与支持, 感谢15万瑞幸伙伴的辛勤努力, 我们将秉持创业初心, 为打造世界级咖啡品牌而持续奋斗, 为客户,伙伴和股东创造长期价值。

Finally, I would like to extend my sincere gratitude to our customers, partners, and investors for their continued trust and support, and to our 150,000 Lockheed team members for their dedication and hard work. Guided by our entrepreneurial spirit, we remain committed to building a world-class coffee brand that delivers long-term value for our customers, partners, and shareholders. With that, I will turn the call over to our CFO Anjing to go through our financial results in detail.

Thank you, Jingyi. Good day, everyone. Thank you for joining today's call. We are pleased to report another impressive quarter marked by accelerated top-line growth and expanded operating margins. Our laser focus on getting the business helped us quickly capture new opportunities, strengthening our leadership in the market. Let's now look at our financial performance in detail. In the second quarter, total net revenues increased by 47% year-over-year to RMB $12.4 billion, primarily driven by a 46% year-over-year increase in GMB. which reached RMB 14.2 billion. This rapid growth was driven by strong performance across both self-operated and partnership stores due to the faster pace of new store openings and our stronger ability to serve customers. This is further evidenced by the record high number of monthly transaction customers we achieved in this quarter. Revenues from productive sales increased by 45% year-over-year to RMB 9.5 billion, mainly driven by enhanced sales performance in our self-operated stores, breaking down our productive sales into three streams. Net revenue from freshly brewed drinks were RMB 8.7 billion, about 70% of the total net revenues. Net revenues from other products were RMB 615 million, about 5% of total net revenues. Net revenues from others were RMB 206 million, about 2% of total net revenues. Looking at product sales from the perspective of company-owned stores, Revenue from self-operated stores increased by 46% year-over-year to RMB 9.1 billion. Notably, same-store sales growth accelerated to 13.4% in this quarter, supported by cup sales increase and AIC uptake due to the volume mix shifting towards delivery. Store-level operating profit grew 42% year-over-year to RMB 1.9 billion. with self-operated store level operating margin standing at a 21%. Revenues from partnership store increased by 65% year over year to R&B 2.9 billion, accounting to 23% of the total net revenues. This strong growth was mainly driven by increases in sales of materials and a profit sharing as a result of the robust performance in partnership stores, as well as an increase in delivery service fees due to higher delivery volume. Cost of materials as a percentage of the total net revenues decreased to 37% from 40% in the same period of 2024. This improvement was mainly driven by our product mix changes and enhanced supply chain advantages. In absolute terms, cost of materials increased by 37% year-over-year to RMB 4.6 billion, in line with our business expansion. So rental and other operating costs as the percentage of total net revenue decreased to 22% from 24% in the same period of 2024, primarily driven by enhanced operating efficiency and a leverage from cut sales growth. In absolute terms, this caused the increase by 30% year-over-year to RMB 2.7 billion, money due to higher payroll costs from increased cup sales, as well as rental costs from continued stock expansion. Delivery expenses increased by 175% year-over-year to RMB 1.7 billion, primarily driven by a significant year-over-year increase in delivery orders from food delivery platforms As a result, delivery expenses as a percentage of total net revenue rose to 14% from 7% in the same period of 2024, in line with growth in delivery volume. Sales and marketing expenses as a percentage of the total net revenues decreased to 4.8% from 5.1% in the same period of 2024. Many driven by enhanced operating efficiency and a leverage from accelerated revenue growth. In absolute terms, Sales and marketing expenses increased by 37% year-over-year to RMB 592 million, only due to our continued strategic marketing efforts to enhance brand visibility, along with increased commission fee paid to food delivery platforms. General and administrative expenses as a percentage of total net revenue decreased to 6% from 7% in the same period of 2024, mainly driven by enhanced operating efficiency and the leverage from accelerated revenue growth. In absolute terms, T&A expenses increased by 25% year-over-year to RMB 736 million, primarily due to decreased payroll expenses and shared base compensation, as well as higher investments in research and development. As a result, our debt operating profit increased by 62% year-over-year to RMB 1.7 billion, with operating margin extended by 1.3 percentage point to 13.8%. On a net gap basis, operating profit increased by 61% year-over-year to RMB 1.9 billion, with operating margin at 15%. Net profit increased by 44% to RMB 1.3 billion, with net margin at 10.1%. On a net gap basis, net profit increased by 44% to RMB 1.4 billion, with net margin at 11.3%. Finally, turning to our balance sheet and cash flow items. For the second quarter of 2025, our net operating cash inflow exceeded RMB 2.5 billion. As of June 30, 2025, we had nearly RMB 8.2 billion in cash, including cash and cash equivalent, restricted cash, temporary deposits, and short-term investments. compared to RMB 5.9 billion as of December 31, 2024. Our strong cash generation ability and health cash reserves will precision us to consistently execute our scale-driven strategy in this ever-changing market, paving the way for our multi-year development. In closing, Our competitive edge, including strong brand recognition, large store scale, high productive quality, and value-driven pricing continue to set us apart in a dynamic market environment. Leveraging this unique positioning, we are confident that we can consistently deliver high-quality results while creating long-term value for our shareholders. With that, we will open the call for questions. Operator, please go ahead.

Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question today comes from C.G. Lin with CICC. Please go ahead.

So thank you, management. Since Q2, the impact of delivery platform subsidy on freshly made drink industry has attracted a lot of attention. It brings new development to the industry. So how should we evaluate the impact of delivery subsidy activities on Lock-in Coffee? Thank you.

Thank you for your question. This is indeed a question that everyone is very concerned about recently. Let me answer this question.

Yeah, so thank you for your question. So this is a very important question that investors are paying close attention to recently.

First of all, for us, whether it's a private user or a delivery user, it's just a difference in the channel he gets this coffee from. Basically, our internal requirements are to stick to the core values of micro-science, that is, to prioritize customers. We require that we precisely monitor the needs of customers and work hard to serve each customer well. From a second-degree point of view, the delivery platform continues to launch a variety of supplementary activities, allowing consumers to buy a cup of coffee at a more affordable price. This quickly aroused the demand for users. And in a short time, this rapid increase in demand for the whole supply chain's flexibility, stability of service, as well as the certainty of delivery, has raised very high requirements and challenges. And Ruixin, through the long term, especially in the past two or three years, Yes, so first,

At Lockheed, no matter it's pickup or delivery, it's just a different way of receiving this cup of coffee. But we remain firmly committed to our core value of putting our customers first. So this means we must deeply understand our customers' needs and consistently deliver this excellent service to every of our customers. So since the second quarter, food delivery platforms, they have launched many subsidy initiatives, so allowing consumers to enjoy high-quality coffee at even more affordable prices. This has led to a sharp surge in customer demand over a very short period of time. So this placed pressure on supply chain flexibility, service stability, and fulfillment reliability. And thanks to our long-term investment in operational infrastructure, especially for the past two to three years, Lockheed is actually well-positioned with strong capabilities across the areas I mentioned. So it enables us to effectively respond to those changes and meet those requirements.

On the other hand, Ruixin currently has more than 26,000 stores, which are evenly distributed across the country. And the standardization process of the whole store also ensures efficient manufacturing efficiency. In addition, the long-standing supply chain ensures a stable product supply. The mature delivery system also guarantees the actual efficiency of our entire delivery order. These advantages make Ruixin an excellent partner brand for large delivery platforms. In fact, We can see from the second-degree operating data that we have seen a positive performance on the data performance, whether it is the user pulling the heart, the user waking up, or a active user commenting.

Yeah, so for ourselves, we now operate over 26,000 stores across all cities of all tiers in China. And our standardized store procedures ensure efficient and consistent preparations of the beverage. Our deeply rooted supply chain also enables stable product availability. And our mature delivery system supports a timely and reliable fulfillment of delivery orders. So all of the strengths have actually made Lockheed a preferred partner for those major food delivery platforms. And in fact, the recent So this has actually made us a preferred partner for this platform. And these recent campaigns launched by these platforms and to some extent actually created a relatively favorable external environment for our scale-driven strategy. And this is evidenced by the positive momentum we have achieved across key operational indicators in this order. So, for example, our new customer acquisition, reactivation of dormant users, and increased purchase frequency among active customers.

Of course, from the future, we are still observing the cycle and intensity of the supply and delivery platforms. The pattern of the market economy may also become more complex. But a large number of customers have not changed their need for a cup of good coffee that is not expensive and can be delivered conveniently. We will fully grasp the constantly changing market opportunities by combining our product development capabilities, brand innovation capabilities, and public relations protection capabilities through scale and efficiency, flexible design and adjustment of our operation strategy, and actively serving RuiSheng's customers to gain the popularity of industry development. Of course, in the long run, Thanks to RuiHsing, we have been able to provide customers with high-quality products and high-quality services. We are confident that we will be able to face various changes in the platform and market environment flexibly, and achieve long-term stable growth of our own business. In this way, we will promote the continuous development of the Chinese coffee industry.

Looking ahead, the duration and the scale of food delivery platforms, their subsidies remain uncertain, and the market landscape may become increasingly complex. But what remains unchanged is the fundamental consumer demand for those great tasting, affordable, and conveniently delivered coffees. We will continue to capture those evolving market opportunities by leveraging our scale and operational efficiency, combined with our strong capabilities in product innovation, brand development, and supply chain execution. So all of these strengths will enable us to remain agile in adjusting our strategies and to better serve our customers, which will allow us to fully benefit from the growth potential of China's coffee market. So over the long term, we are confident that our competitive edge in our private domain traffic, our digitally-driven user operations, and our ability to consistently deliver high-value products and premium services will allow us to navigate future changes either in platform dynamics or market conditions with greater flexibility and resilience. So these capabilities will enable us to achieve our long-term solid growth as well as to propel the healthy and sustainable development of China's coffee market. So this is our answer for this question. Thank you. We can move on to the next question.

The next question comes from Hua Yili with Gojin Securities. Please go ahead.

Thank you, management. And I have one question. Since the start of the year, industry developments have evolved rapidly. And under these current circumstances and market conditions, what are the company's new expectations for star expansion and the financial matrix?

Thank you. I will answer this question as well.

Ray, thank you for your question. And Dr. Guo will answer this question.

China's drink industry is probably one of the fastest changing industries, and one of the most competitive industries. Since the second quarter, we can see that the various supplementary activities launched by the online platform have once again boosted the entire industry and caused some new changes. In the face of the overall development situation, the company responded quickly and actively adjusted, effectively grasping the opportunity of the entire user demand expansion. So we accelerated the opening of stores, I mentioned earlier that there were more than 2,000 stores in the second quarter. In the first half of the year, there were more than 3,800 stores. The speed of store expansion is indeed faster than our development plan for the beginning of the year. However, in the second half of the year, we will closely monitor the market dynamics and grasp the opportunity of the industry. We will always maintain a competitive opening speed and actively respond to changes in the industry. Of course, we believe that the growth on both sides of the Chinese coffee industry will set a solid foundation for stable and sustainable development.

Yes, so China's directly-brewed beverage market is one of the most rapidly evolving and competitive sectors. So since the second quarter, the launch of many food delivery platforms, their subsidy campaigns have once again triggered new developments across the industry. So in response to these shifts, our company moved quickly to adjust our strategies and effectively captured these surges in consumer demand while accelerating our store expansion pace. As I mentioned earlier, we added over 2,000 annual stores in the second quarter alone and over 3,800 in the first half of this year, both above our original plans set at the beginning of this year. So looking ahead into the second half, we will continue to closely monitor the market developments, capture industry opportunities, and maintain a proactive and competitive store expansion pace to stay ahead of the industry changes. And we believe that the continued scaling of both supply and demand in China's coffee market will lay a solid foundation for our steady and sustainable long-term growth.

Of course, Ruixin is still a very young company. The Chinese coffee industry is still in the early stages of its development. We will always maintain the spirit of entrepreneurship and the sharpness of the market. We will try to maintain a scale increase that is higher than the industry and continue to expand our market share. In general, under the background of the entire foreign market platform, At the same time, we are also proud of the large-scale advantages, efficiency advantages, and strong team execution that we have already had in Ruixin. We remain cautious and optimistic about this year's overall performance. From the perspective of the whole year, we will try to maintain high-quality and rapid growth in revenue, and through the improvement of scale advantages and operating efficiency, we will try to eliminate the cost impact caused by the change in volume structure,

We will continue to embrace an entrepreneurial mindset and stay attuned to market shift. and with a clear focus on outpacing industry growth and expanding our market share. So overall speaking, supported by continued delivery platform subsidies, as well as our own scale advantages, operational efficiency, and strong execution, we remain cautiously optimistic about our performance for the full year. So we are committed to delivering high-quality, rapid revenue growth. At the same time, by leveraging our scale and improving operational efficiency, we aim to mitigate the cost impact from the shifting mix towards delivery and aim to maintain a healthy and sustainable level of profitability. Thank you. This is our answer to the question.

Due to time constraints, no further questions will be taken at this time. This concludes the question and answer session. I'd like to turn the call back to management for closing remarks.

Thank you, everyone, for joining our call today. If you have further questions, please feel free to contact our IR team. This concludes today's call. We're looking forward to speaking with you again next quarter. Thanks.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.