Luckin Coffee Inc

Ladies and gentlemen, welcome to Luckin Coffee's second quarter 2026 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 for Luckin Coffee. Nancy, please go ahead.

Thank you, and hello, everyone. Welcome to Locking Coffee's second quarter, 2026 earnings conference call. We announced our financial results earlier today before the US market opens. The earnings release is now available on our IR website and Available Services. Today, you will hear from Dr. Guo Jinyi, co-founder and CEO of Locking Coffee, who will share a strategic overview of our business. then Ms. An Jing, 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 historical facts, including but not limited to statements about our beliefs and expectations are forward-looking statements. These statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in our findings with the ICC. In addition, for land-gap matters discussed today, reconciliation information related to those matters 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.

Good day, everyone, and welcome to today's earnings conference call. Thank you for your continued interest and support for Locking Coffee. In the second quarter of 2026, we firmly promote a high-quality growth strategy, and the growth of our business is solid and steady. In a complex and diverse market environment, we continue to strengthen our store network and product innovation, strengthen the customer base and brand mentality, and continuously enhance long-term performance advantages, continue to expand market share, and further consolidate the leading position in the industry.

We delivered solid second quarter results as we remain focused on executing our core strategy of high-quality scale growth. Amid a dynamic market environment, we continue to strengthen our store network and product innovation capabilities while growing our customer base and deepening breadman share. These efforts further enhanced our long-term competitive advantages helping us expand market share and reinforce industry leadership.

伴随中国咖啡消费需求的稳步增长, 我们继续保持行业领先的开店速度。 上半年,门店进增超5000家, 二季度末,全球门店总数突破3.6万家, 累计交易客户数已接近5亿。 The company's total revenue this quarter is about 159 billion yuan, which is 29% of the total growth. Due to the impact of the high-tech delivery in the same period last year, the sales of self-sufficient stores and stores of the same chain have been suppressed in stages, and the second quarter has dropped by 5.3%. This performance is completely in line with our previous judgment on the speed of business. At the same time, in an environment where the delivery competition is gradually returning to normal, The profit of this quarter is the same as the growth of last year. It increased by 22% at the same time last year, reaching 2.1 billion yuan. The profit-to-profit ratio is 13.4%. The profit-to-profit ratio is 13.4%. The profit-to-profit ratio is 13.4%. The profit-to-profit ratio is 13.4%. The profit-to-profit ratio is 13.4%.

Supported by continued growth in China's coffee consumption demand, we maintained an industry-leading pace of store expansion, with more than 5,000 new stores opened in the first half of the year. By the end of the second quarter, our global store count has surpassed 36,000, while cumulative transacting customers approached 500 million. Total net revenues for the quarter reached around RMD 13.9 billion, up 29% year-over-year. Since short sales for our self-operated stores declined 5.3% year-over-year in the second quarter, primarily due to the temporary high comparison base created by elevated food delivery subsidies in the prior year period. This performance was fully consistent with our previous expectations for the trajectory of business operations. Meanwhile, as food delivery competition gradually returned to more rational levels, our operating income resumed year-on-year growth in the quarter, growing 22% to RMB 2.1 billion, with an operating margin of 13.4%. This further reinforced the recovery in our profitability. Our second quarter results once again validate the strength of our high-quality scale growth strategy and further strengthen our confidence in capturing long-term market opportunities.

接下来,我将从门店覆盖,产品创新和客户体验三个方面介绍本季度人货厂三大业务支柱的运营进展。

Next, I will walk you through the quarterly progress across our three core business pillars, people, products, and places, focusing on strong coverage, product innovation, and the customer experience. Following that, our CFO, An Jing, will share more detailed financial updates.

In terms of stores, We insist on long-term demand judgment to promote the national store network layout, deepen the coverage of high-end cities, improve the customer access and service capability, and continue to release the growth potential of the Chinese coffee market. Until the end of the second quarter, the company's global store total reached 36,310, which is 39% of the total growth. The scale and increase are good for the industry.

Starting with our store network, we continue to extend our nationwide footprint based on our long-term view of customer demand. We further strengthen our presence across cities of all tiers, enhancing consumer accessibility and the service capabilities to continuously unlock the long-term growth potential of China's coffee market. By the end of the second quarter, Our global store count reached 36,310, up 39% year-over-year. We continue to lead the industry in both scale and expansion pace.

具体来看,中国市场竞争2668家, 门店总数达到36087家, 其中自营23625家,连营12462家。 At present, the Chinese coffee market is still in a state of rapid growth where the penetration rate continues to increase and the consumption frequency steadily increases. Enhancing the coverage capability of each county and city and the consumer scene is an important basis for establishing long-term market advantage. With the strong digitalization capability and strategic execution capability of Ruixin, we can accurately survey the demand for consumption and effectively land on the doorstep of planning and layout. In China, we added 2,688 next-door stores during the quarter.

bringing our total store count to 36,087. This includes 23,625 self-operated stores and 12,462 partnership stores. China's coffee market remains in a high growth stage, supported by rising penetration and increasing consumption frequency. Extending our reach across all CD tiers and consumption scenarios remains fundamental to building long-term market leadership. Leveraging Lock-in's strong digital capabilities and strategic execution, we are able to precisely identify consumer demand and efficiently expand our store network based on these insights. Through data-driven site selection, This will enable the store construction and intelligent store operations. We continue to enhance expansion efficiency and operational consistency while maintaining store quality. This enables us to deepen consumer engagement and consistently translate market opportunities into sustained market share gains.

In terms of the international market, we continue to steadily promote the expansion of retail business Weiming Zhou, Tian Zang, Weiming Guo, Fei Yang We continue to expand our overseas presence in a disciplined manner, leveraging the proven digital operating capabilities we have developed in China. We tailored our approach to local consumer preferences and market dynamics

to further improve our localized operations. In the second quarter, we added 46 new stores, bringing our total international store counts to 223. This includes 89 self-operated stores in Singapore, 20 self-operated stores in the US, and 114 franchise stores in Malaysia. Building on our presence in these markets, We will continue to refine our product offerings and enhance our operational and organizational capabilities. We will also continue to optimize store-level economics and develop standardized, replicable operating practices, laying the groundwork for our continued international expansion.

In terms of products, we continue to strengthen RuiHsing's professional coffee brand mentality Weiming Zhou, Tian Zang, Weiming Zhou, Tian Zang have fully demonstrated our accurate consumption trend, quickly responded to users' needs, and continued to develop product experience innovative comprehensive strength, and effectively permeated the brand's assets with fluidity. In the second quarter, the product sales have been unbeatable, until the end of this quarter, the total sales of the small butter series have surpassed 500 million cups. In addition, we are actively strengthening the healthy product strategy and development direction, Weiming Zhou, Tian Zang, Weiming Zhou, Tian Zang, Weiming Zhou, Tian Zang

On the product front, we continue to strengthen Locking's positioning and measure as a professional coffee brand, while leading innovative and health-conscious beverage trends through deeper insights into evolving consumer needs. In the second quarter, we launched 28 new new freshly brewed beverages, and over a dozen snack items. In the coffee category, we continue to develop signature products that embody Lockheed's unique brand identity, reinforcing the competitive mode built around our brand mission. During the quarter, our Little Butter Americano once again gained significant traction as consumers discovered creative ways of enjoying the product. This success demonstrates our ability to identify emerging trends, respond quickly to evolving practices, and continuously innovate the product experience. Further strengthening the distinctive brand equity we have built over time. This product ranked among our top two best-selling products by volume in the biggest corner. and the cumulative sales of the little butter series surpassed 500 million cups by quarter end. We'll also continue to strengthen our wellness-oriented product strategy and R&D focus, extending our selection of light and refreshing beverage options to better align with the evolving taste preferences of our increasingly sophisticated customer base. During the quarter, We launched our annual flagship product, Calamansi Americano, first deepening consumer recognition of Lockheed's signature fruity Americano offerings while meeting growing demand for high-quality, house-conscious beverages. With sales surpassing 10 million cups within its first week of launch, this product delivered encouraging repeat purchase and customer retention performance. reflecting its strong consumer view. Beyond coffee, we introduced new product lines during the quarter, including yogurt smoothies and iced milk beverages, further broadening our omni-categorie product portfolio and providing consumers with a one-stop beverage destination across the various day parts and the consumption scenarios. By the end of the second quarter, Five of Locking's 25 products that have each surpassed 100 million cups in cumulative sales were non-coffee products. Further demonstrating Locking's strong brand appeal and the product execution capabilities.

In terms of users, we continue to enhance consumer experience through convenient door-to-door network, high-quality product supply and sensitive data insight. will continue to enhance the brand mentality and user connection, and increase customer size and consumption frequency. As mentioned earlier, the rise of small and medium-sized U.S. food has not only deepened our consumer interaction, but also shaped the brand memory and further promoted customer reputation and consumer growth. In addition, we will continue to provide customers with emotional value beyond the product itself through diversified cross-border partnerships and other brand interaction methods. and Shenhua. With the joint promotion of product innovation and brand construction, in the second quarter, we have added more than 25 million new trading customers. The total number of new trading customers has increased by 23%, which is more than 1.1 billion. By the end of the second quarter, the total number of trading customers in Ruisheng has reached nearly 500 million. At the same time, the total number of customers has increased by 1 billion,

On the customer front, we continue to enhance the customer experience through our accessible store network, high-quality product offerings, and data-driven consumer insights. These strengths further reinforce our brand measure and connections with consumers, helping us expand our customer base and increase purchase frequency. As mentioned earlier, the strong market response to Lathe Butter Amount Panel reflects our efforts to deepen consumer engagement and co-create lasting brand memories. It also further drove positive word of mouth and increased consumption. In addition, We continue to engage consumers through diversified brand initiatives, including IT collaborations, delivering emotional value beyond the products themselves, and fostering deeper brand relevance with our customers. Driven by product innovation and the brand building, we added more than 25 million new transaction customers in the second quarter. bringing average monthly transaction customers to a new record high of over 110 million, up 23% year-over-year. By the end of the second quarter, our cumulative transaction customers approached 500 million. At the same time, our average monthly cost per customer also reached an all-time high, These achievements reflect consumers' continued recognition of the Lockheed brand and the products. While reaffirming that, coffee consumption habits in China are continuing to deepen.

In addition, when it comes to business responsibility, we always pay attention to consumers' health needs and integrate the concept of healthy and healthy products into our product development and consumer experience. In recent years, Weiming Zhou, Tian Zang, Weiming Zhou, Tian Zang, have been working together with the Department of Medical Sciences of Peking University in 2024 to build the North University Medical Coffee Health Innovation Base, which has completed a number of innovation projects and has turned academic results into product practice. In June this year, we joined forces with Xinhua Net, the Department of Medical Sciences of Peking University, and other parties to launch the Coffee Health Project, and published the report on China's Limitation of Drinking Health Trends in 2026.

In addition, as part of our commitment to corporate responsibility, we remain attentive to consumers' growing health needs and incorporate our product philosophy of free taste and wellness into beverage development and the consumer experience. In recent years, we have continued to optimize our product strategy by enhancing supply chain quality and raising product evaluation standards, making health-conscious innovation an important focus of our product development. Through cleaner formulations and higher-quality ingredients, we aim to deliver beverage experiences that balance taste, quality, and wellness Meanwhile, we have continued to deepen collaboration with leading research institutions to advance coffee health research and consumer acquisition. Since establishing the Peking University Health Science Center Locking Coffee Health Innovation Base in partnership with Peking University Health Science Center in 2024, we have completed multiple innovative research projects and continue to apply academic findings to product development. In June this year, together with Xinfanet, Hacking University Health Science Center and other partners, we jointly launched the Coffee Health Education Initiative, along with the release of the Health and Wellness Trend in China's Freshly Prepared Beverage Market 2026. Looking ahead, we will continue to integrate research insights with product innovation and contribute to the sustainable and health-conscious evolution of the freshly brewed beverage industry.

In summary, the second quarter of this year is an important quarter where we continue to verify and implement long-term growth strategies. High-quality growth is not simply about pursuing the number of stores, will continue to discover needs, respond to needs, and even stimulate needs, and eventually turn market needs into long-term market share capabilities. With the rapid digitalization of mobile, repeatable, and scalable business systems, and long-term accumulation of brand assets, we will continue to expand the network of stores, product innovation, and the co-operative effect between customer sizes to form a sustainable growth dynamic. In summary,

The second quarter marks another significant quarter in which we continue to validate and deliver on our long-term growth strategy. High-quality scale growth is not simply about increasing store count. It reflects our ability to continuously identify, respond to, and even create demand, and ultimately translate market demand into sustainable market share gains. Leveraging Locking's digitally driven, replicable, and scalable operating model. Together with the brand equity, we have built over time. We continue to amplify the synergies across our store network, product innovation, and the customer base. These grants create a sustainable growth momentum and positions as well to fully capture the historic opportunities presented by China's coffee market. Looking ahead, we remain committed to executing our high-quality scale growth strategy. As we consistently enhance our capabilities across store network coverage, product innovation, and customer experience, we aim to further expand our market share while creating long-term value for our customers, partners, and shareholders.

Sui Hou. Finally, we are deeply grateful to our consumers, partners and investors for their ongoing support.

and to our 220,000 Locking Team members for their valuable contributions to the company's growth. We will continue to work together towards building a world-class coffee brand and making Locking Coffee a part of everyone's daily lives. Now, I will turn the call over to Anjing to go through our financial results in detail. Thank you, Jinyi.

Good day, everyone. Thank you for joining today's call. In the second quarter, we delivered solid top-line growth and the continued profitability recovery, reflecting our operational resilience and the strong execution of our growth strategy. Let me now walk you through the financial details. In the second quarter, Total net revenues increased by 29% year-over-year to RMB 15.9 billion, managed by a 30% year-over-year increase in GMB to RMB 18.4 billion. This growth was supported by higher total cup volumes across both self-operated and partnership stores as we continue to expand our stock network and grow our customer base. Revenues from productive sales increased by 29% year-over-year to RMB 12.2 billion, reflecting the solid performance of our self-operated stores. Breaking down our productive sales into three streams. Net revenues from freshly brewed drinks were RMB 11.2 billion, representing about 70% of total net revenues. Net revenues from other products for RMB 892 million, or about 6% of total net revenues. Net revenues from others for RMB 171 million, or roughly 1% of total net revenues. Looking at our company-owned stores, revenues from self-operated stores increased by 27% year-over-year to RMB 11.6 billion. digital sales growth was negative 5.3% for this quarter, mainly reflecting the high comparison base created by the elevated food delivery subsidies in the five-year period. Store-level operating profit increased by 26% year-over-year to RMB 2.5 billion, with self-operated store-level operating margin of 21.3%. Revenues from partnership stores increased by 28% year-over-year to RMB 3.7 billion, accounting for 26% of total net revenues. These growths were largely driven by a continued expansion of our partnership store network. Sales of materials remained the largest contributor, followed by the delivery service fees, and a profit sharing and loyalty fees. Cost of materials as a percentage of the total net revenues were 39% compared to 37% in the same period of 2025. Many due to fluctuations in average selling price and a certain raw material price. In actual terms, cost of materials increased by 34% year over year to RMB 6.1 billion. mostly due to increases in volumes in self-operated stores and the material sales to partnership stores. Store rental and the other operating costs as a percentage of the total net revenues was 27%, compared to 22% in the same period of 2025. In absolute terms, These expenses increased by 36% year-over-year to RMB 3.6 billion, mainly driven by higher payroll costs from cost volume growth and rising rental expenses due to continued stall expansion. Delivery expenses as a percentage of the total net revenues increased to 10% from 14% in the same period of 2025. This improvement were mainly driven by a lower proportion of delivery orders as well as lower average delivery costs per order as we enhance fulfillment efficiency. In absolute terms, delivery expenses decreased by 3% year over year to RMB 1.6 billion. Sales and marketing expenses as a percentage of total net revenues was 6%. compared to 5% in the same period of 2025. In actual terms, sales and marketing expenses increased by 66% year-over-year to RMB 925 million, mainly due to higher spending on advertising and promotion, as well as higher commission fees paid to the food delivery and livestream platforms. General and administrative expenses as a percentage of the total net revenue was 6%, plus flat compared to the same quarter of 2025. In absolute terms, Jinyi expenses increased by 34% year-over-year to RMB 985 million, mainly driven by higher share-based compensation and payroll costs, as real estate increased investment in research and development. Our gap operating profit increased by 22% year-over-year to RMB 2.1 billion, with an operating margin of 13.4% compared to 14.1% in the prior year period. On a non-gap basis, operating profit increased by 26% year-over-year to RMB 2.4 billion, with a non-gap operating margin of 15.1% compared to 15.3% in the prior year period. Net profit increased by 16% year-over-year to RMB 1.5 billion, with a net margin of 9.4%, compared to 10.4% in the five-year period. On a net gap basis, net profit increased by 23% to RMB 1.8 billion, with a net gap net margin of 11, compared to 11.6% in the five-year period. Finally, looking at our balance sheet and cash flow, we generate RMB 2.6 billion in net operating cash during the second quarter of 2026. As of June 30, 2026, our total cash position, which includes cash and cash equivalents, restricted cash, term deposit, and short-term investments, was RMB 10.9 billion, compared to RMB at the end of December 31, 2005. During the quarter, we utilized short-term borrowings as part of our capital allocation strategy to support an ongoing shareholder return initiative. We continued to maintain a strong net cash position of RMB 9 billion and a healthy leverage profile, supported by our robust cash generation capabilities and the discipline of financial management. This provides us with flexibility to continue investing future growth opportunities while returning capital to shareholders. During the second quarter, we repurchased 49 million Class A ordinary shares, or 6 million ADS, for a total consideration of $195 million under our $300 million share repurchase program. In closing, Our second quarter marked another step forward in turning our long-term strategy into tangible results. Our expanded store network and growing customer base have positioned us well for long-term growth. Looking ahead, we will remain focused on disciplined execution, continuous improvement in operational efficiency, and sustainable value creation for our shareholders. With that, We will open the call for questions. Operators, please fill a hat.

Ladies and gentlemen, we will now begin the question and answer session. To ask a question, please press star, then 1. If you are using a speakerphone, please pick up your handset. To withdraw your question, please press star, then 2. The first question today comes from Jessie Xu with J.P. Morgan. Please go ahead.

Good evening, Mr. Guo, Ms. An, Nancy. I'm Jessi from Morgan. Thank you for accepting my question. Congratulations to the company for achieving a very good performance this quarter. Especially when you can feel that the red light and the industry level are full of challenges, WeChat is still able to beat the market in terms of door-to-door expansion, copper power, and profit. It is very significant in the market. Thanks for taking my question. This is Jessie Xu from JPMorgan. Congrats on a very strong 2Q, very encouraging in a weak macro environment, especially against some challenges for the whole industry year to date. And second quarter turned out to be a beat in both same-store sales and also margins, clearly diverging from and outperforming the whole industry. So my question is mainly on second half outlook. Considering a tough phase during July to August, how should we think about same-store sales trend for the second half? and as the delivery mix continues to normalize, how should we think about the margin and earnings outlook from here? Thank you.

Okay, thank you. Thank you for your question. I will answer this question. Since this year, we have seen that as the competition for food delivery gradually returns to rationality, the limited food industry is entering a more healthy and sustainable stage. Market competition has also returned to the value of products, operations, and users. These are the core advantages of RuiHsing's long-term investment and accumulation.

Thank you for the question. Since the beginning of the year, delivery platform competition has gradually returned to a more reasonable level. We believe the freshly brewed beverage industry is also moving towards a healthier and more sustainable development stage. And the market competition is increasingly shifting back to product innovation, operational excellence, and consumer value creation. So all the areas where Lockheed has consistently invested and built our long-term strength around.

从外部环境来看,外卖补贴收缩的节奏是快于我们年初的预期。 去年外卖补贴形成的高基数压力也开始逐步地显现出来,并已经反映到了二季度同点的表现中。 For the third quarter, because last year's July and August were at a more intense stage of platform delivery subsidies, we expect the impact of the relevant high-tech will continue. But at the same time, as the delivery ratio continues to fall back since the high point of the third quarter last year, and the steady optimization of delivery efficiency, we also see that the trend of profit recovery is also clearer. The performance of profits is also constantly improving.

So from an external perspective, food delivery subsidies have been scaled back more quickly than we initially expect at the beginning of the year. So the high-day pressure created by last year's elevated subsidies has also become more apparent, and it's already reflected in our second quarter, thanks to our sales performance. As for the third quarter, as platform subsidies were particularly intense during July and August of last year, we expect the result of high base effect to persist. At the same time, We are seeing improving trends in our profitability and margins, supported by the continued decline in delivery mix from peak levels since the third quarter of last year, as well as the improvement in our fulfillment efficiency.

From an internal point of view, this year's company is also continuously optimizing its product and business operations, and has achieved good results. For example, the super-large cup of raw cups project and the product innovation brought by the small oil American market that I just mentioned not only improved the consumer experience, but also effectively supported the performance of the single cup price and cup quantity.

And from an internal perspective, we also continue to optimize various products and operational initiatives this year with very encouraging results. For example, our cup size upgrade initiative and the product innovation around little butter Americano I just mentioned. These efforts not only enhance customer experience, but also supported the overall average selling price and our cup volumes.

So, overall, we will remain optimistic for the next half of the year. We will continue to flexibly optimize our business strategy according to the market environment and consumer demand changes, and maintain a balance between long-term growth opportunities and improved profitability, and strive to promote higher quality and sustainable development of our business. Thank you.

Overall, we remain cautiously optimistic about our operating performance in the second half of the year. We'll continue to adapt our strategies based on evolving market conditions and the consumer needs and balancing the long-term growth opportunity with profitability improvement and driving higher quality and more sustainable growth for our business. Thank you.

The next question comes from Xinyu Ruan with Goldman Sachs. Please go ahead.

My question is about power generation. In the first half of the year, the company maintained a very fast power generation speed. But at the same time, we also saw that with the rapid decline in sales, there is a lot of pressure on the industry's power supply. At the same time, after the high-speed power generation last year, many players in the industry saw the slowdown in power generation speed. Under this background, what is the reason behind the fast power generation speed? What is the strategy and understanding of the company's power generation in the second half of the year? How do we balance power generation and power generation? Let me translate my question into English. So the company has a very fast opening pace in the first half, but in the meanwhile, we see industrialized seems to have self-growth pressure under the delivery sub-system normalization, and multiple employers actually slow down the opening this year. Thank you for your question. First of all, I would like to emphasize

We are full of confidence in the long-term development of the Chinese coffee market. When we compare the coffee penetration rate of mature countries and the low level of human resources, Chinese coffee consumption is still in the early-middle stage. The potential of demand growth is huge. This is an important basis for us to stick to the high-quality scale growth strategy, and it is also the most important core driving factor for us to continue to open new stores and open good stores.

Thank you for the question. First, I'd like to reiterate that we remain very confident in the long-term growth potential of China's coffee market. So compared with more mature coffee markets globally, coffee consumption in China remains in its early stages of habit formation, with significant room for future penetration and frequency growth. This long-term market opportunity is the foundation for our high-quality scale growth strategy. It's also the key driver for our continued expansion, leaving us plenty of headroom to continue opening more stores while maintaining store quality.

Weiming Zhou, Tian Zang, Wenbao Cao, Jinyi Guo, Fei Yang

As coffee consumption increasingly becomes part of China's consumer daily routine, Locking has built a nationwide store network covering all city tiers and diverse consumption scenarios. So from tier one cities to county level markets and townships and across different consumption scenarios, for example, office buildings, commercial districts, Straight from locations, residential communities, campuses, and transportation hubs, we continue to expand consumer accessibility and strengthen Lockheed's brand measure as a nationwide professional coffee brand.

Therefore, for Ruixin, the growth of stores is not only simply an increase in the number of stores, but also relying on the national store network, strong brand and product power, Weiming Zhou, Tian Zang, Weiming Zhou, Tian Zang,

So for Lock-in, store expansion is not simply about adding more stores. It's actually more about leveraging our nationwide store network, strong brand equity, and the product capabilities to better identify and serve the growing customer demand. And supporting this is a highly scalable and replicable operating model covering the full value chain across people, products, and places. From demand insights and site selection to our store construction operations and the ongoing optimization, we leverage our digital capabilities and AI technologies to improve our decision making efficiency. Our mature organizational capabilities and strong execution actually ensure that we can open stores quickly while maintaining store quality and continuously enhance our store performance.

同时持续扩大的门店网络也进一步增强了品牌的影响力 提升产品创新的规模化能力 形成了一套门店产品和用户之间的正向循环 Therefore, the expansion of the store is not the ultimate goal, but an important basis for continuing to improve the long-term market share.

At the same time, our expanding store network further strengthens our brand influence, enhances our ability to scale product innovation, and creates a virtuous cycle among stores, products, and customers. And so, store expansion is not an end in itself, but a crucial foundation for sustainably gaining market share.

We have always believed that the number of coffee shops in the Chinese coffee market is still very high. As the penetration rate and consumption frequency of coffee people continue to increase, this number of coffee shops is still increasing. Therefore, we are confident to maintain a competitive opening rhythm, and strive to grasp the long-term growth opportunities of the Chinese coffee market, and continue to improve the market share of Ruixing. Thank you.

So to conclude, we believe there's remain substantial had to look for store growth in China's coffee market. As coffee penetration and consumption frequency continue to increase, the overall market capacity will continue to expand. We are confident in our ability to maintain a competitive pace of store expansion, capture the long-term growth opportunities in China's coffee market, and continue to grow Locking Coffee's market share. Thank you.

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 the management team for any closing remarks.

Thank you, everyone, for joining our call today. If you have any further questions, please feel free to contact our IR team. This concludes today's call. We look 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.