Culture, people and technology
This article is Part 3 of the eight-part chronicle on Luckin Coffee’s rise, collapse, and reinvention. It is the excerpt of a sharing by Luckin Coffee CEO Guo Jinyi in 2024, translated into English here.
You can also read the other parts of the series here: Part 1, Part 2, Part 4, Part 5, Part 6, Part 7, Part 8
The next step was to reform the company’s culture.
Before the scandal, Luckin had no clear mission or values—we had never even discussed them.
Today, with over 100,000 employees and highly complex operations, what drives everyone to stay aligned, remain hopeful about the future, and stay energized every day?
The answer lies in corporate culture. We redefined our mission and core values to unify the company.
Next, we improved governance and incentive mechanisms.
Previously, we operated in silos. As the head of product R&D, I didn’t know the sales figures; marketing colleagues focused only on advertising without understanding sales performance; operations just managed stores. Information was confined to a few key individuals.
We broke down these barriers so that everyone can now access data. All of Luckin’s financial and operational data is now uploaded to blockchain technology.
We had to overcorrect to restore trust, using extreme measures to ensure that past mistakes would never happen again.
When Luckin went public, the team felt little involvement because they didn’t hold shares.
Centurium Capital, even when it held as little as 7% of shares, supported the team with an equity incentive plan of around 11% over six years.
Initially, only a few individuals held company shares, but now more than 300 core employees at the vice-director level and above own company stock.
Then came adjustments in strategy and tactics.
Today, Luckin has 300 million customers and over 20,000 stores. If one day we have 600 million customers and over 40,000 stores, we might explore other business opportunities. But during my tenure, I am committed to focusing on China’s golden market segment.
There aren’t many industries left with ten years of growth potential. Many brands are promoting the idea of consumption upgrades, where consumers buy increasingly expensive products.
However, our focus is on frequency-based consumption.
Even now, the average Chinese consumer drinks only about 10 cups of coffee per year, whereas in many developed countries and regions, that number is around 100 to 200 cups.
China’s coffee industry is on a fast track, and we believe there is a clear opportunity for at least a decade of growth.
Thus, our strategy remains firmly focused on coffee, with all our investments and efforts centered around it.
My job is to safeguard this gold mine, seize the biggest industry opportunities, and prevent others from taking over.
Tactical adjustments have included innovations in product development (such as the Coconut Latte), customer acquisition, private traffic channels, and business models.
Aspiring to Become a Century-Old World-Class Brand
Today, Luckin Coffee’s shareholders consist of top-tier professional investment institutions, including Centurium Capital, IDG, Ares SSG, Qatar Investment Authority (QIA), and Joy Capital.
The greatest advantage of having these investors is that they respect the Luckin team and understand that the team is capable of creating value.
Our board of directors includes four independent directors, who set very high standards for our corporate governance.
As for the management team, I describe it as “a group of professional managers with an entrepreneurial spirit.” Myself, Yang Fei, Zhou Weiming, Cao Mang, and Zang Tian have all been with the company since before the financial scandal.
One day, the team may leave the company, but our hope is for Luckin to become a century-old brand.
A great company should not be dependent on who the CEO is. Consumer goods companies, in particular, possess the potential to achieve this.
Take Coca-Cola and McDonald’s, for example—does it matter who their current CEO is? Not really. These companies have established a well-defined system and brand recognition.
Thus, we redefined our mission and values—
“Creating moments of luck and inspiring a passion for a better life.”
Our vision is to build a world-class coffee brand. Not just in terms of revenue and profits, but more importantly, in terms of brand value and consumer recognition.
Luckin is just getting started; we still have a long way to go.
In terms of values, we have further segmented our principles into two aspects:
For our work:
- Quality first, continuous innovation.
“Quality first” is simple—if you hesitate to let your own family drink our coffee, then this company should not exist.
For our people:
- Ownership and mutual trust for shared success.
This applies to our partners, suppliers, and franchisees alike.
Luckin was the first in the industry to reduce payment terms to 30 days. The OPM strategy (Other People’s Money—making money using others’ funds) is crucial. Before Luckin, all chain restaurants had a 45-day payment cycle, but we realized that we don’t need those extra 15 days.
We have no accounts receivable; our business operates entirely on cash flow. Achieving mutual trust and shared success must be reflected in every part of our operations.
Suppliers are our true “clients.” Without their support, Luckin’s rapid expansion would not have been possible.
Technology-Driven Strategy: “People, Product, Place” as the Three Pillars
At the tactical level, our core business strategy is fundamentally technology-driven, supported by three key pillars: People (Users), Product (Merchandise), and Place (Stores).
As a company built on a digital foundation, the concept of digitalization must be embedded into all business processes.
Consumers can perceive whether their purchasing process is smooth, their waiting time is short, the product quality is consistent, and the pricing is fair—all of these are the results of digitalization.
The three key pillars are:
- People – Brand and growth, led by Yang Fei.
- Product – Supply chain integration and trending products, covering procurement and product development.
- Place – Store expansion and operations.
On the technology front, we have implemented automated scheduling and automated ordering to enhance efficiency.
We once analyzed a metric called automated order adoption rate, which measures how often stores accept system-generated purchase recommendations. Initially, the adoption rate was only 20%, as stores found the suggestions unreliable due to the complexity of the operational chain.
In internet companies, while people and supply-demand dynamics are complex, the operational chain is relatively short. However, our business operates within a long and complex supply chain with over a dozen constraints to consider.
For example, store storage capacity is a critical factor—if too much inventory is ordered, there may not be enough space, and stores may perceive the system recommendations as unreliable and ignore them.
Store storage must account for multiple factors, such as dry, wet, cold, and hot goods, with clearly defined zones. If a new bottle of syrup is added, another must be removed to maintain balance.
Through continuous refinement, we have improved our automated order adoption rate to 85%, along with enhancements in automated scheduling processes.
It is crucial to thoroughly streamline business processes and carefully analyze how to best leverage digitalization for operational efficiency.
[Next part: The scale and the business engine behind 20,000+ stores]
You can also make reference to the following Momentum Works reports and articles for more:
- Inside Luckin Coffee
- Coffee in Southeast Asia
- Chinese F&B in Southeast Asia
- Quick Commerce in China 2025
- Food delivery in Southeast Asia 5.0
