Analysis of the Cost Structure of Luckin Coffee

Abstract

In today's ever-evolving and uncertain economic environment, the Chinese coffee industry continues to show remarkable growth and development. However, it is crucial to understand that the cost structure of any business has a direct impact not only on its future operational risks but also on its overall profitability. To shed more light on this topic, this article undertakes a detailed analysis of the composition and proportion of the cost structure of Luckin Coffee. It compares the cost structure of Luckin Coffee with that of the same industry and examines its historical data. The article then concludes that Luckin Coffee has adopted a high-cost elastic cost structure. Furthermore, the article delves deeper into how Luckin Coffee and the coffee industry at large are influenced by this high-cost elasticity cost structure. By understanding the impact of such a cost structure, stakeholders in the industry can make informed decisions that can positively affect their bottom-line. Overall, this article serves as a valuable resource for anyone seeking to understand the cost structure of the Chinese coffee industry and its implications for businesses operating within it.