What is China's "9.9 Yuan Coffee War"? | Luckin vs. Cotti, the Counterattack of the Exiled Founders

A quick grasp through 4-panel comics: The 9.9 Yuan Coffee War

Introduction

In 2023, the number "9.9 yuan" began to have a strange presence in China's coffee industry.

9.9 yuan. In Japanese yen, that is about 200 yen.
Compared to latte-style drinks at Starbucks in China, this is about one-fourth the price range.

Armed with this price, Luckin Coffee and Cotti Coffee clashed head-on.

Luckin is one of China's largest coffee chains, which achieved an unusual business recovery after being delisted from NASDAQ due to accounting fraud.
Cotti is a new coffee chain created by the former management team that was ousted from Luckin.

In other words, the composition is as follows.

The people who once created Luckin launched an attack on their old nest with a model very similar to Luckin's.

Currently, Luckin has over 35,000 stores, and Cotti is said to be on the scale of 18,000 stores.
Combined, the two companies have already become a massive low-price coffee network of 50,000 stores.

The Chinese coffee market itself is also growing rapidly.
The market for freshly ground and freshly brewed coffee made in-store, which is the main battlefield for Luckin and Cotti, expanded from approximately 54.2 billion yuan in 2019 to approximately 119.5 billion yuan in 2022, and is estimated to have reached a scale of 200 billion yuan by 2025.

Secure the still-growing market first with low prices and store density.
This is the basic logic of the 9.9 yuan war.

In this article, we will organize the 9.9 yuan war from its beginning to where it stands in 2026.

What to look for in this article

・What are Luckin and Cotti aiming for in the 9.9 yuan war?
・Differences in business models supporting the 9.9 yuan policy
・How did the 9.9 yuan war change the price standards and consumption habits of the Chinese coffee market?

1. The "grudge" necessary to understand this war

To understand Luckin and Cotti, one must first know the relationship between the founders.

Luckin Coffee was founded in 2017.
The central figures in the founding period were Lu Zhengyao and Qian Zhiya.

As an entity "challenging Starbucks in China," it expanded rapidly with an app-based, mobile-order-first business model that was revolutionary in the Chinese cafe industry at the time.
It achieved a NASDAQ listing in just two years.

However, accounting fraud was discovered in April 2020.
It was revealed that sales of approximately 2.2 billion yuan (at the time, a scale of tens of billions of yen) had been inflated, leading to delisting from NASDAQ.
Lu and Qian were ousted from the company, and the reputation of the Luckin brand seemed to have fallen to the ground.

But this is where it gets unusual.

Under the new management, they reorganized unprofitable stores and rebuilt store operations and the digital ordering infrastructure.
Furthermore, they proceeded with debt restructuring in the U.S. and a review of the management structure, leading to a rapid recovery.
In 2021, net revenue saw a significant increase of 97.5%, and it became China's largest coffee chain with 6,000 stores, surpassing Starbucks.
It is an exceptionally rare case globally for a company that committed fraud and was delisted to return as an industry leader.

Meanwhile, the exiled Lu and Qian founded Cotti Coffee in 2022.
Using the model they knew best—app-based, low-price, and rapid expansion—they challenged their former company head-on.
The difference is that Cotti is more franchise-oriented and expanded even more rapidly.

The former executives who built Luckin have challenged Luckin using the same model as Luckin.
This is the interesting part of this price war.

2. The Opening of the 9.9 Yuan War

It was Cotti that ignited the low-price war.
They launched a campaign starting at 9.9 yuan in February 2023.
In March, they also rolled out 8.8 yuan coupons, aiming to capture awareness at once through low prices.

In response, Luckin dropped 9.9 yuan coupons at stores near Cotti locations in April.
In June, coinciding with reaching 10,000 stores, they expanded this to a nationwide 9.9 yuan coupon strategy.
Furthermore, they turned the 9.9 yuan measure from a temporary promotion into a core strategy for customer acquisition.

Cotti also piled on measures with even lower price points, such as 8.8 yuan coupons.

The 9.9 yuan price point puts strong pressure on profitability and strains management.
Still, there are two reasons why both companies continue to lower prices.

1. Acquisition of app member data:
The basis of ordering is through digital channels such as apps and mini-programs.
They create a path where users drawn in by the 9.9 yuan price make additional purchases of higher-margin products (customized drinks, food, seasonal items, merchandise) via digital channels.
Luckin's cumulative transaction customers exceed 450 million. This member base itself is an asset.

2. Pre-empting market share:
Coffee consumption in China is still small relative to the population size, so they lock in users based on the logic that "the company that makes it a habit first wins."

Annual coffee consumption in China is estimated at about 28 cups per person (as of 2025).
Compared to markets like South Korea, where people drink around 400 cups a year, there is still plenty of room for it to become a daily habit.
This gap means that "there is still a market where no one has made it a habit yet."

It is fresh in our memory that in Japan, when the cashless payment ratio was low, various smartphone payment companies engaged in a battle of campaigns to compete for market share.
The structure is similar to that. It is a competition to secure the gateway to daily behavior in a growing market.

3. Who bears the burden of the 9.9 yuan measure—Luckin with its majority of direct-managed stores and Cotti with its rapid franchise expansion

Luckin and Cotti look very similar on the surface.
Both use app ordering, small stores, low prices, and high-density store openings as weapons.
The difference lies in who bears the 9.9 yuan price and how much the headquarters can adjust it.

Luckin has a majority of direct-managed stores. Direct-managed stores account for about two-thirds.
Because the direct-management ratio is high, it is easier for the headquarters to integrate products, prices, coupons, supply chains, and store operations.
It is easier to incorporate 9.9 yuan not just as a discount, but into member acquisition, visit frequency, and product mix.

On the other hand, most of Cotti is franchised, and they used franchisees to expand their store network all at once.
They reached the 7,000 and 10,000 store scale in a short period from their founding, chasing Luckin in a short time.

The franchise model allows for faster store opening speeds because the headquarters can expand the store network using the franchisees' capital without having to bear all the opening costs.

However, "who bears the burden of the 9.9 yuan measure" changes in appearance depending on the store model.
In a direct-managed store, the headquarters can adjust the entire store's profitability and promotions as one.
On the other hand, in a franchise, much of the final store profitability returns to the franchisee side.

Cotti expanded its store network in the early stages while providing generous subsidies and opening support to franchisees.
It was symbolic that they provided a competitor subsidy of 1 to 1.5 yuan per cup depending on the distance to franchisees opening near Luckin stores, and there were also many other subsidies such as basic subsidies, multi-store subsidies, and rent subsidies.
As a result, they were able to continue opening stores at a scale of 1,500 per month.

Cotti's 9.9 yuan coffee was also a weapon in the store opening competition involving franchisees.
Gather customers with low prices, lighten the burden on franchisees with subsidies, and increase the store network all at once. Cotti's rapid expansion was established by this combination.

This reminds me of the early attack method of PayPay in Japan (and if we go back further, it is also the early attack method of Alipay).
The flow is to gather stores with zero payment fees, make it usable at any store, drive traffic to stores by launching extreme point-distribution measures for users, and further increase the number of franchisees.
It is interesting that the same type of structure is established in Cotti's development.

While showing enough expansion power to chase Luckin in a short period, Cotti's rapid expansion strategy also caused distortions.

Various problems arose, such as the actual operating results being far from the figures shown before franchising regarding "recovery period and profit margin," cases where subsidies were delayed despite being designed to cover the difference, leading to a state where franchisees had to keep paying out of pocket, and frequent cases where stores of the same brand were lined up in close proximity, leading to competition. As a result, posts by franchisees calling for "reselling/closing stores" on social media surged.
There was even a period when the number of new monthly store openings plummeted from 1,500 to 173.

The low-price strategy of 9.9 yuan forces the entity bearing the cost to face the issue of sustainability. If the plan goes awry, it is a precarious strategy that becomes impossible to maintain.

4. The War Situation as of 2026—The Low-Price War Enters the Next Phase

As of 2026, the 9.9 yuan war has moved from the phase of across-the-board discounting to the next stage, rather than ending with one side winning completely.

Symbolic of this is Cotti's change in policy.
In February 2026, Cotti stopped the policy of highlighting "all items for 9.9 yuan" and narrowed down the products available for 9.9 yuan to a few special-price menu items.
Many products have returned to the normal price range of 11.9 to 16.9 yuan, and the model has shifted to lowering the actual price through delivery app discount subsidies as needed.

This move indicates that it is not just because Cotti has finished its expansion, but because the burden of maintaining 9.9 yuan across the board has become too heavy.
With the combination of franchisee profitability, subsidy burdens, and soaring coffee bean prices, the model of pushing all products at a low price has entered an adjustment phase.

Luckin, on the other hand, is also trying to balance price and gross margin while narrowing the scope of its 9.9 yuan policy.

The composition as of 2026 is not a simple story of "Luckin won and Cotti lost."

Based on public information, Luckin appears to have the advantage in overall strength.
Luckin has exceeded 35,000 stores globally, its Q1 2026 revenue increased by 35.3% year-on-year to 11.99 billion yuan, and its average monthly transacting customers have reached 93.09 million.

Meanwhile, Cotti has lowered the price standard of the Chinese coffee market and has grown into a massive chain claiming over 18,000 stores globally.

Luckin is the winner in terms of corporate completeness, while Cotti is the challenger that broke the price perception.
And the Chinese coffee market has changed to price standards and usage habits different from those before the 9.9 yuan war.

5. Starbucks China Caught in the Crossfire

The player that suffered the greatest "collateral damage" in this war is Starbucks China.

For many years, Starbucks has sold a "premium cafe experience" in China.
Spacious stores, a calm atmosphere, a third place, and a Western lifestyle.
That was a very strong symbol for the urban middle class.

However, Luckin and Cotti brought a different question.
The question is whether it is necessary to pay more than 30 yuan for a cup you drink every day.

Between 2023 and 2024, Starbucks China faced significant headwinds.
Its same-store sales growth rate in China turned negative, and both customer traffic and average ticket size declined.
As low-price chains spread as options for daily use, the reason to choose a 30+ yuan Starbucks as a daily cup became relatively weaker.

The position of "premium third place" that Starbucks had built in China became difficult to function in the context of daily consumption.
Starbucks as a "reward coffee" once a week might remain, but demand as a daily habit beverage has flowed to a certain extent to low-price, high-frequency chains like Luckin.

6. Three Observations Shown by This War

① In the Chinese market, not only "quality" but also "habituation" determines victory or defeat

The essence of the spread of 9.9 yuan coffee lies not only in cheapness but in habituation.
Opening the app, choosing a coupon, picking it up at a nearby store, and buying it the same way the next day.
Embedding this behavior into daily life is significant.
Chinese low-price coffee chains are not selling a "delicious cup" as a standalone item, but rather selling a "system for buying every day."

(2) The sustainability of price competition depends on the store model

Even at the same price of 9.9 yuan, the burden structure changes depending on the store model.
If there are many directly operated stores, the headquarters can easily coordinate product composition, coupons, store operations, and supply chains as a whole.
In a franchise model, while the store network can be expanded quickly, much of the final store profitability returns to the franchisee side.

Low prices are effective for attracting customers.
However, as the number of stores increases, the conditions for subsidies and support change, and raw material costs, rent, and labor costs become heavier, the perspective on the same 9.9 yuan changes.
The sustainability of price competition is determined not only by the unit price but also by who is supporting that price.

(3) The price war is not ending, but changing its form

The 9.9 yuan war is moving from a simple lowest-price competition to a more complex battle.
Some products are kept cheap, while gross profit is recovered through seasonal limited-time products and high-unit-price items.
Coupons are used to encourage repeat visits, and subsidies from delivery app companies are also combined.
The direction is to create revenue through other products or other usage scenarios while using low prices as an entry point.

A brand cannot last long on low prices alone.
However, it is also difficult to completely return consumers who have become accustomed to 9.9 yuan to their original price perception.
In the Chinese coffee market, how to turn habits created by low prices into profitable relationships has become the next point of contention.

7. Conclusion

The 9.9 yuan coffee war was not just a simple discount competition.
It was a rematch waged by the former Luckin management team against their old home via Cotti, revolving around digital ordering, small-format stores, low prices, franchising, subsidies, and a membership base.

Cotti changed the price standard of the Chinese coffee market.
It dragged Luckin into a low-price battle and also shook the position of Starbucks China.

What becomes visible from this war is that the Chinese cafe market can no longer be described only as a 'place to spend time leisurely inside'.

Order via app, pick up nearby, and buy as a daily habit because it is cheap.
Raise the unit price with limited-time products, and get them to come back using membership data.
Before being a space, cafes are becoming a conduit for daily habits.

A cup bought as a daily habit and a cup chosen to lift one's mood have different meanings, even if it is the same coffee. One might even say the business formats are different.

The war between Luckin and Cotti, while being a story about the massive Chinese market, also offers suggestions for how to start small cafes and coffee stands.

When thinking about GAFUCAFE, whether to start a cafe from a 'place' or from a 'habit' becomes a major question.

Next article to read

This is an article about actually drinking Luckin Coffee in Shanghai.
It also describes the trends in creative coffee happening in low-price chains like Luckin Coffee in contrast with independent cafes.

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