Luckin Coffee Hit by Food-Safety Scandal as Viral Employee Cream Video Fuels Outrage
Luckin Coffee, China's largest coffee chain with over 36,000 stores, is facing a food-safety backlash after a video of employees feeding each other cream from a dispenser went viral. The episode surfaces as Q2 revenue rose 28.5% year-on-year to 15.89 billion yuan, even as…
Intelligence analysis by Llama
Two Luckin store employees filmed themselves playfully squirting cream into each other's mouths, sparking food-safety fears on Chinese social media. Luckin confirmed the cream was end-of-day waste and pledged discipline, but the optics underscore mounting quality-control strain as the chain pushes past 36,000 outlets and chases overseas growth.
Two workers at a Luckin Coffee shop made a silly video squirting coffee cream into each other's mouths, and lots of people got worried the cream might not be clean. Luckin said the cream was being thrown out anyway and they'll punish the workers, but the video made people wonder if the food at giant coffee chains is really safe.
Analysis
A Cream-Gun Video, a Black Eye
On the evening of August 1, a short clip of two Luckin baristas in Jinan, Shandong playfully firing whipped-cream dispensers into each other's mouths circulated on Chinese social media, accumulating shares and outrage before the original account was deleted. The clip hit a nerve because food safety is a non-negotiable for Chinese consumers, and Luckin, with more than 36,000 stores, sits in the most visible position. Luckin moved within hours, saying the two staff had used end-of-day waste cream and promising internal discipline. The store involved kept operating but swapped out its entire on-shift crew, trashed its cream gun, and disabled the "add cream" option on its mini-program. According to the article, this is not Luckin's first hygiene flare-up in 2026: state-media outlet CNR reported in early July that customers in Shaanxi and Anhui claimed to have found live foreign objects in Luckin drinks, and the Black Cat complaint platform has logged more than 22,000 complaints against the brand, averaging over 25 new ones a day.
Growth by Volume, Margin by Inch
The Q2 earnings reported alongside the controversy paint a chain running on volume rather than pricing power. Net new store openings hit 2,714 in the quarter, lifting the total to 36,310 and pushing first-half revenue up 31.4% to 27.88 billion yuan. Quarterly revenue of 15.89 billion yuan beat 28.5% growth, and net profit rose 16.1% to 1.49 billion yuan. Yet the same-store sales growth rate for self-operated stores flipped to minus 5.3% from plus 13.8% a year earlier, an unmistakable hangover from the 2025 delivery-war base effect. Net margin slipped a full percentage point to 9.4%, while selling and marketing expenses ballooned 56.1% to 925 million yuan, with Luckin blaming higher ad spending and commissions to third-party delivery and livestream platforms. General and administrative costs rose 33.8%, driven by equity incentives, payroll and R&D. In other words, the chain is still growing, but it is paying more for each incremental cup.
Thailand Win Clears the Path Southeast
Even as the cream-gun episode dominated headlines, Luckin secured a notable legal win abroad. On July 27 the company announced that Thailand's Central Intellectual Property and International Trade Court had ruled in its favor in a five-year trademark fight against local copycat Royal 50R Group, ordering the defendant to surrender its Luckin marks, permanently stop using the Luckin brand and deer logo in coffee-related businesses, and pay more than 95 million Thai baht (about 19.18 million yuan) in damages, a record for a Thai IP case. According to the article, the judgment is also the first in Thai jurisprudence to formally recognize the concept of "malicious trademark squatting." With the legal obstacle cleared, Luckin's stalled Thailand entry becomes viable again, complementing its 177 international stores at the end of Q1, more than 90% of them across Southeast Asia.
Key points
- A viral video of two Luckin staff feeding each other cream sparked food-safety concerns; Luckin said the cream was end-of-day waste and pledged internal discipline.
- Q2 revenue rose 28.5% to 15.89 billion yuan, but net margin slipped from 10.4% to 9.4% and same-store sales growth turned to minus 5.3%.
- Selling and marketing expenses jumped 56.1% year-on-year as Luckin spent more on ads, delivery platforms and livestream commissions.
- Luckin won its long-running trademark case in Thailand against Royal 50R Group, securing over 95 million Thai baht in damages and a record-setting IP ruling.
- Black Cat complaint platform has logged more than 22,000 complaints against Luckin, including multiple reports of live insects in drinks, signaling ongoing hygiene concerns.
Luckin moved within hours to contain the cream-gun incident, and the company's confirmation that the cream was end-of-day waste caps the immediate reputational damage. The Thailand trademark victory removes a long-standing barrier to one of Southeast Asia's most attractive coffee markets, while the disclosed 20 billion yuan in non-coffee category sales shows the multi-format strategy is already contributing meaningfully to growth.
Same-store sales at self-operated Luckin stores slid 5.3% in Q2, net margin compressed a full point, and marketing spend jumped 56%, suggesting Luckin is defending share with price rather than earning it. Recurring food-safety complaints, including reports of live insects in drinks, hint at quality-control issues that may worsen as the chain adds thousands of new stores each quarter, and the viral cream-gun video could intensify regulator and consumer scrutiny.
