Welcome to and read [Industry Wall-breaking Blender 151]

The coffee industry is exiting the 9.9 yuan era. On February 1, 2026, Kudi Coffee ended its “Unlimited All-You-Can-Eat for 9.9 Yuan” promotion, leaving only some discounted products, with the prices of other drinks returning to the range of 10.5 to 15.9 yuan.

Just two years ago, Kudi Coffee broke into the market with the all-9.9 yuan pricing, taking market share from Luckin. Now, two years later, it has personally withdrawn this trump card. Why is Kudi Coffee raising prices? Is the era of cheap coffee at 9.9 yuan truly coming to an end?

01 “9.9 Yuan” Behind the Low Price Is Unsustainable Cost Limits

Freshly brewed coffee has never truly had a “natural low price.” Many imagine that by opening enough stores and increasing sales volume through bulk purchasing and centralized production, costs can be continuously lowered, allowing consumers to enjoy cheap coffee long-term.

But coffee is not an industry that can infinitely reduce costs simply by “scaling up.” It is fundamentally a mature global industrial chain system, with hard-to-break cost limits from raw materials to store operations. These costs cannot be endlessly cut through so-called “efficiency optimization.” The cost structure of home coffee shops can generally be divided into three categories.

The first is raw material costs. Coffee beans are a globally traded agricultural product, with prices affected by supply and demand cycles, climate change, regional reductions, international logistics, and more. While bulk purchasing can offer bargaining advantages, it cannot change the fundamental logic of coffee beans as a commodity.

Sometimes, when market procurement volume increases, prices may even rise. In the long run, the global price of coffee beans has been oscillating upward, making raw material costs difficult to compress indefinitely.

The second category is labor and service costs. Stores require operators, cleaning staff, and basic service support. Unlike standardized industrial products, these cannot be fully replaced by machines. With the overall rise in labor costs, these expenses are also difficult to reduce infinitely.

The third category is fixed operating expenses, including rent, equipment depreciation, and utilities. These investments can be partially spread through scale, but there is a clear lower limit, and they cannot be reduced endlessly.

Industry estimates suggest that, under current raw material, rent, and labor levels, the comprehensive cost of a freshly brewed coffee generally falls within 9 to 11 yuan. In other words, any long-term pricing below this range cannot be sustained solely through operational efficiency.

Kudi Coffee’s Chief Strategy Officer, Li Yingbo, disclosed in an interview that the average material cost per cup is between 5 and 5.5 yuan, with labor costs around 2 yuan, rent over 1 yuan, plus water, electricity, and miscellaneous expenses, bringing the total cost to approximately 9 yuan or less.

Even based on this relatively ideal cost model, a price of 9.9 yuan leaves only a very slim profit margin. If actual store costs are slightly higher, or if delivery commissions or order volume fluctuate, profits can be quickly eroded, and in some cases, “the more you sell, the faster you lose money.”

To maintain a “9.9 yuan all-You-Can-Eat” strategy long-term, business logic suggests it can only be sustained through continuous external subsidies. In the early stages of price wars, subsidies are usually borne by capital, sacrificing losses for scale, and then leveraging scale for higher valuation. But as the price war progresses into later stages, the burden of subsidies begins to shift increasingly onto franchisees and stores.

02 Store Closures and Industry Impact

Many ask: “Isn’t it good that prices are low? Consumers benefit, so why worry?” The real issue is that the price war has never truly hurt coffee drinkers but has instead hurt coffee shop operators.

Here’s some data: As of December 2025, Kudi had about 18,000 stores nationwide; but in the previous 90 days, it opened 1,655 new stores and closed 1,009, with closures reaching half of the new openings.

Kudi’s rise was not complicated: using extremely low prices to quickly attract new customers, then densely opening stores to seize locations, using scale expansion to gain market presence and capital space.

In the early expansion phase, this approach was highly effective. But as Kudi’s stores approached 20,000, marginal returns began to decline. New stores diverted customers from existing stores, increased competition within shopping districts, and reduced sales per store.

Last year’s sudden delivery war brought a surge of traffic to Kudi franchisees, with some items priced as low as 1.68 yuan. Even with Kudi’s “bottom-line” policy, some franchisees reported that after delivery platform commissions, profit per cup was not high.

After the delivery war, Kudi’s store sales volume also declined significantly, with many franchisees reporting only about 200 cups per day. According to CICC estimates, at a unit price of 10 yuan, Kudi needs to sell about 400 cups daily to recover costs within 18 to 24 months.

Against the backdrop of rising global coffee bean prices and increasing fixed costs, products priced below 9.9 yuan are now difficult to cover costs. Continuing to maintain the 9.9 yuan price in this context is essentially increasing subsidies as the scale benefits diminish.

03 Moving Beyond Price Wars, the Coffee Industry Enters a New Phase

Many naturally worry: “Will I never be able to afford coffee again?” The answer may not be so bleak… After ending the all-9.9 yuan promotion, Kudi still offers a few discounted products at 9.9 yuan. Low prices haven’t been completely abandoned; they’ve just become a “traffic driver.”

It’s better to say: Coffee is returning to a more reasonable price range, which will likely stay around twice the current level for a long time. This is a price point that covers costs and leaves a basic profit margin.

In the context of subsidy withdrawal and rising costs, this price is closer to normal business practice. From 2023 to 2026, the biggest winners of the coffee price war may not be any brand but rather the educated Chinese consumers.

Once, 30 yuan per cup was normal; now, 15 yuan per cup has become a psychological red line. Price wars are not meaningless—they rapidly expanded the consumer base for freshly brewed coffee in China, cultivated many new users, and shifted coffee consumption from “occasional” to “daily.”

The 9.9 yuan price fulfilled its historical mission: lowering barriers, educating the market, and expanding the user base. But it does not have the economic conditions to exist long-term. Ultimately, coffee is not just about traffic; it is a business that must be profitable. Over the past three years, Kudi used extreme prices to open the market.

But in the next three years, it will face a tougher question: when cheapness is no longer the only reason, will people still choose it?