a lot of M chip macs r popping on this sub w this problem..
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That does seem below average considering the age/cycles, but I don’t think Apple will consider a warranty replacement until it’s below 80% and/or gives you a “service recommended” warning.
Like you said, you shouldn’t expect the degradation to be linear. On my MacBook, it seems to be leveling out—it was something like 93% after year 1, 89% after year 2, and 87% right now at year 3.
My battery is at 30 cycles in 11 months and the battery health is still 101%. Guess I got lucky as my battery is a little over the advertised capacity so it will take some time to actually dip below 100%. Chances are you got a battery that was 98% capacity out of the factory or something but it does seem low for that many charge cycles. I doubt Apple will replace it as they have certain rules on when a battery is eligible for replacement, but it can’t hurt to try.