Coffee Startup Luckin Plans to Overtake Starbucks in China

Chinese coffee startup Luckin announced on Tuesday that it plans to open 2,500 new stores this year and overtake Starbucks Inc. (NASDAQ: SBUX) as the largest coffee chain by number of outlets in the world’s second largest economy, as per CNBC.

The firm which launched its business at the start of last year has grown exponentially due to a focus on technology, delivery, and heavy discounting even at the cost of mounting losses. Luckin said it was targeting a total of more than 4,500 stores by the end of 2019, which would overtake Starbucks current total of 3,600 stores in the country.

According to CNBC, Luckin’s expansions is in stark contrast to Starbucks, which opened its first China store in 1999 and has spent two decades reaching its store count. The U.S chain has been at the forefront of this industry however, it started to see competition rise from smaller peers over the last 18 months, with Luckin being the most aggressive competitor.

Luckin’s rise has come with a steep cost. The firm recorded losses of USD 116.34 Million last year which was in line with expectations as it pushed to expand. Luckin has opened more than 2,000 locations this past year, gaining a USD 2.2 Billion evaluation after raising USD 200 Million in a founding round last month.

Luckin’s Chief Executive Officer Qian Zhiya told Reuters last year that Luckin “aimed to outnumber Starbucks in China.” Reuters also commented that Luckin was in early-stage talks with investment banks about an overseas initial public offering.

2 Comments
  1. Herve Blandin 3 months ago
    Reply

    Interesting strategy (and flawed) by $SBUX rival Luckin. They want to beat SBUX in China by heavily discounting + expanding. This works against competitors that aren’t already scaled (Lyft/Uber) or are under-capitalized. SBUX is neither Setting up SBUX to thrive after they fail.

  2. Wilson Cheung 3 months ago
    Reply

    you can outnumber starbucks, but will consumers really come to you over them?

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