Luckin Coffee, a Chinese coffee chain, has rapidly expanded to over 10,000 stores in China, surpassing Starbucks as the largest coffee chain brand in the country. Founded in 2017, Luckin Coffee aimed to challenge Starbucks by offering affordable coffee options and mobile ordering. Its aggressive expansion strategy, including self-operated stores and franchises, has contributed to its rapid growth.
China, traditionally a tea-drinking market, has seen increasing coffee sales in recent years, particularly in urban areas and among younger professionals. Analytics firm GlobalData predicts that China’s overall coffee sales will rise at an 8.7% compound annual growth rate (CAGR) from 2022 to 2027.
Luckin Coffee’s pricing strategy also sets it apart from Starbucks, with its coffee priced lower due to heavy discounts and offers. While Starbucks focuses on creating a cozy environment for customers to work and socialize, Luckin operates a grab-and-go model where customers order through an app and pick up their orders at the store, resulting in lower operating costs.
Additionally, Luckin Coffee has formed partnerships and collaborations to raise its brand profile, including a recent partnership with Kweichow Moutai, a renowned Chinese liquor maker. This strategic move has allowed Luckin to offer premium products alongside its affordable coffee options.
Despite facing challenges and a delisting from the Nasdaq stock exchange in 2020 due to an accounting scandal, Luckin Coffee has made a comeback under new leadership. It posted a full-year operating profit for the first time in 2022 and continues to expand its presence in China’s coffee market.
Overall, Luckin Coffee’s rapid growth and innovative strategies have positioned it as a formidable competitor to Starbucks in China’s evolving coffee industry.