After a comeback, the Starbucks of China wants to enter the US with affordable coffee
Good night and good Luckin… China’s biggest coffee chain, Luckin Coffee, appears to have rebounded after being charged with making up sales numbers. Luckin IPO’d on the Nasdaq in 2019 but was booted from the exchange in 2020 after the SEC said it fabricated $300M+ in sales (#fakebrews). The stock lost most of its value but has made a comeback after Luckin agreed to a $180M fine and kept expanding its biz, opening thousands of new stores. Now it’s said to be making moves into Starbucks’ biggest market:
Luckin plans to launch in the US as soon as next year, the Financial Times reported, aiming to undercut its American rival by selling drinks for as low as $2.
It’s bad news for Starbucks, which yesterday reported that its global same-store sales fell for a third straight quarter as folks cut back on $6 lattes.
Hold my Americano… Luckin’s sleek shops and affordable cups of joe (feat. deer silhouettes) helped it surpass Starbs years ago as China’s biggest java chain. Now it might be coming for a piece of the US’s coffee cake. Luckin has grown to 20K+ stores in China — more than double the # of Starbucks locations in the country. Starbs’ same-store sales in China (its second-biggest market) plunged 14% last quarter as cautious consumers gravitated to cheaper brews. The latte legend’s sales are also losing steam in the States, where traffic fell 10%. Now its new CEO (Chipotle’s ex-boss) is trying for a turnaround that includes bringing back the condiment bar and not charging extra for oat milk.
Made in China could come to brick and mortar… The US is already inundated with affordable China-made goods on ecomm sites like Amazon and in retailers like Walmart (not to mention the likes of Shein and Temu). But what isn’t so common are China-based brick-and-mortar chains. If Luckin opens up shop in the US, it could threaten Starbucks and other coffee slingers by undercutting them on price.