Luckin Coffee, the Chinese coffee chain that overtook Starbucks in its home market, has launched its first United States locations in New York City. The company opened two outlets on Monday, one in Greenwich Village and the other in NoMad, marking its official entry into the competitive American coffee market.
“NYC, it’s happening. Our doors are open and Luckin Coffee is taking over the city,” the brand wrote on its US Instagram page. The move intensifies competition in the US coffee sector, where Starbucks has been grappling with weakening sales.
Luckin Coffee: A mobile-first coffee giant
Founded in Beijing in 2017, Luckin Coffee quickly gained ground in China by offering affordable drinks, typically about 30 per cent cheaper than Starbucks, according to a report by CNN.
The chain operates minimalist stores which are focused on speed and convenience. The company does this by encouraging mobile app usage for ordering, a model now increasingly common in the US market as well.
Luckin’s rapid expansion, aggressive pricing, and mobile-first ordering system have helped it grow into a major player in China’s coffee scene, where it now operates over 24,000 stores, including 15,598 self-operated stores and 8,499 partnership stores. The chain also saw an average 74.3 million customers on a monthly basis in the first quarter of the calendar year.
Luckin’s menu includes standard coffeehouse items like hot coffee and cold brews, as well as fruit-infused iced drinks and colourful ‘refreshers’ made with coconut milk, juices, and cold foams. A small selection of pastries is also available.
Is Luckin affordable than Starbucks?
In the US, a comparison by CBS News indicated that at Luckin, a 16-ounce drip coffee was priced at $3.45, slightly less than Starbucks’ $3.65. Meanwhile, a 16-ounce iced matcha costs $6.45 at Luckin — 20 cents more than Starbucks. Both chains sell a bagel for the same price: $3.25. The price difference, therefore, may not be substantial in the US market compared to China.
Delisting from Nasdaq, fine and rebound
Luckin’s trajectory has not been without controversy. After its 2019 IPO on Nasdaq, the company was delisted in 2020 following revelations that it had fabricated sales figures. The scandal led to a $180 million fine by the US Securities and Exchange Commission and the ousting of its chairman and CEO. Following the setback, Luckin refocused on its Asian markets, eventually surpassing Starbucks in both store count and revenue in China.
Luckin Coffee vs Starbucks
In 2023, the company’s Chinese revenue exceeded that of Starbucks for the first time, making global headlines. During this time, Luckin also cemented its position as China’s largest coffee chain. Starbucks, meanwhile, has struggled to regain its footing in China.
Back in the US, Luckin’s debut comes at a time when coffee chains are battling for younger consumers. Rivals such as Dutch Bros and Starbucks have been courting Gen Z customers with viral drinks and app-based loyalty programmes. Luckin appears to be adopting a similar strategy, using social media, giveaways, and gamified app features like point-based discounts and chances to win free coffee for a year.
Source: Business Standard
