As of January 2020 , it managed 4,507 stores and exceeded the number of Starbucks stores in China. In this May 18, 2019, photo, customers sit at a Luckin Coffee outlet in a shopping mall in Beijing. Starbucks dismissed these allegations as a marketing stunt. Shares of McDonald's, Starbucks, Yum China and Luckin Coffee all fell Monday amid growing fears about the Wuhan coronavirus. [21][22] By the end of September 2019, Luckin Coffee had opened 3,680 stores,[23] and had recorded a net loss of $75 million in the third quarter of 2019. China's Luckin Coffee Says Business Will Continue Amid Financial Fraud Probe More FILE PHOTO: A cup of 'Luckin Coffee,' coffee is displayed during the … . On 16 May 2018, the case was officially put on file by the Shenzhen Intermediate People's Court. In April 2020, the company revealed that it had inflated its 2019 sales revenue by up to US$310 million. That is, many feared that huge fines from both the U.S. and China would drain Luckin Coffee of its resources, and force the once high-flying coffee chain to declare bankruptcy. We could easily have 5-10 big retail coffee chains across China. [15] Luckin Coffee hired Hidenori Izaki (2014 World Barista Champion) to advise the company on recipes and store designs. A man wearing face mask walks by a Luckin Coffee store on April 3, 2020 in Beijing, China. [15] Luckin offers coffee-based drinks regularly found in other coffee shops, and has a selection of recipes custom-made for the palates of the Chinese consumers. var oTime = new Date(); [6] Most of its stores are small "pick-up" locations in office buildings or college campuses that serve for online orders' pickup and delivery. [28], On 2 April 2020, Luckin Coffee announced that an internal investigation found that its chief operating officer, Jian Liu, had fabricated the company's 2019 sales by "around RMB2.2 billion" (US$310 million). [32] In the month of April, the company's stock fell by over 80%. FILE PHOTO: A deliveryman walks past a closed Luckin Coffee store at Sanlitun, as the country is hit by an outbreak of the new coronavirus, in Beijing, China February 7, 2020. [33] In mid-April 2020, American investment bank Goldman Sachs announced that it would seize and sell the Luckin stock holdings of the company's chairman, Lu Zhengyao, after he defaulted on a $518 million margin loan. The company was founded in 2017 and is based in the southeastern city of Xiamen, according to its website. These discounts make its price lower than Starbucks and attracted a bigger number of returning customers in the early stage of its business.[41][9]. window._newsroom = window._newsroom || []; Copyright 1995 - It was founded in Beijing in 2017. Secondly, the company is one of the first chains to go completely paperless. Luckin reported a net revenue of 840.7 million yuan ($121.5 million) in 2018 and incurred a net loss of 1.62 billion yuan last year. [15], National Association of Securities Dealers Automated Quotations, Holding Foreign Companies Accountable Act, https://edition.cnn.com/2020/07/14/tech/luckin-new-ceo/index.html, https://www.vbprofiles.com/people/jinyi-guo-5cdec12a1dedae45eef1f8cc, "Luckin Coffee Inc. [16], In January 2019, Luckin Coffee announced that they planned to open 2500 new stores and surpass Starbucks to become the biggest coffee brand in China. As of March, it has opened 2,370 … For years, China was a new market frontier Starbucks. Customers need to download the Luckin Coffee App to order and pay for drinks online. Qian said earlier they were expecting to continue their discount strategy for another three to five years. f.parentNode.insertBefore(e, f); And on … [24], In January 2019, Luckin Coffee appointed Reinout Schakel as CFO. Known endearingly in China as the Little Blue Cup, Luckin—which went public last year—grew from a small chain with nine stores at the end 2017 to … [37], On 29 June 2020, Luckin Coffee suspended trading on NASDAQ and filed for delisting, after the exchange ordered the company to delist. Luckin Coffee Inc. (Chinese: 瑞幸咖啡; pinyin: Ruìxìng Kāfēi) is a Chinese coffee company and coffeehouse chain. Qian said their single cup cost has fallen to 13.3 yuan in the first quarter from 28 yuan of the same period last year. Not only is this an efficient way forward for th… Luckin Coffee also announced their unmanned retail strategy and two new technical products in the press conference—Luckin Coffee EXPRESS and Luckin popMINI. Lu Zhengyao, chairman of Luckin, said Starbucks sells about 1 million cups of coffee in China every day and Luckin was closing the gap. [7] Trading was suspended and the company was delisted from NASDAQ on 29 June 2020. Luckin Coffee was once seen as a competitor to Starbucks in China, but is now embroiled in a fraud probe US securities regulators fined China's Luckin Coffee $180 million for defrauding investors over its financial performance, officials announced Wednesday. As the Seattle coffee chain has made China its largest non-US market where it opened more than 3,300 stores, Starbucks has introduced the American interpretation of coffee to the Chinese middle class. 1 of 3 In this May 18, 2019, photo, customers sit at a Luckin Coffee outlet in a shopping mall in Beijing. Founded in 2017, Luckin accelerated its … Of the total, 6,661 are KFC stores -- China's most popular fast-food chain. This operation principle is suitable for Chinese people's fast-paced lives and put pressure on other traditional coffee brands. [20] After reaching $25.96 on the first day, the stock dropped to $16 on its second day of trading. document.write(oTime.getFullYear()); It resulted in the stock price crashing and several executives being fired. !function (e, f, u) { [11], The company continued its rapid growth—by October 2018, Luckin Coffee had opened 1300 stores, surpassing the number of Costa Coffee stores to become the second-biggest coffee brand in China. This means that everything is digital — all orders are placed and paid via the Luckin app and then delivered to customers at requested locations or collected in-store. [25], On 8 January 2020, Luckin Coffee held a press conference about their self-service retail stores operations. [17][18] Luckin also gained exposure in the US stock market, applying to the National Association of Securities Dealers Automated Quotations[19] and starting to trade on Nasdaq at $17 a share. The company argued that the report raised malicious accusations and false allegations with unsubstantiated evidence and flawed methodology. Luckin operated about 4,500 stores at year end amid its whirlwind expansion in China, where the company hopes to upset Starbucks’ dominance there. [24] The target customers of Luckin Coffee are white-collar workers and students near the stores who do not have much time to drink coffee at stores. Although most of its stores do not have seats or other services for customers, and are in less prestigious locations compared to Starbucks, the brand has been able to capture a new generation of consumers and rival Starbucks in China. // Luckin Coffee Inc. (Chinese: 瑞幸咖啡; pinyin: Ruìxìng Kāfēi) is a Chinese coffee company and coffeehouse chain. All rights reserved. [29][30] The next day, the China Securities Regulatory Commission said that it would investigate the company for fraud. [35], After over a month of being halted for trading, Luckin Coffee stock was able to be traded again on 20 May 2020. Most outlets are pick-up stations or non-public facing kitchens from where mobile orders can be picked up or prepared for delivery via Luckin’s app. The U.S. market watchdog says China's Luckin Coffee has … [33], On 12 May 2020, CEO Jenny Zhiya Qian and COO Jian Liu were relieved of their positions, while Reinout Schakel remained as CFO. e.async = 1; [38], The scandal could potentially have a profound impact, as the US Government is poised to pass the Holding Foreign Companies Accountable Act, which would force Chinese companies to provide audited financial statements or else face delisting from U.S. stock markets. Known endearingly in China as the Little Blue Cup, Luckin Coffee is no small fry. Most of its stores are small "pick-up" locations in office buildings or college campuses that serve for online orders' pickup and delivery. Starbucks has about 3,600 locations … The company operates shops, stores, and kiosks that offer coffee, tea, and food. What Luckin really needs is a way to open 3,000-4,000 stores quickly and get lots of consumer attention. [43], Purchases can only be made through the Luckin mobile application. [15] In May 2018, Luckin Coffee accused Starbucks of forming a monopoly by signing exclusive contracts with suppliers and property owners. It sold 90 million cups of coffee in 2018 with heavy discounts. Growing at breakneck speed by offering cheap delivery, online ordering and big discounts, Luckin also said it now has just over 4,500 stores across China - … They also offer "buy one, get one free" coupons for loyal customers. Luckin vowed to overtake Starbucks as China's biggest coffee chain when it launched shares in the US last year. Luckin Coffee did not open any traditional brick-and-mortar stores in the beginning. }(document.createElement('script'), Photo: Getty Images/Hou Yu/China News Service [15][42] Luckin Coffee also cooperates with the second largest courier in China, SF Express, delivering orders to customers within two kilometers around each store. Firstly, the coffee retailer’s prices are 20% lower than Starbucks. [8], Luckin Coffee was incorporated in October 2017, and by January 2018 had opened its first shops in Beijing and Shanghai. Luckin plans to add 2,500 stores in China this year, bringing its total to more than 4,500. NEW YORK -- Nasdaq-listed Luckin Coffee entered 2020 with a new title: the largest coffee chain in China by number of outlets, surpassing Starbucks. With losses widening, concerns have been raised on long-term growth and profitability. Updated: 2019-05-29 13:52, Starbucks announces new, 2 unit business structure, Starbucks launches mobile order and pay services in China, Luckin, a Starbucks rival in China, rises in US stock debut, Luckin Coffee to price IPO at $17 a share, FTZs inject more vitality in China's economic development, Shanghai Disneyland gets into Christmas spirit, Student returns to village and builds e-commerce success, Robots, trains and more at industrial design expo, China holds key economic meeting to plan for 2021, Quick view: State Council executive meeting on Dec 14, Year-ender: 2020 achievements in the internet and technology, Chinese investors look to Greece for opportunities in post-COVID-19 era, Corporate hospital on wheels spreads vision, High-speed train maker fares well amid COVID. It is opening lots of stores and increasing coffee consumption by Chinese consumers. She said their store management system – propelled by technology and information system -- will boost their expansion. Luckin Coffee has Starbucks worried. Luckin is fighting Starbucks in China by opening thousands of stores in the past two years and relying on technology for orders, deliveries and payments to give it an edge. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). By doing so, it will break the bottlenecks of the catering industry that has heavily relied on store professionals, Qian added. As of January 2020[update], it managed 4,507 stores and exceeded the number of Starbucks stores in China. [31] On 8 April, the U.S. stock market halted trading on all Luckin shares over the fraud probe. The company has targeted 600 new stores in China for the full fiscal year. [CDATA[ It sold 90 million cups of coffee in 2018 with heavy discounts. [9] As noted by sources, the company's marketing and market appeal is centered around marketing and discounts; Luckin offers freebees, where each new customer is offered a free drink and a 50%-off coupon for one cup. Starbucks continues to sell at the same prices it does in places like New York. But KFC in China is a bit different from what we Americans are accustomed to. [9][10] The company announced the completion of Series A financing to a total of US$200 million in July 2018. [40], Luckin Coffee stores started trial operations in January 2018. The market dominator Starbucks now has 3,800 stores in China and is going to open more than 6,000 stores by 2022. By Wang Zhuoqiong | [26], On 13 July 2020, Luckin Coffee named Jinyi Guo as the new chairman and CEO after co-founder and former chairman Charles Zhengyao Lu was removed by shareholders. Before the U.S. stock market opening on 3 February 2020, Luckin Coffee responded by categorically denying all allegations made in the report. Luckin popMINI is the vending machine with E-commerce price. The report claimed that the number of items sold per store was inflated by at least 69% in the third and by 88% the fourth quarter of 2019, supposedly backed by 11,200 hours of video footage. chinadaily.com.cn | In October 2019, Luckin Coffee unilaterally withdrew the case. The Beijing-based coffee upstart founded a year and a half ago has gone from operating nine stores at … Its physical locations were only for making coffees and fulfilling online orders picked up by customers or delivery persons. Luckin has 2,370 stores in 28 cities in China, mostly pickup stations. Established in October 2017, Luckin Coffee has quickly become the second largest coffee chain in China after Starbucks. e.src = u; [27], On 31 January 2020, short-selling firm Muddy Waters Research published an anonymous 89-page report on Twitter, claiming that Luckin Coffee had falsified financial and operational figures. [12] Luckin Coffee also signed a strategic cooperation agreement with Tencent. ... Starbucks Can Push Back Against Luckin Coffee in China, Analyst Says . Luckin has said it is targeting a total of more than 4,500 stores in China by the end of 2019, which would take it past Starbucks, which has long dominated the Chinese coffee … It was founded in Beijing in 2017. [13][14] Much of Luckin's expansion was fueled by an aggressive marketing strategy which saw the company spend three times as much as it earned to feed its growth. Luckin Coffee has opened more than 5,000 coffee shops in China in the last two years. Qian Zhiya, CEO of Luckin Coffee, told the audience at its global coffee industry forum that the 22-month-old retailer is going to add 8,000 new stores in about two years. s Without written authorization from CDIC, such content shall not be republished or used in any form. [36] On 28 May, shares of Luckin Coffee (NASDAQ:LK) plummeted more than 20% after The Wall Street Journal released a report claiming that firms linked to the company's chairman and controlling shareholder played a central role in its accounting scandal. In this May 18, 2019, photo, customers sit at a Luckin Coffee outlet in a shopping mall in Beijing. The stock has more than doubled since its … The prize was dominance in China’s nascent coffee-and-tea retail market, valued by Euromonitor at $9.3 billion in 2019. Luckin reported a net revenue of 840.7 million yuan ($121.5 million) in 2018 and incurred a net loss of 1.62 billion yuan last year. The brand also has a strong focus on technology. Luckin, which is also known as Ruixing Coffee in China, currently operates 2,370 stores in more than 20 cities across the vast east-Asian nation. Luckin has 2,370 stores in 28 cities in China, mostly pickup stations. Hu says there are 8,000 coffee shops in Shanghai, 5,000 in Beijing and more than 3,000 in Guangzhou and Shenzhen. [39], In September 2020, China's markets regulators fined a group of firms including Luckin Coffee for a combined $8.98 million in relation to Luckin's falsification of financial and operational figures. The Xiamen-based upstart has opened 2,370 coffee shops across 28 Chinese cities since June 2017. Luckin opened its first store in Beijing several years ago, challenging Starbucks’ stronghold in the Chinese market by delivering coffee ordered using a mobile phone app. The biggest problem these companies have is not fighting each other. Announces Unaudited ThirdQuarter 2019 Financial Results", "Luckin Coffee, China's Newest Unicorn, is Challenging Starbucks' Market Stranglehold", https://www.wsj.com/articles/behind-the-fall-of-chinas-luckin-coffee-a-network-of-fake-buyers-and-a-fictitious-employee-11590682336?mod=hp_lead_pos5, "China's scandal-hit Luckin Coffee ousts chairman", "China's Luckin Coffee takes on Starbucks", "This coffee company thinks it can beat Starbucks in China", "What you can eat and drink at Starbucks's China rival", "Wall Street sees major growth potential for Luckin in untapped Chinese coffee market", "Starbucks' China challenger Luckin Coffee prices IPO at $17 a share", "Luckin Coffee Burns Investors With 39% Plunge", "Luckin Coffee surges in Wall Street debut", "Breakingviews – China fortune hard to read in Luckin Coffee beans", http://www.china.org.cn/business/2019-01/07/content_74349098.htm, "Luckin Coffee announces smart unmanned retail strategy, bringing Luckin closer to customers", "Luckin Coffee ousts chairman, names new CEO", "Luckin Coffee Responds to Anonymous Report Containing Misleading and False Allegations", "Shares of China's Luckin Coffee plummet 80% after investigation finds COO fabricated sales", "Luckin Coffee Announces Formation of Independent Special Committee and Provides Certain Information Related to Ongoing Internal Investigation", "China probes alleged fraud at Luckin Coffee, banks review IPO work", "Luckin Coffee's stock has been halted for pending news since Tuesday", "Embattled Luckin Coffee sees wild surge as customers scramble to cash in on free drink vouchers", https://ca.finance.yahoo.com/news/luckin-fires-ceo-coo-probing-152456763.html, "Luckin Coffee gets delisting notice from Nasdaq", "Luckin Coffee began trading again, but it will have to close stores and investors will be 'wiped out,' says Quo Vadis", "Luckin Coffee Drops Nasdaq Appeal; Shares to Be Delisted", "America's threat to delist Chinese companies could make everybody better off", "China fines Luckin Coffee and linked firms a total of $9 million", https://en.wikipedia.org/w/index.php?title=Luckin_Coffee&oldid=992668860, Food and drink companies established in 2017, Companies traded over-the-counter in the United States, Articles with dead external links from July 2020, Articles containing Chinese-language text, Articles containing potentially dated statements from January 2020, All articles containing potentially dated statements, Creative Commons Attribution-ShareAlike License, This page was last edited on 6 December 2020, at 13:58. 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