Start-up Luckin brewing plan to overtake Starbucks in China
The company aims to have more than 4,500 stores by the end of 2019
Beijing — Chinese coffee start-up Luckin is aiming to open 2,500 new stores in 2019 and overtake Starbucks as the largest coffee chain by number of outlets in the world’s second-biggest economy, it said on Thursday.
The firm, which only officially launched its business at the start of 2018, has expanded at breakneck speed, propelled by a focus on technology, delivery and heavy discounting even at the cost of mounting losses.
“What we want at the moment is scale and speed,” Luckin’s chief marketing officer, Yang Fei, told reporters on Thursday at a presentation in Beijing.
“There’s no point talking about profit,” he said, adding that subsidies to lure in more users would be an important part of the firm’s strategy for the next few years.
Luckin says it is targeting a total of more than 4,500 stores by the end of 2019, which would take it past Seattle-based Starbucks that has long dominated China’s coffee scene and has more than 3,600 stores in the country.
Luckin’s caffeine-fuelled expansion is in stark contrast to Starbucks, which opened its first China store in 1999 and has spent two decades reaching its current store count.
The US chain, which spearheaded the growth of a coffee culture in China, started to see competition rise from smaller peers over the last 18 months, though Luckin has stood out as the most aggressive competitor.
But Luckin’s rise has not come cheaply.
The firm recorded a loss of 800-million yuan ($116.34m) in 2018, which its chief marketing officer said was in line with expectations as it pushed to expand.
Luckin, backed by Singapore sovereign wealth fund GIC and China International Capital, opened more than 2,000 locations in the last year, gaining a valuation of $2.2bn after raising $200m in a funding round in December.
The firm’s CE, Qian Zhiya, told Reuters in 2018 that Luckin aimed to outnumber Starbucks in China.
Reuters previously reported that Luckin was also in early-stage talks with investment banks about an overseas initial public offering. The firm, however, declined to answer questions about IPO plans on Thursday.