According to two people with knowledge of the situation, the Xiamen-based company is expanding its supply chain and tailoring its technology for the market, according to Financial Times.
The coffee chain intends to “undercut U.S. incumbents by selling drinks priced around US$2 or US$3” in an effort to lessen the dominance of its rival Starbucks.
According to one of the persons, the corporation has been airing commercials during NBA games to increase brand awareness before its scheduled launch.
One of the greatest comeback tales in Chinese business history is Luckin Coffee, according to Shaun Rein, founder of China Market Research Group.
“Many people thought they were dead, but underlying the fraud was a company with great technology and decent coffee at a competitive price,” he added.
“Over the past three years, Luckin has grabbed massive market share from Starbucks in China. Now, it is coming after Starbucks on its home turf.”
Convenience and affordability have been central to Luckin Coffee’s pitch since its founding in 2018. With small-scale stores and kiosk formats combined with a focus on mobile ordering and automation, the coffee chain experienced a quick growth in its home country, opening more than 4,000 stores within its first two years.
As of 2023, Luckin was opening an estimated 16.5 stores per day in China, becoming China’s largest coffee chain by a wide margin, followed by another relatively new chain, Cotti Coffee, and Starbucks. In July, Luckin Coffee said it had reached 20,000 stores.
Luckin’s annual revenue of Rmb24.9bn (US$3.5bn) exceeded Starbucks’ in China for the first time in 2023, though Starbucks has fewer outlets and its sales per store in China tend to be higher.
The company’s revenue rose 35 per cent in the second quarter of this year to Rmb8.4bn, with Rmb871mn in net income.
Customers in Luckin’s China stores must order through an app, which offers discounts for group purchases and collects a wealth of data on consumer behaviour.
Market Analysts argue that the chain will need to o adapt its cashless business model to the US market considering that the US coffee market is fiercely competitive.
Starbucks is also strategizing on new measures to win back its customers and go back to profitability.
Besides Starbucks’ nearly 17,000 US stores, coffee-and-doughnuts chain Dunkin’ has more than 9,500 locations.
New York-listed Dutch Bros has about 900 drive-through coffee outlets after expanding by a fifth in the past year. Meanwhile, coffee is sold everywhere from fast-food chains to convenience stores.
