Luckin Coffee, Starbucks’ biggest challenger in China, has officially entered the U.S.
The Asia-based chain opened its first two stores in New York City’s Greenwich Village and NoMad neighborhoods. The company was founded in October 2017 in Beijing, but already has over 24,000 units across China, Singapore, Malaysia, and now the U.S.
Luckin offers a variety of classic and modernized beverages for Gen Z and millennial guests: iced coffee, hot coffee, cold brew, refreshers, matcha, frappes, a wellness lineup, and hot and iced chocolate. It also has a small selection of pastries (croissant, brownie, cookie, banana yogurt loaf, dessert bar, and plain bagel). All orders must be placed through the app.
The company is also offering multiple promotions for new users—50 percent off any beverage and a $1.99 drink deal, both of which can be used twice.
Luckin has staged a dramatic turnaround after a massive fraud scandal nearly destroyed the company. The controversy surrounding the brand started in January 2020 when Muddy Waters, a short seller, obtained a report accusing the company of multiple fraudulent activities, such as exaggerating its revenue and profit figures. Following an in-depth internal review, it was revealed that the COO had falsified financial data amounting to hundreds of millions over several quarters. The brand lost over $5 billion in value, let go of several executives, was delisted from Nasdaq, and filed for bankruptcy in early 2021.
Following a $180 million SEC fine and a leadership overhaul, private equity firm Centurium Capital rescued the company with a $240 million investment.
The brand earned $4.7 billion in net revenue in fiscal 2024, up 38.4 percent year-over-year. It also opened 6,092 shops, comprising 6,071 in China and 21 in Singapore. Same-store sales fell 16.7 percent.
In comparison, Starbucks China finished its fiscal 2024 with 7,596 units and $783.7 million in revenue, down from $840.6 million in 2023. China comparable store sales declined 8 percent, driven by an 8 percent decline in average ticket.
Luckin’s drinks in China are approximately 30 percent cheaper than Starbucks and paid for via mobile devices, appealing to the younger consumer, according to CNN.
Luckin enters the U.S. at a time of increasing competition in the beverage space. Starbucks, faced with consistent negative sales domestically, has staged a comeback plan to regain its coffeehouse identity. The brand has faced immense pressure from other players like Dutch Bros, 7 Brew, Swig, and Scooter’s Coffee, all of which are growing significantly. On top of that, QSR players McDonald’s and Taco Bell have leaped into the segment with their own lineup of creative beverages.
