The “Chinese Starbucks” Overtaking Starbucks
As we near only its second birthday, Luckin Coffee is opening eight new shops every day. China craves caffeine, and with Starbucks only opening one store per day, Luckin looks in pole position to deliver it.
More than half of its customers come back for more (54%) in a convenience-based “pick-up and go” coffee culture. Such a culture runs completely counter to the Western, “third place between home and work” idea that Starbucks has adapted to the region. The fate of both companies lies with the Chinese consumer, which is how it should be.
Food and drink take on massive cultural importance in China. Investors traveling the country will learn how different local regions define themselves by their unique cuisines and tastes. There are still mass-appealing menu choices, however, and in a bid to tip the competitive scales in its favor, Luckin wants to offer them all. Alongside tea, lemon, orange, and apple juices stand ready to go with citrus-grower Louis Dreyfrus signed up for a joint venture. Yummy!
Using orange juice to reverse the dominance of Starbucks is cool and all, but it won’t automatically reverse $400 million losses. Luckin is unprofitable. This company is still a baby, and no obvious roadmap to breaking even has led many to think it has the full might of President Xi’s government on its side. Rumor has it that Xi’s all about the tea, though, so we’ll see about that!