- Luckin Coffee is opening its first U.S. locations. The China-based coffee chain has grown to outnumber Starbucks in its home country. It enters the U.S. market at Starbucks is in the midst of a turnaround effort.
While the trade wars are capturing most of the headlines, another battle is brewing between China and the U.S. over consumer caffeination.
Luckin Coffee, the largest coffee chain in China, has opened a pair of locations in New York. And that could put an added emphasis on Starbucks’ ongoing turnaround plans, as Luckin has grown to outnumber that company in China, with 22,000 locations.
Founded in 2017, Luckin largely offers scaled-down stores, rather than coffeehouses that are designed to encourage customers to linger. It accepts cashless payments and has takeout booths. The smaller footprint cuts expenses and has allowed Luckin to offer the usual coffeehouse staples for a lower price than Starbucks, which has particularly appealed to younger customers.
Whether it can replicate that success in the U.S. is still unknown. Luckin’s previous business efforts in North America did not go according to plan. In 2019, it filed for an IPO on the Nasdaq, but was delisted after it admitted it had lied about its earnings.
Starbucks has struggled in the past several years, in part due to activist investors and an uneven experience at stores. Last year, the company ousted its CEO and hired Brian Niccol, former CEO of Chipotle Mexican Grill. He has since cut menu items by 30% and instructed baristas to start writing messages on cups, changes intended to simplify store operations and bring back customers’ feelings of connection. The company has also hired a new CFO.
Luckin will offer the same cold brews and hot coffee options as Starbucks. It also has signature items such as pineapple and raspberry versions of its iced coffees and “Refreshers” that mix coconut milk, fruit juices, and cold foams.
