Luckin Coffee, China’s largest coffee chain, is gearing up to make a comeback in the US market by undercutting competitors such as Starbucks with its affordably priced drinks. The company, which faced a fraud scandal leading to its delisting from Nasdaq and a hefty fine, is now preparing for a US launch as early as next year.
Despite being exposed for inflating revenues following its IPO in 2019, Luckin has managed to surpass Starbucks in annual revenue in China. With a revenue increase of 35% in the second quarter of this year, Luckin seems to be on the path to recovery.
The company’s strategy includes targeting cities with a high number of Chinese students and tourists, like New York, and offering drinks priced around $2 or $3 to undercut established players in the US market. Luckin’s focus on affordability and technology-driven customer experience has allowed it to regain market share in China and is now setting its sights on challenging Starbucks on its home turf.
Following the scandal, Luckin has made significant changes in its management, with new investors taking control of the company. Luckin has also expanded its operations, including opening a new roasting plant with a large annual capacity, in preparation for its US launch and expansion into south-east Asia.
However, experts point out that Luckin will need to adapt its cashless business model to suit the preferences of US consumers, who may have different expectations when it comes to their coffee-buying experience. The US coffee market is highly competitive, with established players like Starbucks, Dunkin’, and Dutch Bros dominating the landscape.
As Luckin prepares to enter the US market, it faces the challenge of standing out in a saturated market where consumers already have established preferences. Despite these challenges, Luckin’s focus on affordability and technology-driven customer experience could give it an edge in capturing market share in the US.