Luckin Redux: Chain Retakes Numbers Crown From Starbucks
When Luckin Coffee first opened in November 2017, they had one clear aim: to beat Starbucks at its own game and become the number one coffee chain in China. Well it looks like they may have finally achieved their goal and stolen the coveted coffee crown, boasting 467 more Chinese stores than Starbucks.
According to Luckin's fourth quarter and full year report for 2021, at the end of last year, the brand had 6,024 stores in China, compared to Starbuck's 5,557. One key thing to note here is that Starbucks has been in China for over 20 years (since 1999) and as mentioned earlier, Luckin only opened in 2017, so that is some huge growth.
Luckin Coffee near the Beijinger office
Now, this isn't actually the first time that Luckin stores have outnumbered Starbucks. Back in December 2019, it was reported that Luckin had 600 more stores than Starbucks. However shortly after this, in April 2020, you may remember that Luckin was hit with a huge scandal. It emerged that they had faked approximately RMB 2.2 billion in 2019 sales, which caused their stock prices to plummet and concluded with them being delisted from NASDAQ.
This led to store closures, including 80 stores being closed in Beijing. However, two years after the scandal first hit, Luckin is back and stronger than ever. As well as dominating the market in China overall, Luckin has also become the lead coffee chain in the capital itself, with 398 Luckin stores to Starbucks' 371.
Luckin gets creative with a spring-themed coffee cup
An avid drinker of Luckin Coffee myself, I (or perhaps my bank balance) was very happy to hear about Luckin's comeback story. When the scandal first struck in 2020, I was sure that I'd have to swap out my daily RMB 11-16 coffee for a RMB 30 Starbucks one, forking out the extra cash for a coffee that in my opinion is around the same quality.
Well, according to their report (read in full from Global Times via QR code below) for the fiscal year of 2021, they had total net revenues of RMB 8 billion, an increase of 97.5 percent from the previous year. Luckin reported net new store openings of 1,221, whereas Starbucks in comparison reported net new store openings of 654.
Aside from the obvious reasons for Luckin's success such as their low prices, app-based ordering and delivery service, there are some other key indicators for why they're winning in the race against Starbucks. One such example is that Luckin have begun opening stores not only in major cities but also in second- and third-tier cities across China where Starbucks has no presence at all.
Luckin was quick to jump on the Eileen Gu bandwagon, signing her as a sponsor amid the Winter Olympics
Also, clever marketing ideas and an ability to quickly jump onto Chinese trends such as releasing a coconut milk latte or their sponsorship deal with Winter Olympic superstar Eileen Gu have also helped their recent success.
And Luckin isn't the only domestic brand that Starbucks has to worry about with various other domestic coffee chains such as Manner Coffee, M Stand and Seesaw also showing significant growth in 2021.
Are you a Starbucks loyalist, or think they're overrated? Let us know in the comments!
READ MORE
SKP Valentino Café is All Glam and Forgettable Coffee
Images: Katie Coy
advertisement