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Watch out, Starbucks: China’s biggest coffee chain opens its first US locations

A Luckin Coffee location China. Monday marks the first day it's expanding to the US. CFOTO/Future Publishing/Getty Images

A Luckin Coffee location China. Monday marks the first day it's expanding to the US. CFOTO/Future Publishing/Getty Images

New York (CNN) — Luckin Coffee, the fast-growing chain that beat Starbucks at its own game in China, is entering the United States.

Its first two US locations are opening Monday — both in New York City — marking an escalation in competition against Starbucks and other coffee chains, such as Dutch Bros., that have successfully built a loyal following in targeting Gen Z drinkers with TikTok-worthy drinks at affordable prices.

Luckin’s website and social media accounts are promoting the openings with discounts and giveaways. The stores are located in Greenwich Village, near the bustling New York University campus, and in NoMad. Luckin didn’t respond to CNN’s request for comment.

 

What is Luckin?

Luckin was founded in 2017 and focuses on catering to young people, with mostly takeout booths and cashless payments. Its beverages in China are about 30% cheaper than those offered by Starbucks.

The bare-bones stores usually offer only the most basic services, which has allowed the company to expand rapidly at a lower cost. It also requires consumers to use mobile phones to place orders. The US restaurant business is also increasingly pushing mobile orders and loyalty programs, which allow companies to collect extensive customer data and generate more repeat visits.

Luckin’s menu is filled with usual coffeehouse staples, including cold brews, hot coffee and matcha options. Signature items include adding fruit like pineapple and raspberry to its iced coffees as well as a line of brightly colored “Refreshers” that mixes coconut milk and fruity juices and cold foams. A small selection of pastries are also on sale.

 

Beating Starbucks

Perhaps the biggest storyline has been Luckin’s dominance over Starbucks in China. The number of Luckins overtook Starbucks in China in 2019, giving them the confidence to plot a US expansion.

In 2019, the company filed for an initial public offering. But the company was forced to retreat a year later following the admission that its earnings had been fabricated. Luckin was later delisted from the Nasdaq, and its then chairman and CEO were both fired. The company was also slapped with a $180 million fine by the Securities and Exchange Commission.

So, it retreated back to its home region of Asia, where it has more than 22,000 locations in China and several dozen in Singapore.

In 2023, Luckin’s revenue in China surpassed Starbucks for the first time — a significant blow for the Seattle chain that is still struggling to crack the market. Starbucks was reportedly courting buyers for a portion of its China business as part of CEO Brian Niccol’s broader turnaround plans, but the company has since denied its Chinese stores are for sale.

Although Luckin’s formula has proven to be successful at home, it remains to be seen if the same will happen here — especially with Starbucks having more than a 50-year headstart.

Laura He contributed to this report.

Author: Jordan Valinsky, CNN

Source: CNN:::

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