New Yorkers have a new logo in town as Luckin Coffee, a popular Chinese coffee chain, announces its debut in the United States.
The Starbucks rival opened its first two stores in New York City on Monday, as the Xiamen-based coffee purveyor sets out to expand its market and garner favor with U.S. customers. The two Manhattan storefronts are located at 755 Broadway in Greenwich Village and 800 6th Ave in Chelsea.
The Chinese company first announced its U.S. arrival last week, posting on Instagram, “Drip level: International. The rumors are true, NYC. You’re luckin now.” Since then, the chain has been teasing “soft openings” on its social media accounts, offering promotional deals to get customers in the door.
Luckin did not immediately respond to CBS MoneyWatch’s request for comment.
Rapid growth in Asia
Since launching in 2017, Luckin has scaled rapidly to over 24,000 stores, with locations in China, Singapore, Malaysia and Hong Kong, according to a recent financial report. Despite hiccups, including an accounting fraud scandal, and $475 million in losses last year as the company poured hundreds of millions of dollars into coffee beans, store rent and other costs, Luckin’s profit margins have rapidly ballooned. This past quarter, the coffee chain made $1.2 million in revenue, a 41% increase from the year prior.
The store’s app-based concept, contrived by founder Jenny Zhiya Qian, was intended to echo that of a ride-hailing business, according to an analysis by the University of Pennsylvania’s Wharton School.
To purchase an item, Luckin customers browse the coffee store’s menu and make payments directly online. This is a “100% cashier-less environment,” Luckin states on its website, adding that the app-based store model is intended to maximize efficiency and keep costs low. The company’s beverages in China are 30% cheaper than Starbucks beverages in the country, according to CNN.
Luckin’s menu offers a range of drinks from traditional items like matcha and lattes to more unconventional choices like its “fruity Americano” series. It also has a small pastry menu including a banana yogurt loaf, chocolate-chip cookie and a sausage, egg and cheese croissant, among other offerings.
Competition with Starbucks
Luckin’s entrée into the U.S. coffee market is a direct challenge to Starbucks, which is in the midst of revamping its brand image through the “Back to Starbucks” campaign as it struggles against declining sales and revenue.
With more than 17,000 locations across the country, Starbucks has the upper hand in the U.S. In China, however, the Seattle-based coffee giant lost its hold to Luckin in 2023, the Wall Street Journal reported.
Significantly cheaper menu items and a convenient in-app ordering model boded well for Luckin in China, though it remains to be seen if the same exact strategy will be applied in the U.S. market.
A quick glance at Luckin’s in-app menu shows that prices on key items are more or less on par with those at U.S. Starbucks stores. A 16-ounce drip coffee at Luckin, for instance, goes for $3.45 compared with $3.65 at Starbucks. A 16-ounce iced matcha, meanwhile, costs $6.45 at Luckin, or 20 cents more than the $6.25 equivalent at Starbucks. A bagel at both companies goes for $3.25.
According to Luckin, the company has over 120 million registered app users. That’s far more than Starbucks, which also offers customers the ability to order via app. In January, the Seattle-based company said it had 34 million people in its membership rewards program, which is run through the app and online.
