Luckin Coffee launches automated retail formats in China

Rapidly expanding Chinese coffee chain, Luckin Coffee, is hoping to broaden its sales reach across offices and public places with the launch of two new vending machine formats

Luckin Coffee operated 4,507 stores as of late 2019, overtaking Starbucks' 4,300 stores

Luckin Coffee is seeking to consolidate its position as Chinese market leader by outlets with the launch of new automated retail formats. At a press conference, Luckin Coffee CEO, Jenny Zhiya Qian, unveiled the Luckin Coffee Express smart unmanned coffee machine and Luckin Pop Mini smart vending machine.

Utilising Schaerer coffee machines, the e-commerce-enabled vending machines are integrated with Luckin’s app-based ordering systems and feature facial recognition technology. While the Express machines are designed to mimic Luckin’s standard retail offering, the ‘Pop Mini’ machines can be deployed in a variety of out-of-home scenarios, including workplaces, campuses and service stations.

“The unmanned retail strategy is a further extension of Luckin Coffee's infinite scene,” said Qian. “Offices, college campuses, hospitals, airports, gas stations, communities – Ruixing Coffee UAV terminals will be everywhere,” she added.

In late 2019 Luckin announced it had reached 4,507 stores, overtaking market leader Starbucks, which has spent 20 years constructing a formidable 4,300-store portfolio in China.

Deploying a canny mix of e-commerce, rapid delivery and heavily discounted coffee, the chain has catalysed demand for aspirational café experiences among China’s growing young urban workforce. The character of Luckin’s market presence is, however, markedly different from that of its US rival, with around around 90% of stores operating from delivery-kitchens with little or no seating.

Luckin has also reportedly raised a combined $778m from an additional share sale and a convertible bond offering. The funds will no doubt come in useful for coffee chain's rapid expansion, which has seen the firm incur heavy losses. In 2019 Luckin said it intended to break even during 2020.

Luckin Coffee is not the first major coffee operator to enter China’s automated coffee segment. Market competitors include eCoffee Zero, Friends Drinks, Coffee Terminal, and Coffee Wing.

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