Luckin Coffee closed net 235 stores in China during 2020 to operate around 4,270 sites but retains a near 20% share of the Chinese branded coffee shop market 

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The new investment includes $240m from Centurium Capital and $10m from Joy Capital, both private investment firms based in China and existing shareholders in Luckin Coffee. 
 
According to a Luckin Coffee press release, the terms of the agreement could see both investors provide an additional $150m ‘under certain circumstances.’
 
The troubled Chinese coffee chain, which filed for bankruptcy in the US in February 2021, said it would use the new investment to facilitate a proposed offshore restructuring, fulfil a $180m penalty agreed with the United States Securities and Exchange Commission (SEC) in December 2020, and continue to grow its core coffee business.
 
“Today, we have a new leadership team and a viable plan to return Luckin Coffee to growth and value creation. The Board of Directors and management team believe that the restructuring is in the best interests of the company and its stakeholders,” said Luckin Coffee Chairman and CEO, Dr. Jinyi Guo.
 
The coffee chain added that all of its stores ‘remain open for business’.
 
Once touted as a significant challenger to Starbucks’ dominance in China, Luckin Coffee expanded at breakneck speed after launching in late 2017, but has since been rocked by financial irregularities and the Covid-19 pandemic.
 
In April 2020 Luckin Coffee revealed as much as 2.2bn yuan ($340m) of its reported 2019 sales had been fabricated. The revelations resulted in a number of high-profile sackings at the coffee chain, including its CEO Jenny Zhiya Qian, and COO, Jian Liu, who were implicated in the scandal. In June 2020, the Xiamen-headquartered company delisted from the Nasdaq.
 
In September 2020 China's State Administration for Market Regulation handed 45 companies, including two Luckin Coffee entities, a combined fine of 61m yuan ($9m) for ‘providing substantive assistance for false advertising’ that broke Chinese fair competition rules.
 
World Coffee Portal data shows Luckin Coffee closed net 235 stores in China during 2020 to operate around 4,270 sites. Meanwhile, Starbucks opened 322 net new stores across the vast east-Asian nation and now exceeds 4,440 locations.
 
However, despite significant challenges over the last 12 months, Luckin Coffee retains a near 20% share of China’s branded coffee shop market, which grew by 5% over the last 12 months to reach 21,464 outlets.
 
The coffee chain’s pioneering e-commerce strategy, which revolves around app-enabled delivery, pick-up and a nimble dark kitchen format, remains highly influential and has been adopted by coffee chains around the world seeking to adapt to the challenges of the pandemic.