The Xiamen-based coffee chain is aiming to boost its presence across China’s third and fourth tier cities and has commenced a new franchise partner recruitment drive in the Henan, Shandong and Shanxi regions
Revenues from franchised stores in Luckin Coffee’s third quarter reached RMB 899m ($126.4m) | Photo credit: via Shutterstock
Luckin Coffee is seeking to increase the number of franchised stores it operates across China.
The technology-led coffee chain opened 651 net new stores in its latest quarter to reach 7,846 locations. Currently 32% of stores are franchise-operated.
The new franchise expansion initiative is initially targeting the northeast Henan, Shandong and Shanxi regions, which Luckin Coffee deems key growth markets.
The coffee chain will then seek to expand its franchise operations across 41 third and fourth-tier cities.
Luckin Coffee does not currently operate more than 10 stores in any of the cities targeted for expansion.
Revenues from franchised stores in Luckin Coffee’s third quarter reached RMB 899m ($126.4m), an increase of 116% on the same quarter of 2021. Overall revenues for the quarter were RMB 3.9bn ($547.5m).
In January 2021, Luckin Coffee sought to attract franchisees from lower-tier cities by removing franchise fees and lowering investment rates.
However, in August 2022 the company suspended the recruitment of franchise operators with ‘uncertain reopening timetables’ following brand infringement concerns.
Luckin Coffee is China’s largest coffee chain, ahead of US brand Starbucks which operates 6,021 stores in the country. All Starbucks stores in China are currently company-operated.
In September 2022, Starbucks’ Interim CEO Howard Schultz outlined plans to increase its Chinese store count by 50% and reach 9,000 outlets by 2025.