| China

Luckin co-founder Charles Lu reportedly planning new coffee chain

Lu, who left Luckin Coffee following its 2020 financial scandal, is returning to familiar territory with Cotti Coffee  his third new hospitality venture in the last two years

Tianjin-based ​Cotti Coffee has reportedly registered capital of $100m | Photo credit: Jane Marc

Charles Lu, former Chairman and co-founder of Chinese coffee chain Luckin Coffee, is reportedly planning to launch a new coffee brand in the country. 

Cotti Coffee documents dated August 2022, obtained by Tech Planet, indicate that the Tianjin-based company has registered capital of $100m and established a core management team consisting of former executives from Luckin Coffee and Chinese car rental companies UCAR and CAR Inc., in which Lu holds shares. 

Two store formats are to be opened, a small 50sq m unit similar to Luckin’s pick-up kiosks and a larger outlet up to 200sq m which will cater for consumers who prefer an in-store experience. The brand will serve bakery items, light meals and other beverages alongside coffee. 

Lu left Luckin Coffee following revelations of fabricated sales of as much as $340m came to light in April 2020. The company replaced its senior management team in May 2020 and delisted from the Nasdaq in June of the same year. 

Luckin Coffee has successfully rebounded in the last 12-18 months, surpassing 7,100 stores in its native market in August 2022 and reporting robust second quarter revenues of $493m. 

Lu launched Quxiaomian, a noodle restaurant, in August 2021. The business adopted similar ordering and delivering processes as Luckin Coffee with Lu suggesting at its launch that Quxiaomian would also seek to replicate Luckin’s rapid growth across China. However, expansion of the company was suspended after only three months of operation. 

He also brought a pre-made dish entrepreneurial project to the Chinese market last year. The Hero of the Tongue, which reportedly reached 6,000 proposed franchise partnerships within its first four months, experienced store closures shortly after opening and has since been abandoned. 

Lu is hoping that Cotti Coffee can capitalise on an increasingly populated coffee shop market in China. Coffee culture is rapidly gaining traction in the country with domestic chains investing in expansion to gain a greater share of the market from Luckin and US chain Starbucks, which is targeting 6,000 stores in the country by the end of the 2022

In July 2022 Lucky Ace International Ltd., which operates Japanese boutique café group % Arabica in China, was reported as seeking $300m to support its expansion plans in the country. In the same month Chinese start-up coffee chain Be+Star Coffee, also referred to as Bixing Coffee, completed an investment round to target outlet growth across the country. 

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