Luckin Coffee said 33 lower-tier cities feature in its latest franchise recruitment plans | Photo credit: via Shutterstock

China's largest coffee chain Luckin Coffee is accelerating outlet growth, opening 478 new stores in January 2023 to exceed 8,400 outlets. 
 

Having previously focused on large, densely populated first and second tier cities for expansion, such as Beijing, Shanghai, Guangzhou and Shenzhen, Luckin Coffee is currently seeking to expand its franchise operations to 41 third and fourth-tier cities.   

Approximately 70% of China’s 1.4 billion population live in third- and fourth-tier cities. 

According to the Luckin Coffee’s WeChat account, 33 lower-tier cities feature in its latest franchise recruitment plans, including Qinzhou, Jiamusi, Songyuan, Baotou, Tongliao, Panzhihua, Xishuangbanna, Pu’er, and Sanmenxia. 

The company ended its third quarter with 7,846 stores, having opened 651 outlets in the three months ended 30 September 2022. 

With nearly 8,400 stores the country, market leader Luckin Coffee is opening stores at a faster rate than its closest competitor, Starbucks, which opened 69 new stores in the three months to 1 January 2023 to exceed 6,000 stores. 

The US coffee chain said revenues in China fell 31% to RMB 4.2bn ($622m) during the three month period ended 1 January 2023 as a result of pandemic trading restrictions. 

Comparatively, Luckin Coffee generated RMB 3.9bn ($547.5m) revenues in the three months ended 30 September 2022 – 66% higher than the same period in 2021.  

The digital-first company, which operates a significant proportion of delivery and pick-up-only stores, has credited its app and delivery model as enabling it to meet increasing consumer demand in ‘an agile and flexible manner’. 

In January 2023 it was reported that Luckin Coffee was considering international expansion this year, with Indonesia, Singapore and Thailand mooted as potential markets.