Less than six years after opening its first store, the technology and value-focused coffee chain has extended its market lead in China’s increasingly competitive branded coffee shop market
Luckin Coffee achieved 84.4% revenue growth in the first quarter of 2023 | Photo credit: Luckin Coffee
Technology-focused coffee chain Luckin Coffee has reached its 10,000-store milestone with a new outlet in Xiamen.
The landmark illustrates Luckin Coffee’s rapid growth this year, with the coffee chain opening nearly 500 new stores in January 2023 alone and only reaching the 9,000-store threshold at the end of its first quarter.
The announcement also represents a remarkable turnaround for the technology and value-focused operator following a 2020 financial scandal that resulted in the sacking of its senior management team, delisting from the Nasdaq and filing for bankruptcy in the US.
Founded in late 2017, Luckin Coffee achieved 84.5% year-on-year revenue growth to reach RMB 4.4bn ($646m) in the three months ended 31 March 2023.
Luckin Coffee's strong quarterly performance followed its first full-year profit in 2022. The Xiamen-based coffee chain achieved 67% sales growth to reach RMB 13.3bn ($1.9bn) for the 12 months ended 31 December 2022.
In March 2023, Luckin Coffee began international expansion with two pick-up stores in Singapore. The coffee chain currently operates seven stores across the Southeast Asian country and has cited Indonesia and Thailand as potential new markets.
Luckin Coffee’s growth strategy primarily focuses on nimble store formats, such as pick-up and delivery, with most outlets having little or no in-store seating.
Also leading the charge for a larger share of China’s rapidly developing branded coffee shop market are US coffee giant Starbucks and Tianjin-based Cotti Coffee.
In May 2023, new Starbucks CEO Laxman Narasimhan reaffirmed the coffee chain’s ambitious plans to open nearly 2,800 stores in China in less than two years. Starbucks achieved 10% outlet growth in China during its second quarter of 2023 to reach 6,243 stores across the country.
Meanwhile, Cotti Coffee, founded by former Luckin Coffee executives Charles Lu and Jenny Qian in October 2022, plans to reach 10,000 stores across China by the end of 2025.
The value-focused coffee chain has adopted a similar growth model to Luckin Coffee and reportedly opened 1,300 stores across 181 Chinese cities in the five months to March 2023, including opening 80 outlets in one three-day period.