Start-up brews Starbucks coup

Business | Reuters 4 Jan 2019

Luckin, backed by Singapore sovereign wealth fund GIC and China International Capital (3908), is aiming to open 2,500 new stores this year and overtake Starbucks as the largest coffee chain by number of outlets in China.

The firm, which only officially launched its business at the start of last year, has expanded at breakneck speed, propelled by a focus on technology, delivery, and heavy discounting even at the cost of mounting losses.

"What we want at the moment is scale and speed," Luckin's chief marketing officer Yang Fei said.

"There's no point talking about profit," he said, adding that subsidies to lure in more users would be an important part of the firm's strategy for the next few years.

Luckin said it was targeting a total of more than 4,500 stores by the end of 2019, which would take it past Seattle-based Starbucks, which has over 3,600 stores in the country. Luckin's expansion is in stark contrast to Starbucks, which opened its first China store in 1999 and has spent two decades reaching its current store count.

The firm lost 800 million yuan last year, which Fei said was in line with expectations as it pushed to expand.

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