China’s Luckin Shows Starbucks How To Sell Coffee – CoffeeTalk

Starbucks is set to launch low-priced drinks in the US as early as next year, marking a significant move for Chinese coffee chain Luckin Coffee Inc. Luckin, which raised $645 million in a public listing in New York in 2019, has emerged as China’s largest coffee chain, overtaking Starbucks in sales and number of stores. However, Starbucks’ revenue has dropped for the third consecutive quarter, with same-store sales down 10% in the US. The company’s mobile app, which accounted for more than one-third of transactions, has led to longer wait times and customer dissatisfaction.

Luckin, founded in 2017, manages its entire operation digitally, with orders only being made via its app. This allows stores to avoid the two lines seen at Starbucks, which can be confusing for infrequent visitors. Starbucks’s wide variety attracts young people, with endless concoctions and cold, sugary refreshers accounting for 35% of beverages sold.

Luckin aims to attract the fickle, social media-obsessed youth by periodically introducing new, limited-time items to test demand and keep its pipeline simple. This summer, it took advantage of the milk-tea craze among young Chinese, selling more than 44 million cups of a jasmine tea drink in the first month.

Chief Executive Brian Niccol is shaking up the menu to reduce customer wait time and make life easier for overworked baristas. He is dropping much-hyped olive oil-infused coffee and bringing back the condiments bar so fussy patrons can add sugar and cream to their liking. Luckin will first target cities with large numbers of Chinese students and tourists, who probably already have the app installed on their smartphones.

The battle between Starbucks and Luckin is over what consumers see in these drinks: Is coffee an expression of individualism or a habit? For many, it’s the latter.

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