Starbucks And Luckin Coffee Both See Growth In Smaller Chinese Cities – CoffeeTalk

Starbucks and Luckin Coffee have regained momentum in China by focusing on lower-tier cities, despite a combination of sluggish consumption and cutthroat pricing. Starbucks’ China operations saw a 4% increase in transactions in the quarter ended March 30, a slight increase from the 8% decline in comparable-store sales in the country in the year ended September 29. Operating revenue rose 5% year on year to US$740 million in the quarter. The company added 665 stores in China over the past year, bringing its total to 7,758, second only to the US at 17,122. This shows Starbucks is making efforts to defend its market share in China as price competition persists. However, it is important to monitor how much further Starbucks could expand beyond wealthier cities, where customers could afford to pay for a premium brand. A total of 66,920 coffee shops opened across China over the past year, with much of that growth concentrated in second and “new first-tier cities” – urban centers less globally connected than Beijing or Shanghai but rising in population and economic power.

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