Description
Luckin Coffee Inc. is a Chinese coffee company and coffeehouse chain. It was founded in Beijing in 2017. As of January 2020, it managed 4,507 stores and exceeded the number of Starbucks stores in China. Most of its stores are small "pick-up" locations in office buildings or college campuses that serve for online orders' pickup and delivery.
In April 2020, the company revealed that it had inflated its 2019 sales revenue by up to US$310 million. It resulted in the stock price crashing and several executives being fired. Trading was suspended and the company was delisted from NASDAQ on 29 June 2020.
History
Luckin Coffee was incorporated in October 2017, and by January 2018 had opened its first shops in Beijing and Shanghai. The company announced the completion of Series A financing to a total of US$200 million in July 2018.
The company continued its rapid growth—by October 2018, Luckin Coffee had opened 1300 stores, surpassing the number of Costa Coffee stores to become the second-biggest coffee brand in China. Luckin Coffee also signed a strategic cooperation agreement with Tencent. Much of Luckin's expansion was fueled by an aggressive marketing strategy which saw the company spend three times as much as it earned to feed its growth. In May 2018, Luckin Coffee accused Starbucks of forming a monopoly by signing exclusive contracts with suppliers and property owners. Starbucks dismissed these allegations as a marketing stunt. On 16 May 2018, the case was officially put on file by the Shenzhen Intermediate People's Court. In October 2019, Luckin Coffee unilaterally withdrew the case.
In January 2019, Luckin Coffee announced that they planned to open 2500 new stores and surpass Starbucks to become the biggest coffee brand in China. Luckin also gained exposure in the US stock market, applying to the National Association of Securities Dealers Automated Quotations and starting to trade on Nasdaq at $17 a share. After reaching $25.96 on the first day, the stock dropped to $16 on its second day of trading. By the end of September 2019, Luckin Coffee had opened 3,680 stores, and had recorded a net loss of $75 million in the third quarter of 2019.
In January 2019, Luckin Coffee appointed Reinout Schakel as CFO.
On 8 January 2020, Luckin Coffee held a press conference about their self-service retail stores operations. At the conference, Luckin announced to public that they had opened 4507 stores in past two years and as such had already become the biggest coffee chain brand in China, surpassing Starbucks. Luckin Coffee also announced their unmanned retail strategy and two new technical products in the press conference—Luckin Coffee EXPRESS and Luckin popMINI. Luckin Coffee EXPRESS venues adopt the Swiss made Schaerer coffee maker and are placed in offices, campuses, airports, train stations and communities as self-service coffee makers in the future. Luckin popMINI is the vending machine with E-commerce price.
On 13 July 2020, Luckin Coffee named Jinyi Guo as the new chairman and CEO after co-founder and former chairman Charles Zhengyao Lu was removed by shareholders.
