Luckin Coffee is apparently planning to try its hand at the U.S. market.
The Chinese coffee chain, which has completely redefined our definition of a traditional restaurant business cycle, is apparently eyeing the U.S. market.
Last year, the publication Financial Times reported Luckin was planning its first U.S. location sometime in 2025. More recently, we’ve been clued in as to where one of those locations is to be: A boutique shop in New York City, at least according to this report in the Tribeca Citizen.
Luckin Coffee representatives did not respond to requests for comment on Monday.
Luckin would be an interesting and difficult competitor. Since 2017, the chain grew rapidly in its native China, attracted an immense amount of investment and went public in the U.S. But then it was revealed to have faked earnings data. Its executives were fired. The company filed for bankruptcy. It then emerged from that bankruptcy with new financing and management and proceeded to grow again.
It has since surpassed Starbucks as the largest coffee chain in China by unit count.
Between June 2023 and the end of last year, it has more than doubled unit count, to 22,340 from 10,836. Same-store sales struggled last year, thanks to a weak Chinese restaurant market and intense price competition. But those sales have improved more recently, including a 3.4% decline in the fourth quarter.
To put that 22,000 stores into perspective: KFC, one of the biggest restaurant chains worldwide, operates about 32,000. It’s been around a lot longer than Luckin.
The coffee chain is clearly aiming for global growth. It has been opening in Singapore, where it now has 51 shops, and in January opened its first two locations in Malaysia.
(Check out our report from a visit to one of Luckin’s shops in Singapore.)
Executives did say last month they are targeting overseas expansion. “We will adopt flexible and tailored operational models to build our overseas experience, while continuously exploring new market opportunities,” CEO Jinyi Guo told analysts, according to a transcript on the financial services site AlphaSense. Executives also said that they took steps to increase their supply of coffee beans.
Luckin would step into a U.S. coffee market that is intensely competitive and far more habitual than the one that enabled its growth in China. Consumers in that country consume coffee a lot less often, which could provide growth well into the future.
The U.S. is loaded with coffee competitors. In addition to Starbucks and Dunkin’, consumers are flocking to a growing number of drive-thru chains like Dutch Bros, Scooters and 7 Brew. Fast-food players such as McDonald’s and Wendy’s sell a lot of coffee and espresso beverages, as do convenience store chains such as 7-Eleven.
Luckin apparently has a plan for that, too, at least according to Financial Times: Undercut prices. Luckin plans to price its beverages from $2 to $3.
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