Starbucks killer? China’s largest coffee chain makes US debut

Luckin Coffee, China’s largest coffee chain that overtook Starbucks in its home market, opened its first two U.S. locations in Manhattan on Monday.

Where they are: Luckin opened stores at 755 Broadway in Greenwich Village near New York University and 800 6th Avenue in NoMad, with promotional offers including $1.99 first drinks through its mobile app and free tote bags for its first 100 in-store customers. The Xiamen-based company announced its arrival on Instagram with the caption, “Drip level: International. The rumors are true, NYC. You’re luckin now.” The coffee chain focuses on young customers through mobile ordering and quick-service operations, serving drinks like fruit-infused espressos, matcha lattes, and food items such as chocolate chip cookie and sausage, egg and cheese croissant. New York City has banned cashless-only businesses since late 2020.

About the company: Established in 2017 by Jenny Zhiya Qian, Luckin operates over 24,000 locations in China, Hong Kong, Malaysia and Singapore through a mobile-first business model similar to ride-sharing apps. The company offers drinks about 30% cheaper than Starbucks in China through its digital ordering system, allowing it to surpass the U.S. company in China store count by 2019. After facing an accounting scandal that led to a 2020 Nasdaq delisting, $180 million SEC penalty and $175 million shareholder settlement, Luckin rebuilt its business and achieved 87% revenue growth in 2023 while doubling its store network and overtaking Starbucks’ China sales.

Competition brewing: Luckin has adopted pricing comparable to Starbucks in the U.S., with a 16-ounce drip coffee priced at $3.45 versus Starbucks’ $3.65. Its advantage? It draws on its base of 120 million app users compared to Starbucks’ 34 million loyalty program members. This expansion puts pressure on Starbucks’ 17,000 American locations as the Seattle-based company implements its “Back to Starbucks” turnaround strategy amid falling sales.