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Yahoo
05-07-2025
- Business
- Yahoo
Is a Chinese chain's blood orange cold brew the future of coffee in America?
Chinese chain Luckin Coffee opened its first two U.S. locations this week, betting that mobile-only ordering and creative flavors can lure customers away from Starbucks. Both new Luckin stores are based in Manhattan, and at the midtown location on Wednesday, Sam Liu took a sip of her jasmine cold brew. 'I've never tried anything like it,' she said. Liu said she'd hoped for more seating — the small shop has only three tables — and was initially confused by Luckin's in-app ordering system, which means customers can't order directly from a barista. 'I thought I just order at the counter, but I realized everyone was standing around looking at their phone,' Liu said. Luckin is China's largest coffee chain, with more than twice as many locations as Starbucks there. Its two New York City stores are its first foray outside Asia, where it has over 24,000 locations across the region. By comparison, there are over 17,000 Starbucks in the United States. Its CEO, Guo Jinyi, called the U.S. 'a strategically important market' for the company's expansion in a press release heralding the two new locations Wednesday. 'We are excited to introduce a diverse and unique coffee experience to American consumers.' The company, which didn't respond to a request for comment, has touted its ambitions to expand globally but hasn't publicly detailed its next moves in the U.S. or other markets. The chain has gained success overseas through creative drinks like alcohol-infused coffees and fruit lattes, along with its smartphone-centric ordering model. The app-based approach makes it easier to track inventory, send personalized appeals to consumers and serve drinks quickly, said John Zolidis, an analyst who tracks Luckin and Starbucks at the brokerage firm he founded, Quo Vadis Capital. 'Luckin was able to develop an incredible muscle with regard to product innovation, and they have been very creative in China,' he said. Zolidis said how Luckin fares on Starbucks' home turf will depend on its ability to differentiate its menu from other major U.S. coffee chains and smaller, independent cafes. Its American lineup already includes distinctive drinks like blood orange cold brew and coconut lattes. 'These orange drinks, or one of their most successful, a coconut cloud latte — that's how you get trial [customers] from the U.S.,' Zolidis said. Luckin faced financial troubles during the pandemic. It was delisted from Nasdaq in 2020 after its stock plunged following an internal investigation that found an executive had falsified revenue reports. The company filed for bankruptcy in the U.S. the following year but emerged from proceedings in 2022 and its sales have soared since, reaching $4.7 billion worldwide in fiscal year 2024, a 38.4% increase from 2023. Starbucks, by contrast, is struggling in both the U.S. and China. Its same-store sales in the U.S. declined 2% and its sales in China 8% in fiscal year 2024, and it reported in April that its quarterly profit was half of what it pulled in for the same period last year. The Seattle-based chain is reportedly looking to partially sell its business in China while revamping its U.S. strategy to focus on customer experience and human connection, in contrast with Luckin's model. 'We veered away from, I think, owning the idea of the 'third place,' the coffeehouse experience, making sure that the customer was front and center,' Starbucks CEO Brian Niccol told NBC News in June. A Starbucks spokesperson declined to comment. Zolidis said that whereas Starbucks aims in both the U.S. and China to appeal to customers looking for higher-end coffee served in an inviting setting, Luckin has successfully positioned itself as the 'everyman's coffee' in China, with low prices and small, grab-and-go storefronts. After taking the train in from Hoboken, New Jersey, to check out the new one in midtown, Samantha Coy said the trip was worth it. She had enjoyed Luckin in China previously and was eager to order one of its fruit drinks. 'I'm surprised Starbucks hasn't tried to bring that over to the U.S.,' Coy said. 'I hope they stay open.' Zolidis said he thinks Luckin is well-positioned to gain a foothold in America. 'They've been able to operate and grow incredibly quickly in the Chinese market, much faster than I would have thought possible, and they've been able to sustain it and develop a strong financial model so they can fund their expansion in the U.S.,' Zolidis said. 'They wouldn't be coming here to try it if they didn't think they had a shot of owning part of the market.' This article was originally published on
Yahoo
05-07-2025
- Business
- Yahoo
Is a Chinese chain's blood orange cold brew the future of coffee in America?
Chinese chain Luckin Coffee opened its first two U.S. locations this week, betting that mobile-only ordering and creative flavors can lure customers away from Starbucks. Both new Luckin stores are based in Manhattan, and at the midtown location on Wednesday, Sam Liu took a sip of her jasmine cold brew. 'I've never tried anything like it,' she said. Liu said she'd hoped for more seating — the small shop has only three tables — and was initially confused by Luckin's in-app ordering system, which means customers can't order directly from a barista. 'I thought I just order at the counter, but I realized everyone was standing around looking at their phone,' Liu said. Luckin is China's largest coffee chain, with more than twice as many locations as Starbucks there. Its two New York City stores are its first foray outside Asia, where it has over 24,000 locations across the region. By comparison, there are over 17,000 Starbucks in the United States. Its CEO, Guo Jinyi, called the U.S. 'a strategically important market' for the company's expansion in a press release heralding the two new locations Wednesday. 'We are excited to introduce a diverse and unique coffee experience to American consumers.' The company, which didn't respond to a request for comment, has touted its ambitions to expand globally but hasn't publicly detailed its next moves in the U.S. or other markets. The chain has gained success overseas through creative drinks like alcohol-infused coffees and fruit lattes, along with its smartphone-centric ordering model. The app-based approach makes it easier to track inventory, send personalized appeals to consumers and serve drinks quickly, said John Zolidis, an analyst who tracks Luckin and Starbucks at the brokerage firm he founded, Quo Vadis Capital. 'Luckin was able to develop an incredible muscle with regard to product innovation, and they have been very creative in China,' he said. Zolidis said how Luckin fares on Starbucks' home turf will depend on its ability to differentiate its menu from other major U.S. coffee chains and smaller, independent cafes. Its American lineup already includes distinctive drinks like blood orange cold brew and coconut lattes. 'These orange drinks, or one of their most successful, a coconut cloud latte — that's how you get trial [customers] from the U.S.,' Zolidis said. Luckin faced financial troubles during the pandemic. It was delisted from Nasdaq in 2020 after its stock plunged following an internal investigation that found an executive had falsified revenue reports. The company filed for bankruptcy in the U.S. the following year but emerged from proceedings in 2022 and its sales have soared since, reaching $4.7 billion worldwide in fiscal year 2024, a 38.4% increase from 2023. Starbucks, by contrast, is struggling in both the U.S. and China. Its same-store sales in the U.S. declined 2% and its sales in China 8% in fiscal year 2024, and it reported in April that its quarterly profit was half of what it pulled in for the same period last year. The Seattle-based chain is reportedly looking to partially sell its business in China while revamping its U.S. strategy to focus on customer experience and human connection, in contrast with Luckin's model. 'We veered away from, I think, owning the idea of the 'third place,' the coffeehouse experience, making sure that the customer was front and center,' Starbucks CEO Brian Niccol told NBC News in June. A Starbucks spokesperson declined to comment. Zolidis said that whereas Starbucks aims in both the U.S. and China to appeal to customers looking for higher-end coffee served in an inviting setting, Luckin has successfully positioned itself as the 'everyman's coffee' in China, with low prices and small, grab-and-go storefronts. After taking the train in from Hoboken, New Jersey, to check out the new one in midtown, Samantha Coy said the trip was worth it. She had enjoyed Luckin in China previously and was eager to order one of its fruit drinks. 'I'm surprised Starbucks hasn't tried to bring that over to the U.S.,' Coy said. 'I hope they stay open.' Zolidis said he thinks Luckin is well-positioned to gain a foothold in America. 'They've been able to operate and grow incredibly quickly in the Chinese market, much faster than I would have thought possible, and they've been able to sustain it and develop a strong financial model so they can fund their expansion in the U.S.,' Zolidis said. 'They wouldn't be coming here to try it if they didn't think they had a shot of owning part of the market.' This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
30-06-2025
- Business
- Yahoo
Watch out, Starbucks: China's biggest coffee chain opens its first US locations
Luckin Coffee, the fast-growing chain that beat Starbucks at its own game in China, is entering the United States. Its first two US locations are opening Monday — both in New York City — marking an escalation in competition against Starbucks and other coffee chains, such as Dutch Bros., that have successfully built a loyal following in targeting Gen Z drinkers with TikTok-worthy drinks at affordable prices. Luckin's website and social media accounts are promoting the openings with discounts and giveaways. The stores are located in Greenwich Village, near the bustling New York University campus, and in NoMad. Luckin didn't respond to CNN's request for comment. Luckin was founded in 2017 and focuses on catering to young people, with mostly takeout booths and cashless payments. Its beverages in China are about 30% cheaper than those offered by Starbucks. The bare-bones stores usually offer only the most basic services, which has allowed the company to expand rapidly at a lower cost. It also requires consumers to use mobile phones to place orders. The US restaurant business is also increasingly pushing mobile orders and loyalty programs, which allow companies to collect extensive customer data and generate more repeat visits. Luckin's menu is filled with usual coffeehouse staples, including cold brews, hot coffee and matcha options. Signature items include adding fruit like pineapple and raspberry to its iced coffees as well as a line of brightly colored 'Refreshers' that mixes coconut milk and fruity juices and cold foams. A small selection of pastries are also on sale. Perhaps the biggest storyline has been Luckin's dominance over Starbucks in China. The number of Luckins overtook Starbucks in China in 2019, giving them the confidence to plot a US expansion. In 2019, the company filed for an initial public offering. But the company was forced to retreat a year later following the admission that its earnings had been fabricated. Luckin was later delisted from the Nasdaq, and its then chairman and CEO were both fired. The company was also slapped with a $180 million fine by the Securities and Exchange Commission. So, it retreated back to its home region of Asia, where it has more than 22,000 locations in China and several dozen in Singapore. In 2023, Luckin's revenue in China surpassed Starbucks for the first time — a significant blow for the Seattle chain that is still struggling to crack the market. Starbucks was reportedly courting buyers for a portion of its China business as part of CEO Brian Niccol's broader turnaround plans, but the company has since denied its Chinese stores are for sale. Although Luckin's formula has proven to be successful at home, it remains to be seen if the same will happen here — especially with Starbucks having more than a 50-year headstart. Laura He contributed to this report.
