I’m blue if I was green I would die.
Starbucks’ position atop the coffee food chain in China has come into question over the past two years thanks to upstart Luckin Coffee. The Chinese coffee chain came seemingly out of nowhere with the goal of ousting the American juggernaut from the top spot, and it appears that goal is in sight. Luckin now states they will have more locations than Starbucks within China before 2020.
As reported by Yahoo Finance, Luckin CFO Reinout Schakel states the company will have over 4,500 stores in China by the end of 2019, eclipsing the 4,000+ Starbucks locations. Starbucks won’t be going down without a fight though, planning to have 6,000 storefronts in the country by 2022.
Luckin is surging right now. Per Yahoo Finance, they ended the third quarter with 3,680 stores, a 209.5% increase from last year. At that same time, Luckin’s viability was coming into question, posting losses of RMB 126 million ($17.9 million USD). In the year since, they have turned things around dramatically with profits of RMB 18.3 million ($26.5 million USD). This reversal has helped Luckin’s stock price increase a staggering 32% since the earnings were announced on November 13th.
To compound matters further, Luckin’s kiosk-style cafe model appears to be branching out to challenge Starbucks in other countries as well. Schakel confirmed that Luckin has signed a deal with a “joint venture partner” to bring the brand to the Middle East. They have not ruled out a move to the United States, either.
Don’t weep too hard for Starbucks, though, they’re still doing alright.