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1

May

Starbucks China Opens its 5,000th Store

By Admin In , ,

Starbucks China has opened its 5,000th store in Qingdao, East China’s Shandong province, after its entrance into this tea-dominated market 22 years ago.

The Chinese market has become the fastest growing and the largest overseas market for the Seattle-based coffee chain.

In December last year, it made announcements to open 600 new stores this year.  Their goal is to have 6,000 stores across 230 cities in the country by the end of 2022.

Starbucks China has prioritized quality coffee, store format diversification, innovations in consumer products, and digital experiences in Chinese communities.

The Starbucks Shanghai Reserve Roastery which was launched in 2017, roasts nearly 1,000 metric tons of coffee beans annually at its 2,700-square-meter store.

They currently have more than 400 Starbucks Reserve Coffee Stores and more than 50 Starbucks Now stores, which is an express retail experience integrating physical and digital customer touchpoints.

Starbucks China in recent years has also introduced Bar Mixato, which integrates the modern cafe and bar experience to appeal to young consumers, pet-friendly stores, and outlets with sign language services.

In November 2020, the coffee chain made an investment of $156 million to build the Starbucks Coffee Innovation Park to enhance its roasting and manufacturing capacities.

8

Feb

Luckin Coffee Files For Bankruptcy

By Admin In , , , , , ,

 

 

In less than a year after the company admitted to fabricating millions of dollars in sales, Luckin Coffee has now filed for bankruptcy in the US.

According to the statement released by company officials who have filed Chapter 15 bankruptcy, the move will help to financially restructure and strengthen its balance sheet.  This type of filing shelters the US assets of foreign companies undergoing restructuring proceedings in their home country.  Officials also stated that bankruptcy won’t materially impact Luckin’s day-to-day operations and its roughly 3,600 cafes will remain open.

Last April 2020 news broke out about its Chief Operating Officer Jian Lu and his direct reports had engaged in misconduct that include fabricating sales transactions beginning in 2019 amounting to about $310 million.

Following the misconduct, COO Lu and CEO Jenny Zhiya Qian were both fired in May 2020. Luckin stock was also delisted on the Nasdaq exchange and the Securities and Exchange Commission slapped the company with a $180 million penalty to settle fraud charges.

Luckin went public in 2019.  It is now looking bleak for this company who was once hailed as the homegrown rival to Starbucks in China.

10

Sep

Costa Coffee to close more stores in China by early next year

By Admin In , , , , ,

 

British Coffee Chain Costa Coffee to close more stores in China by early next year.

In response to a plunge in consumer demand, the Coca-Cola-owned brand reduced its physical stores by 40 since August this year.  The store closures were 20 in Beijing, 2 in Hangzhou, 2 in Shanghai, 6 in Nanjing, and all 6 outlets in Qingdao, according to reports.

The pullback comes as a blow to the brand’s long-standing aspirations to tap into China’s Coffee market which took a major hit during the Covid-19 outbreak. Rising unemployment and other economic factors have hurt the spending power and discretionary consumption of Chinese consumers.

The company’s operations have also been affected by Covid-19 in the UK, its home market, with 1650 staff to be laid off.

Costa Coffee has had some major difficulties facing the competitive Chinese coffee market. Having just opened 500 of its 2500 store target networks in the last 14 years since its market entry in 2006. Despite the recent turn of events, the company asserts its commitment to the China market.

Coca Cola made a landmark acquisition of Costa Coffee, Europe’s largest coffee chain in 2018 for $4.8bn.

 

3

Apr

Luckin Coffee Shares plummets after a $310 million financial scandal

By Admin In , , , , , , ,

Luckin Coffee Inc., considered to be Starbucks China’s challenger, saw shares plummet 75.6% in Thursday trading after a special committee of three independent directors investigated “misconduct, including fabrication of certain transactions” that spanned during the 2nd to 4th quarters of 2019.

The special committee has discovered Jian Liu, Luckin Coffee COO and Founder and Employees reporting to him fabricated sales adding up to 2.2 billion yuan ($310 million).

“As a result of the investigation, Investors should no longer rely upon the Company’s previous financial statements and earning releases for the nine months ended September 30, 2019 and the two quarters starting April 1, 2019 and ended September 30, 2019, including the prior guidance on net revenues from products for the 4th quarter of 2019, and other communications relating to these consolidated financial statements,” Luckin Coffee said in a statement released recently.

The company has since suspended the individuals involved in the misconduct and will pursue legal action against them.

About Luckin Coffee:

  • The Chinese coffee chain was founded in October 2017
  • Made its public trading debut on the Nasdaq in May 2019
  • Luckin stock spiked 47% the day of its IPO and largely remained above its offering price of $17 per share until Thursday’s tumble
  • Luckin Coffee traded at $8.73 per share as of 10:05 a.m. ET Thursday, down roughly 78% year-to-date
  • To date, Luckin has over 4,500 outlets in China
  • Since going public, Luckin has added smart vending machines called Luckin Pop and Luckin Tea
Luckin Coffee Vending Machines

30

Jan

Luckin Coffee launches Vending Machines

By Admin In , , , , , ,

Luckin Coffee launches Vending Machines in an attempt to increase their share in the rapid growth of the coffee market in China.  Luckin is now one of the largest and most quickly expanding brands in the market where they now operate more than 4,500 store-based outlets.  They are and are now increasing market share by expanding into the vending machine aspect of the Coffee market.

Luckin Coffee expanding into Vending Machines

Luckin Coffee expands into vending machines as part of a huge equity deal

Founder and CEO Qian Zhiya states that this new strategy will allow them to get closer to consumers.  They will not be restricted by the license approvals.  In what could be yet another first in China Luckin’s vending machines will serve freshly brewed drinks as well as food.

Luckin Coffee Vending Machines

Luckin Coffee launches new vending machines

Just recently, Luckin Coffee also launched a share placement and a convertible bond with a combined worth of US$821 million early January 2020.   That is according to a Reuters report which also mentioned that the proceeds will be used to open more stores and invest in sales and marketing of the brand.

Luckin coffee Stock Listing

Luckin coffee Share Price

Luckin Coffee Share Price

Luckin has recently surpassed Starbucks China, in terms of outlets count within the country.  Recently we reported on the incredible growth of Luckin Coffee and their determination to take on their key rival Starbucks.  Luckin are now operating more than 4,500 stores and growth is continuing.

Luckin Coffee’s business model focuses primarily on a coffee delivery and pickup style of business.  The venture into vending machines is seen to be a broadening of this model.  They have achieved great brand recognition and attachment in the under 30’s demographic.

It’s not luck that Luckin Coffee is beating Starbucks at their own game.

The heads at Starbucks must be worried…

Luckin Coffee

2

Jul

Luckin Takes on Starbucks China

By Admin In , , , , ,

According to CBN Data, Coffee sales will top US$43.7 billion in 2020, a 330% jump from 2015 and this seven month old start up is giving Starbucks China a run for their money.

“There can’t be only one brand for China’s coffee market,” said Qian Zhiya Luckin Founder.  Speaking to the media about their market entry in China where Starbucks has dominated (50% market share), she stated firmly, “We are willing to learn from Starbucks’ advantages, from where we can innovate.”

Luckin coffee vs Starbucks

So far, Luckin has opened 809 stores this year that is spread across major cities in China. The British coffee brand Costa has 449 outlets since entering China in 2003 and Starbucks has the lead with 3,124 since entering China in 1999; while Luckin targets to open 2,000 by the end of this year.

Unlike their rivals boasting of Stand Alone stores, Luckin has taken a non-traditional approach of opening their outlets in unusual locations including, hidden inside office buildings or just off busy streets. As of June 44% of Luckin’s locations were dedicated for takeaways and the comany has forged a partnership with courier service provider SF Express offering a 30-minute delivery.

According to the company, in the first seven months alone, total cups sold amounted to 18 million and user retention is 80% in April for stores 3 months or older.  This is primarily achieved by customers ordering via the Luckin Coffee App and accessing deep discounts and promotions such as “buy 2, get 1 free” and “buy 5, get 5 free”.

Luckin recently secured a US$2 billion series A investment.

Watch this space.