My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.

Growth Strategies

This Local Coffee Chain is Challenging Starbucks in China

Funding round values Luckin Coffee at $2.9 billion
This Local Coffee Chain is Challenging Starbucks in China
Image credit: Pixabay
Features Editor, Entrepreneur Asia Pacific
3 min read
Opinions expressed by Entrepreneur contributors are their own.


China is Starbucks’ biggest market, after the US. A local coffee chain, however, is trying to change that.

Luckin Coffee has raised US $150 million (1 billion yuan) in its latest round of funding, putting the company's valuation at an estimated $2.9 billion.

A private equity fund managed by BlackRock, a US global investment management corporation based in New York City, participated in the round by investing $125 million. In July last year, the company closed a $200 million funding round, with investors including private equity fund Centurium Capital, which is founded by the former China head of Warburg Pincus, and Singapore’s sovereign wealth fund GIC. That round gave it a $1 billion valuation. In December 2018, it announced having raised $200 million in a Series-B round of funding, which pushed its valuation to $2.2 billion. 

The Growth Story

By the end of 2018, the two-year-old coffee chain had a little above 2,000 stores in 22 cities, serving up more than 89.6 million cups of coffee to 12.5 million customers. In comparison, Starbucks has opened 3,500 stores in 150 Chinese cities since 1999.

Earlier this year, Luckin, which has openly declared its aim to overtake Starbucks in China, revealed its plan to build 2,500 more in 2019.  The firm plans to outdo Starbucks in store and cup numbers in the country, said Luckin Coffee's founder Qian Zhiya at a news conference in January.

In 2017, the country's coffee shop sales reached $ 4.4 billion (RMB 30 billion) and are expected to hit $145 billion (RMB 1 trillion) by 2025, according to consultancy firm Qianzhan

What Works

According to the Luckin’s founder, what makes the 2,500-plus goal achievable is the company’s business model, which is already tackling the biggest challenges currently facing the coffee industry in China: expensive prices and inconvenience. 

“With the development of the internet, Luckin has transformed the traditional coffee chain to a new retail model, integrating offline services and online delivery services,” Qian said, in a release. “Thus, Luckin's new retail model strikes an excellent balance of price and services,” he adds.

Luckin's delivery service likewise sets the brand apart. With in-app ordering, the company guarantees a delivery time of 18 minutes or less within major cities. Luckin recently partnered with China's largest food delivery giant, Meituan Dianping, and now allows customers to order Luckin Coffee products via the delivery app Meituan Waimai.

By the end of 2018, the company claimed to have achieved its “500-meters coverage” layout in downtown Beijing and Shanghai, meaning customers can walk to Luckin's stores within five minutes.

Qian said their established strategy is to race to grab market share through subsidies. “So far, the loss is in line with our expectation.”


More from Entrepreneur

Kathleen, Founder and CEO of Grayce & Co, a media and marketing consultancy, can help you develop a brand strategy, build marketing campaigns and learn how to balance work and life.
In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Are you paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.

Latest on Entrepreneur