FOR CAFFEINATING THE DATA-DRIVEN CHAIN RESTAURANT

In just two and a half years since its launch, Luckin Coffee has become the largest coffee chain in China, surpassing Starbucks, which took more than two decades to achieve that status. Data informs virtually every decision Luckin makes, from store placement to pricing to supply forecasting. When Luckin enters a new market (it’s currently in 53 Chinese cities), it opens 5 to 10 “relax” stores—casual, sit-down coffee shops—and centralized kitchens from which it serves delivery orders. It entices people to download the Luckin app—users can only pay digitally— with a free cup of coffee. The company then decides where to open pickup kiosks based on

customers’ location data. Once Luckin has blanketed a market, it shuts down delivery—because the economics don’t make sense for a product that sells for about $2.50—and relies solely on pickup. “We started as an online model, so 100% of the transactions give us data,” says Reinout Schakel, Luckin’s chief strategy officer and CFO. As of Q3 2019, Luckin’s store growth was more than 200% year over year, its customer base climbed by 413%, the number of customers who returned every month grew by 398%, the number of products they bought rose by 470%, and Luckin’s revenue increased by 558%. In January, it announced a new vending machine product, which could help it grow even faster. Luckin is still operating at a loss as it continues its rapid expansion, but its model is being copied worldwide— including by Starbucks in a New York City test.