Ambitious Chinese coffee start-up Luckin has Starbucks in its sights

Chinese coffee start-up Luckin is aiming to open 2,500 stores this year and overtake Starbucks as the largest coffee chain by number of outlets in the world’s second-biggest economy, it said on Thursday.

The chain, which only officially launched its business at the start of last year, has expanded at breakneck speed, propelled by a focus on technology, delivery and heavy discounting even at the cost of mounting losses.

“What we want at the moment is scale and speed,” Luckin’s chief marketing officer, Yang Fei, said on Thursday at a presentation in Beijing.

“There’s no point talking about profit,” he said, adding that subsidies to lure in more users would be an important part of the company’s strategy for the next few years.

Luckin said it was targeting a total of more than 4,500 stores by the end of 2019, which would take it past Seattle-based Starbucks that has long dominated China’s coffee scene.

The Chinese operator’s caffeine-fuelled expansion is in stark contrast to Starbucks, which opened its first China store in 1999.

The US chain, which spearheaded the growth of a coffee culture in China, started to see competition rise from smaller peers over the last 18 months, although Luckin has stood out as the most aggressive.

But Luckin’s rise has not come cheaply.

It recorded a loss of 800 million yuan (Dh427.5m) last year, which its chief marketing officer said was in line with expectations as it pushed to expand.