Luckin Coffee Goes Bold in the US: Cashless, Cheap, and Hungry to Dethrone the Giant
Luckin Coffee, the Chinese upstart that once toppled Starbucks in its home market, is setting its sights on the United States with a ruthless playbook: app-based orders, no cashiers, and discounts that slash the price of a latte to the $2–$3 range. Since opening its first U.S. location in May, Luckin has expanded to five shops in New York City. The model is simple: customers place orders in Luckin’s mobile app, collect their drinks, and pay digitally—no human cashiers, no long lines. Discount codes and coupons are what keep people coming back. The price cuts, typically 30–50% off sticker price, create a compelling bargain for coffee drinkers tired of sky‑high prices. The launch included a buzzworthy promotion: free tote bags for the first 100 guests and $0.99 drinks to lure early customers. But experts warn that this approach may not be sustainable as the chain grows.
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From China to the United States: A Global Expansion That Sets its Sights on NYC
Luckin’s rapid growth mirrors its meteoric rise in China. The no-frills chain was founded in 2017 and went public on Nasdaq in 2019; by then, it had already overtaken Starbucks as China’s largest coffee chain. Today, Luckin operates more than 26,000 locations, most of them in China, while Starbucks has around 8,000 stores in China. The U.S. debut featured two locations near New York University, and the company has continued expanding to five New York City sites. The aim is to build national brand recognition—even if that means enduring early losses at individual stores.
The Mechanics of the Discount Play: App-Only Orders, Low Prices, Quick Service
Luckin’s core tactic is simple: order on the app, pick up fast, and pay with a digital wallet. There are no cashiers, which speeds service and reduces labor costs. Lattes, matchas, and cold brews go for as little as $2–$3 after discounts. The chain also offers a small pastry selection and fruit-forward refresher drinks for customers on the go. The sticker prices are similar to Starbucks, but Luckin’s discounts create a much lower final bill, a strategy that is easy to scale—at least in the short term.
Skepticism and Strategy: Can a Discount-Heavy Model Deliver Profits?
Bernstein Research notes that the initial Luckin stores are operating at a loss, and the pricing strategy will likely need adjustment as the chain scales. As Bernstein’s Danilo Gargiulo explains, the aim for Luckin is to grow awareness and brand recognition on a national level, even if some stores momentarily suffer losses. In contrast, Starbucks is often measured by its single‑sale profitability, targeting a roughly 15% operating margin per store.
A Global Market Reality Check: How Long Can Cheap Wins Last?
Locally, Luckin’s beverages are priced near Starbucks in tag price, but the discounts bring the real price well below Starbucks in practice. In China, Luckin is even cheaper than Starbucks by roughly 30% on a typical cup. Luckin’s push has helped it become one of China’s biggest restaurant chains, with a far larger footprint than Starbucks in its home market. The US push comes amid broader retail dynamics: Starbucks’ recent China strategy has faced questions about the pace and profitability of its growth, with rumors of exploring a sale of some Chinese stores. As the story plays out, the question remains: can Luckin convert short‑term price wins into lasting customer loyalty, or will the model require ever-higher subsidies? The Daily Mail reached out to Luckin Coffee and Starbucks for comment.
