Luckin Coffee Goes Public
Article

Luckin Coffee Goes Public

But Is This Coffee Start-Up Overvalued?

Siyi Li
Tencent, 2019
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8

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Luckin Coffee caused a stir in China’s coffee shop industry. Ever since it launched at the end of 2017, it has spent millions of dollars on fierce expansion. Only 18 months after its founding, Luckin made its debut on NASDAQ. Li Siyi, a writer for Tencent Technology, takes a look at the company’s path to success, describes its marketing tactics and highlights its problems. This article offers a useful introduction to the popular Chinese business while also providing useful pointers on how to start your own business off with a bang. 

Summary

Luckin Coffee is China’s homegrown challenger to Starbucks.

On May 17, 2019, Luckin Coffee – China’s second-largest coffee shop chain – went public on NASDAQ. It opened at $25 a share, well above the company’s IPO price of $17, and ended at $20.38 per share with a total market value of $5 billion. The 18-month-old challenger to market leader Starbucks set a new record as the youngest company to start trading in New York.

Luckin Coffee opened its first shop in Beijing in October 2017. In contrast to your typical coffee chain, Luckin requires customers to place their order and pay via Luckin’s smartphone app even if they are in the store. You can then pick up your order at the store or have it delivered to you. For first-time users who just want coffee, the experience isn’t great. You have to download the app and scan a QR code to pick up your drink. But once customers have the app and are familiar with the process, the method saves customers time, increases the likelihood of repeat purchases and builds customer loyalty. 

Ferocious expansion and aggressive marketing contributed to Luckin’s success.

From the start, achieving scale...

About the Author

Li Siyi is a writer for Tencent Technology. As a branch of Tencent News, Tencent Technology focuses on the latest events in the tech world.

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