Luckin Coffee’s Amazing Road to Its $4 Billion Valuation

 

Chinese-based coffee chain Luckin Coffee announced yesterday it raised $200 million in Series-B funding, giving the company a valuation of $2.2 billion.

Luckin Coffee’s Explosive Growth

Luckin Coffee is currently the fastest growing coffee chain in China. Founded in 2017, Luckin Coffee has already expanded to over 1,700 and 21 cities across the country. This is a truly stunning expansion considering China’s largest coffee chain Starbucks has just 3,300 stores despite having entered the market over 20 years ago. The round of funding is also the second large round closed by the company this year. In July, the company raised another $200 million round of Series-A funding, which at the time gave the company a $1 billion valuation. Luckin Coffee is currently the fastest startup to reach unicorn status in China.

The Appeal of Luckin Coffee

One of the main draws of Luckin Coffee has been its focus on very fast door-to-door coffee delivery. This is a feature which appeals to many in the urban work setting who can’t get away from their desk. Along with in-store sit-down cafes, Luckin has concentrated on creating pickup booths and delivery hubs where dedicated take-out workers quickly pickup orders. In China’s largest cities of Beijing and Shanghai, the company claims there is a Luckin Coffee within 500-meters of anywhere in the city and says it will deliver coffee to customers within 30 minutes.

How Luckin Coffee is Challenging Starbucks

Luckin’s explosive expansion does not look to be letting up any time soon. According to company CEO Qian Zhiya, “We will continue to increase capital investment in product research and development, technological innovation and business development, and continue to optimize product and user experience.” According to Euromonitor, Starbucks still maintains an 80% share of the $3.4 billion Chinese coffee shop business, but this may soon be changing. In response to Luckin’s aggressive delivery tactics, Starbucks has since partnered with Alibaba-owned food delivery giant Ele.me in order to compete to delivery coffee to people’s door.

Whether or not Luckin will be able to eclipse the behemoth in China that is Starbucks remains to be seen, but what is certain is it is off to a great start.

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