Chinese coffee chain Luckin Coffee is exploring potential expansion into the US, with a launch possibly as early as next year.
During an earnings call, Luckin Chairman and CEO Guo Jinyi emphasized both the promise and challenges of overseas growth.
“The international market is filled with opportunities, but also presents significant challenges that require patience, time, and continuous investment,” Guo said.
“We remain both patient and confident in our ability to succeed. We are actively evaluating opportunities in the US and other markets.”
A report from the Financial Times suggests that Luckin may target cities in the US with sizeable Chinese student populations and tourist presence, such as New York.
The company also aims to undercut major US coffee brands by offering drinks priced around US$2 to $3, potentially attracting budget-conscious consumers.
Luckin has already begun overseas expansion in Singapore, opening eight new stores last quarter, taking its total in that market to 45. It also has stores in Malaysia.
Although initial operations in the country incurred financial losses, Guo said these experiences provided valuable insights into the complexities of managing international ventures.
The company plans to expand abroad, focusing on store network growth, supply chain management, and brand building.
“Considering the maturity and competitiveness of the US coffee market, Luckin intends to approach its expansion strategy there with careful consideration and a disciplined execution plan,” Guo added.
However, the potential US expansion may face reputational challenges.
Jason Yu, GM at consumer research firm Kantar Worldpanel China, pointed out that Luckin’s past scandal, involving inflated sales data, could impact its brand image in the US.
In 2020, Luckin admitted to fabricating approximately $310 million in sales in 2019, leading to multiple short-selling attacks and ultimately its delisting from NASDAQ.
“With fierce competition in the Chinese coffee sector, overseas expansion and the possibility to regain trust from the capital market might be strategic options for Luckin,” Yu said.
