- Shares of Luckin Coffee Inc surged as much as 52.7% in their market debut on Friday, indicating strong investor demand for the self-declared challenger to Starbucks Corp in China.
“For us, brand is very, very important. If you’re a listed company, particularly in the U.S., that will elevate your brand even further than what it is today. So helps us with branding,” Chief Financial Officer Reinout Schakel said in an interview at the Nasdaq. Luckin’s expansion is in stark contrast to Starbucks, which opened its first China store in 1999 and has spent two decades reaching its current store count.
Luckin’s innovation on how consumers enjoy a cup of coffee sets it apart, said Zephirin Group analyst Lenny Zephirin in a note. “We believe this will continue to support above-industry growth in the coming years.” However, Luckin’s expansion comes at the cost of an aggressive cash burn. It relies heavily on cheap delivery and big discounts as a key strategy to attract customers.
Luckin makes a good cup of coffee.
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