When the Starbucks made its entry into the Chinese market in 1999, many expressed skepticism at the prospect of a coffee chain succeeding in a country so deeply rooted in coffee tradition. tea.
The café's incursion into the country was not just a mere market expansion, but rather an event that significantly changed drinking habits in the country.
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Starbucks not only opened the market, but also became a cornerstone in the dynamic cultural change in China, which massively embraced the culture of western coffee.
During the decade from 2011 to 2021, a chain opened thousands of new establishments. It started modestly, with 278 locations, and culminated with an impressive number of over 5,000, as reported by Coffee Intelligence.
After years as China's top coffee chain, Starbucks has officially been overtaken by Luckin Coffee. This is a Chinese company that emerged in 2017 as an innovative competitor in the country's coffee scene.
While Starbucks reigned virtually alone as a global coffee giant, Luckin Coffee emerged as a new competitor.
Driven by a rapid period of expansion, Luckin Coffee closed Q2 2023 with a total of 10,829 establishments throughout Chinese territory, exceeding the 6,480 in Starbucks.
With this achievement, it not only became the largest coffee chain in China, but also experienced faster growth in the market.
The growth of a new network
In 2017, the Luckin Coffee has emerged as a powerhouse on the Chinese business scene, quickly rivaling Starbucks.
The growth strategy focused intensely on sales and marketing, allocating a significant portion of its operating costs to these areas in the initial years.
Luckin's meteoric rise was halted in 2019 when an internal investigation revealed manipulation of sales reports.
The company's then-chief operating officer artificially inflated sales by more than $310 million, which resulted in his dismissal, along with that of founder and CEO Jenny Zhiya Qian.
The scandal resulted in Luckin Coffee being delisted from the stock exchange and a hefty $180 million fine imposed by the US Securities and Exchange Commission.
Despite the upheavals, Luckin Coffee has managed to recover remarkably since the scandal. This turbulent episode, although it tarnished its reputation, did not completely prevent the company from recovering.
Through a series of restructuring and trust protection efforts, Luckin Coffee appears to be regaining its footing and seeking to reassert its presence in the Chinese market.
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