Luckin Coffee is now opening 8 shops per day as it debuts on NASDAQ

2 months ago by James Mattone in Features, Trends

Luckin Coffee ($LUCKINCOFFEE) is a Chinese coffee delivery startup that is going public today. Known as the company who is fending off a Starbucks ($NASDAQ:SBUX) invasion into the country, here is what alternative data we have to explain the company and its rapid rise in China:

Is Luckin Coffee like Starbucks?

No.

Luckin Coffee is more like a coffee delivery service than it is a direct Starbucks competitor. Although it has some locations that resemble cafes, many Luckin locations are small kiosks that act as takeaway windows. Through these windows, customers can either grab a cup of joe to go, or have a delivery person pick it up and drop it off to their office, home, or wherever they are near the coffee hut.

And, because of this retail strategy...

It is expanding at ludicrous speed

By design, Luckin Coffee locations can be opened up fairly quickly as most locations doesn't require all those comfy couches, countertops, and bathrooms seen in a typical Starbucks.

That allowed Luckin to open an average of three stores per day since we started tracking the company in February. However, since the beginning of April, Luckin has appeared to ramp up its expansion process to an even faster rate, according to location data from the company.

From April 1 to April 24, Luckin opened up 141 new locations as seen in the chart above. That's nearly 6 new locations — which are mostly those kiosk windows — per day.

Of the 172 locations opened during the past month, there doesn't seem to be any pattern typically seen in how businesses grow in China. Rather than stick to the four main Tier 1 cities (Shanghai, Beijing, Guangzhou, and Shenzhen) or opening up new avenues within smaller, Tier 3 cities, it is taking a shotgun approach, scattering new locations all over China among different tiers of cities.

City

Number of New Locations

Hangzhou

13

Shanghai

9

Ningbo

8

Nanjing

8

Beijing

8

Qingdao

7

Chengdu

7

Tianjin

6

Guiyang

6

Wuxi

6

Nantong

6

Changsha

6

At present, Starbucks claims to have over 3,600 locations within China. Although Luckin is still down a little over 900 locations to its big Western rival, it could easily surpass it during this year if it continues a pace of eight new stores per day.

A killer (but not highly reviewed) app

Luckin's sale model revolves around customers ordering coffee from its app and picking it up at one of its locations.

On Apple's App Store, Luckin has an average rating of four stars out of five across all versions of its app. It only has 102 total reviews, however, which could be good or bad. In other words, there appears to be no complaints about the app, but there aren't thousands of people singing praises of the app like they do for Starbucks' 4.8 star average-rated app.

A skyrocketing Weibo profile

In terms of marketing, Luckin Coffee is growing rapidly on the Chinese social media platform Weibo.

Already in 2019, the company's profile is seeing a doubling of its follower count. While all social media platforms should be seen with some skepticism due to the presence of "bought followers," this growth is, nevertheless, pretty impressive in a short period of time.

So should you buy into the Luckin IPO? We explored the company several times before, from when we first tracked its locations to its latest issue of putting its coffee machines on collateral. At this point, alternate data should be up to your own interpretation; whether you see this rapid growth and aggressive strategy as a positive or a negative is entirely up to you, but as you should know, we have the data to look inside this shooting star of an IPO.

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James Mattone

James is the Associate Editor at Thinknum Media, mainly covering video games, food, and tech news, but not afraid to head into Sephora or beauty brands if need be...

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