Luckin Coffee ($NASDAQ:LK) is having a tumultuous week. The company's chairman, Lu Zhengyao, defaulted on a $518 million margin loan, which led Goldman Sachs to seize and sell a large number of his shares in the company. Meanwhile, investigations have led to allegations of fraudelent sales reporting, resulting in lawsuits against the company.
But the coffee shop is still trundling forward with social media campaigns and shows of support from locals. As of this week, it is showing more than 6,500 locations on its app's store locator. That's up from the 4,500 or so it reported just a few months ago, and more than 2,000 more locations than Starbucks reports in China. Meanwhile, Luckin shops are reportedly being flooded with orders after a free-coffee coupon made its way around and as locals showed their support for the chain. As a result, the chain has picked up 65,000 new followers on Chinese social network Weibo.
Is Luckin too big to fail? Here's what we're seeing in the data.
In early 2020, Luckin announced that it had surpassed Stabucks in terms of store count in China with 4,507 shops. We reported on the moment it matched Starbucks' location count and then when it surpassed it.
And then the company's app went dark, at least to our trackers that watch the number of locations reported. Last week, the lights went back on, and now Luckin is showing a staggering 6,500 or so locations throughout China.
The shops are clustered in major metropolitan areas throughout China, including Shanghai, Nanjing, Hangzhou, and Beijing. Assuming the locations reported by Luckin's app are accurate and are actually open, it appears the chain is filling in locations on major routes between the aforementioned population centers.
But what's truly staggering here is how much distance Luckin has put between itself and Starbucks in terms of locations throughout China. According to the store locators from Luckin's app and Starbucks' website, Luckin now has at least 2,000 more locations in China than Starbucks.
Both coffee companies have opened shops aggressively in major cities throughout China, but we're now seeing — as mentioned before — hundreds of Luckin locations in second- and third-tier cities throughout China where Starbucks lacks any presence at all.
Meanwhile, Luckin appears to have taken the recent lawsuits and investigations in stride, lauching a social-media support campaign that invited fans to grab a free coffee.
It seems to have worked, too: downloads of Luckin's app skyrocketed as thirsty Chinese citizens rushed to grab a free cup, leading to hundreds of social media posts celebrating the free java.
On Weibo, the largest social network in China, Luckin picked up around 56,000 new followers in just the past few days at it ran its support campaign.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.