It is unusual for a coffee shop opening in New York to make headlines around the world. The Chinese chain Luckin Coffee’s American debut earlier this summer is the culmination of an extraordinary turnaround story for a brand that had a fall from grace in the same city. But it has also garnered attention for what it says about the rising competitiveness of Chinese brands that leverage their country’s supply chain and manufacturing prowess to undercut western rivals.
Five years ago, the Chinese chain was publicly disgraced for fabricating sales ahead of its Nasdaq debut, a scandal that would have killed most brands. Luckin used the proceeds of that initial public offering to turbocharge growth in China, where it outgrew upmarket rival Starbucks to become the largest coffee chain by store count and revenue. It was helped by an economic downturn pushing consumers towards cheaper coffee. Now, it is coming after Starbucks in its home country.
Despite all that divides the US and China, their consumers have a surprisingly similar sweet tooth. Luckin’s signature coconut velvet latte drink has been a hit in New York. But that is about as far as the similarities go for the retail experience. The conditions that fuelled Luckin’s rapid expansion in China are not easily replicated across the Pacific.