This article only represents the author's own views.
Call it a coffee hangover. That was the story for Luckin Coffee Inc. (LKNCY.US) in the first quarter, as China’s leading coffee chain slipped into same-store sales contraction during the three-month period after reporting strong gains for that metric for most of last year.
In this case, the culprit behind the slowdown was unrelated to Luckin’s own operations, and instead was the result of changes in a subsidy war that charged up China’s takeout dining market for much of last year. That war saw e-commerce giant JD.com enter the takeout dining market, while Ele.me, one of the two major existing players, underwent a big overhaul that included a major cash infusion from Alibaba, China’s leading e-commerce company. The third major player, online-to-offline services leader Meituan, was forced to follow suit by offering its own major subsidies to hold on to its market share.