Starbucks’ biggest threat just came to the U.S. Luckin Coffee opens two NYC locations

In potentially the biggest threat to Starbucks since other companies figured out that they, too, could market pumpkin-spice flavored treats, Luckin Coffee, China’s biggest coffee chain, opened its first US stores yesterday with two outposts in New York City.

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If you haven’t heard of Luckin, it’s probably because you’ve never tried to get a cup of joe in China, where it’s grown massive by offering super cheap drinks and quirky flavors.

• The chain, which opened in 2017, surpassed the number of stores Starbucks had in China in 2019. It now has 22,000+ locations in its home country, per CNN.
• In 2023, Luckin’s revenue in China exceeded what Starbucks made there for the first time, bouncing back from an accounting scandal that got Luckin booted from the Nasdaq in 2020.

Meanwhile…things haven’t looked so good for Starbucks in China recently, and not just because its baristas can’t spell names in Chinese characters, either. The chain positioned itself as the high-end option, and sales dipped as customers turned to cheaper alternatives like Luckin. Last week, Starbucks denied reports it planned to sell off its Chinese business.

Big picture: Starbucks has a 50-year headstart in the US market, but it’s recently been struggling here, too. The chain is trying to turn around five quarters of slowing sales by bringing back traditional coffeehouse vibes and smiley faces on cups.—AR

This report was originally published byMorning Brew.

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