Are you wondering how does Luckin coffee work? This article will discuss its popularity and how it emerged from financial scandals.
Being a pioneer in the booming Chinese coffee industry, Luckin has been taking the world by storm with its innovative operation using tech-smart approaches and effective marketing strategies. Luckin is a typical coffee house – it serves Americanos, lattes, Macchiatos, flat whites, and a few tea drinks – made by a couple of baristas behind a small counter. If you want to purchase a drink, download its self-developed app, and claim your order – there’s no dining in, just pick-up and delivery.
According to NPR, technology is at the core of Luckin’s business. But Luckin got expelled from the stock market by NASDAQ and shocked its investors, who believed it would be the next Starbucks.
How Popular Is Luckin Coffee?
Within three consecutive years since it opened in 2017, Luckin quickly became one of China’s most significant coffee giants. Despite the intense Covid-19 hit, the company still maintained over 6500 stores in mainland China, outrivaling its biggest competitor Starbucks who acquired just over 5650 outlets in the country. Some of the stores are self-operated, while partners run others.
Thanks to its strategic approach by incorporating a technology-driven retail network into its operation, Luckin can target the growing market of the young community in China by using high-quality coffee with affordability and convenience.
Luckin Coffee sets itself apart from other traditional coffee houses by benefiting from the fast-growing technology industry to meet the needs of young customers. The primary operation mainly concentrates on takeaway booths and cashless payments.
In 2020 when NASDAQ delisted Luckin for accounting fraud, they came back with a shift in the ownership and top management and a vision to steer clear from its darkest moments. Luckin has decided to stay in line with its US capital markets and keep expanding its number in both stores and revenues.
How Did Luckin Coffee Grow So Fast?
Gaining Exposure In The US Market
After opening in Beijing in 2017, Luckin quickly moved forward and became China’s favorite “unicorn.” Luckin opened and ran nearly 2000 stores within one year after its first store in Beijing.
In 2019, the company was made public in New York. Investors soon lapped up the stock after Luckin got listed with NASDAQ, betting it would outshine Starbucks at some point down the road, especially when the company generated a big chunk of revenue from its homegrown Chinese customers.
The Eileen Gu Effect
Luckin owes a massive thanks to a particular person, Olympic superstar Eileen Gu. 2021 was a fruitful year for Eileen Gu and Luckin, and the company foresaw her victory in the Winter Olympics and the Skiing World Championships.
The result was not unexpected, leaving the Chinese free-ski champion with more medals than any other Chinese team athlete. Her breakout sensation created a sizable effect on Luckin’s business.
Luckin introduced sensational drinks targeting young people, including coconut latte, thick milk latte, meteorite latte, and many more. In 2021 alone, the monthly sales of the raw coconut series exceeded 10 million cups.
Even though the Covid-19 surge hit Luckin, the company was shielded from lockdowns thanks to the store locations, as many stores reside within office buildings and universities. Luckin was able to maintain its normal operation in these locations.
You might also be interested in our explainer on is Starbucks coffee good?
Construct A Tech-Savvy Brand Image
Technology makes life easier, and so does coffee. By incorporating user-friendly experiences and solutions, Luckin can drive a huge amount of revenue and repeat customers – those who are keen on the idea of making coffee convenient.
With that in mind, Luckin developed its app for customers to place an order for either pick-up or delivery. Cashless payment is a must, everything is done online, and middleman cost is also minimized.
The use of technology provides Luckin with a precious collection of user data. Luckin can keep track of customer preferences and order frequency. From there, the accurate data based on customers’ behaviors allows Luckin to come up with the best marketing and R&D campaigns.
Other than that, the online mobile app-based ordering system also drives revenues for the company, improves the efficiency of the sales cycle, and removes the overhead of store-by-store cash management.
Effective Operation And Marketing Approaches
Starbucks, its biggest competitor, created a stellar social experience by designing a convenient meeting hub and workplace for its in-house customers. Luckin decided to take over a different market share: customers on the go.
While pick-up and delivery stores make up a large segment of the company’s operation, that’s not the only thing Luckin has to offer. The brand also sets up cafes with space for customers to socialize and kiosks to deliver orders.
In terms of marketing strategies, Luckin sneaks into urban office buildings and residential areas for advertising and brand exposure. Well-received public figures with a good resonance with the young community, such as Eileen Gu, Tang Wei, and Zhang Zhen.
Luckin encourages its customers to download the app and refer friends by offering free coffee for every successful invitation. With that in mind, the company quickly gathered a huge database and was able to grow its customer base in no time. If you liked this post, you might also be interested in our guide on the best Starbucks drinks.