Luckin Coffee, a major Chinese coffee chain, has shifted its strategy to compete in the premium coffee segment, specifically challenging high-end rivals like Starbucks Reserve Roastery. On Sunday, 8 February, Luckin Coffee officially opened its new "Origin Flagship" store in Shenzhen, another key economic city in China.
This strategic shift aims to change Luckin Coffee's image from its original model focused on selling affordable coffee through many easily accessible locations, which made it the coffee chain with the largest number of stores in China, surpassing Starbucks.
While Luckin Coffee’s low-price, numerous-store strategy succeeded in reestablishing the brand after a 2020 fraud scandal that led to its delisting from Nasdaq in the U.S., Starbucks faced significant challenges that forced it to sell the majority of its Chinese operations to local investors.
According to CNBC, the new store is a two-story building covering 420 square meters and marks Luckin Coffee’s 30,000th store worldwide. This location offers exclusive menu items, such as a tiramisu latte, which customers have reviewed as requiring wait times of 1 to 3 hours.
Additionally, prices for coffee at this new store are slightly higher than at regular Luckin locations, focusing on specialty drinks like pour-over coffee and cold brew. Customers can choose coffee beans from different origins including Brazil, Ethiopia, or China’s Yunnan province, reflecting the "Origin" concept that tells the story of the coffee bean's source, a concept long used by Starbucks and other premium brands.
China’s coffee culture has evolved significantly. Initially, tea was dominant, allowing Starbucks to gain a foothold. However, as local brands like Luckin Coffee offered similar quality at nearly half the price, Starbucks found it increasingly difficult to compete in the Chinese market.
Luckin Coffee reported that its self-operated stores alone—which account for more than half of its Chinese locations—generated revenue exceeding $1.55 billion in the quarter ending 30 September 2025, marking a 48% increase year-over-year.
Meanwhile, Starbucks reported a 6% year-over-year revenue increase in China to $831.6 million for the quarter ending 28 September 2025. For the quarter ending 28 December 2025, its same-store sales improved to 7% growth.
However, Starbucks has yet to release net income figures for its latest China quarter as it is in the process of finalizing a deal to sell 60% of its China business to Boyu Capital, while retaining the remaining 40%. The company announced this agreement in November, with the Chinese business valued at approximately $13 billion.
Currently, Luckin Coffee’s market value stands at $10.46 billion, according to CNBC. CEO Jinyi Guo has indicated plans to return to U.S. stock markets, although no timeline has been confirmed.
Founded in late 2017, Luckin Coffee reached over $2.9 billion in revenue within 18 months and went public on Nasdaq in May 2019. However, within about a year, the company was found to have falsified financial reports, leading to its delisting in 2020.
Despite the scandal, Luckin Coffee continued expanding under the same name and logo. A key strength of the brand is its marketing collaborations with other popular brands, such as the Minions cartoon and the hit video game Black Myth: Wukong, which helped it reach diverse consumer groups and gain widespread popularity.
Luckin Coffee is also known for its smartphone app that allows customers to conveniently order and pay without waiting in line at stores, which has helped attract a larger customer base through this service.
/Source:CNBC,Luckin Coffee
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