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Starbucks Losing Ground To Homegrown Luckin Coffee In China

Seattle-based coffee chain company Starbucks Corporation (NASDAQ: SBUX) is losing ground in China to local competitor Luckin Coffee Inc. (NASDAQ: LK).

Benzinga · 01/03/2020 04:42

Seattle-based coffee chain company Starbucks Corporation (NASDAQ: SBUX) is losing ground in China to local competitor Luckin Coffee Inc. (NASDAQ: LK).

What Happened

Luckin Coffee had 4,500 outlets in China by the end of 2019 against Starbucks' 4,300, the Nikkei Asian Review reported on Friday (Tokyo time).

The data from Thinknum Alternative Data reviewed by the Nikkei suggests that Luckin took over Starbucks in November last year, backed by its strategy of expanding in remote areas not served by Starbucks.

The American coffee giant has long been trying to capture the Chinese market, particularly in larger cities. In August 2018, it announced a partnership with e-commerce behemoth Alibaba Group Holding Ltd. (NYSE: BABA) to pilot delivery services.

Luckin's shares are up 124% at press time, since listing its shares at the Nasdaq Stock Market in May 2019 at $17. The startup posted a year-on-year revenue growth of 557.6% at $208.9 million in the third quarter of 2019.

Price Action

Starbucks' shares closed 1.63% higher at $89.35 on Thursday. Luckin's shares closed 3.25% lower at $38.08.