Low‐Cost Chinese Coffee Chains Luckin And Cotti Target US Market, Raising Stakes For Starbucks

Chinese coffee chains Luckin Coffee (LKNCY) and Cotti are stepping up their U.S. push, luring consumers with low prices and inventive offerings, posing a growing challenge to local players, especially Starbucks (SBUX).

Luckin, China's largest coffee chain, is set to open a location in Manhattan, while Cotti's has recently opened outlets in both Brooklyn and Manhattan, according to a CNBC report.

Inflation, tech layoffs, and shifting U.S. trade policies have created economic uncertainty, leading consumers to scale back on discretionary spending. 

That's weighing on Starbucks, which has pledged to revamp its store experience and boost efficiency in ordering and service.

Luckin is known for its innovative beverages, including coffee and bubble tea hybrids and alcohol-infused lattes. The company launched 119 different items in 2024 alone.

According to the CNBC report, Luckin co-founder Guo Jinyi said in April that the company plans to“adopt flexible, locally tailored models” to expand overseas steadily.

Luckin was listed in the U.S. from 2019 to 2020, during which it confirmed that the company fabricated revenue of $300 million.

Cotti Coffee was founded in 2022 by former Luckin executives who were ousted during the scandal. Since then, it has expanded its footprint from Southeast Asia to Dubai and California.

From electric vehicle makers to food delivery platforms, large-scale Chinese companies often follow a familiar strategy of fast growth through rapid cash burn and expansion.

Despite tensions between Washington and Beijing, Gen-Z and younger Americans perceive China differently from older generations, who may associate Chinese products with lower quality, according to an expert's comment in the CNBC report.

LKNCY over-the-counter U.S. shares were up 42% year-to-date, while SBUX shares are nearly flat.

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