China’s trailblazing coffee chain, Luckin Coffee, looks set to expand into baked goods.
The company just allocated RMB 200 million (USD 29 million) to incorporate ”Luckin Bakery”, whose scope includes “cakes and bread”; coffee, fruit and vegetable beverages; as well as kitchen and roasting appliances, according to financial filings.
At first glance, Luckin Bakery seems similar to Luckin Coffee, but a key distinction is the listing of “puff pastries” and “bread” as the company’s main line of business, whereas Luckin Coffee focuses on “coffee roasting.”
Luckin Coffee made a name for itself by building its business with digital tools at its core. For example, Luckin coffee shops are cashier-less and every order is made and paid for through its app. Similar principles will most likely apply to its new Bakery shop, too.
By expanding into baked goods, Luckin would open a new position against China’s leading coffee chain, Starbucks. The American company does also offer a variety of baked goods and snacks but is not positioning itself as a place one might go to specifically shop for food. Luckin Bakery would also place Luckin in closer competition with existing bakery chains in China, such as South Korean franchises Tous Les Jours and Paris Baguette.