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Luckin enters unmanned retail market with new vending machines to speed up expansion

Luckin also revealed that it has surpassed Starbucks in the number of physical stores in China.

China’s on-demand beverage chain Luckin Coffee has entered the unmanned retail market with the launch of vending machines selling freshly brewed coffee and other beverages, in a move to increase the density of its network in China.

Luckin announced in a press statement on Tuesday that its new vending machine will offer drinks with the same taste and quality as in Luckin stores, also providing drinks from Luckin Tea, the startup’s tea division unveiled in July. Customers can place orders on the Luckin’s app and scan the QR code on the vending machine to pick up their purchased items.

“Luckin Coffee is dedicated to building a closed-loop smart retail platform with our own customer traffic and our own products,” said Luckin’s founder and CEO Qian Zhiya.

In particular, Luckin introduced two different types of machines. Luckin Coffee Express, which will provide freshly brewed drinks, and Luckin Pop Mini, offering snacks and bottled products from the Luckin ecosystem and from global suppliers including Pepsi and Nestle. The machines will be located in popular locations such as airports, campuses, and bus terminals.

Source: Luckin

Luckin said that it will grant the same prices as on e-commerce platforms to its customers, as a result of partnerships, large volume of procurement,  and reduced channel costs.

These unmanned machines are empowered by technologies including the internet of things (IoT), big data and facial recognition to enhance the customer experience.

Luckin also revealed that it has over 4,507 stores as of December 31, 2019, serving over 40 million customers. By number of stores, Luckin is now the largest coffee chain in China, surpassing Starbucks.

The company also announced a proposed offering of USD 400 million convertible senior notes due 2025. The net proceeds will be used for corporate purposes such as store network expansion, unmanned retail initiative, business development, sales, and marketing.

Luckin reported total net revenues of RMB 1,541.6 million (USD 215.7 million) in the third quarter of this year, up 540.2% from last year. However, the company booked RMB 531.9 million (USD 74.4 million) in net losses, widening by 18% from RMB 484.9 million in the third quarter of 2018.