Luckin Tea to settle in 20 Chinese cities soon

The new tea company is moving fast, following Luckin Coffee’s example.

Photo: Tuchong

Luckin Tea, which spun off from China’s on-demand beverage chain Luckin Coffee last month as a standalone company, has acted fast by establishing a total of 20 subsidiaries in 20 cities across China, reported Chinese media outlet Caijingtuya, citing corporate registration information.

The firm has conducted a partnership plan, calling individuals to open their own tea houses and share profits and risks. Under the partnership scheme, the initial investment comes from individual partners, rather than Luckin Tea or Luckin Coffee, which was still reporting losses by the end of the second quarter of this year.

Luckin Tea has already opened one self-owned store in Shanghai, reported Chinese media outlet IT Times last week, adding that the upcoming tea stores operated under the partnership plan are expected to open in the middle of this month. Luckin Tea has also started to test its own app since the middle of last month.

Partners can propose the location for their stores while Luckin Tea will have the final say. Partners also are in charge of decorating the stores, preparing tea and handling it to end consumers, while Luckin Tea manages the brand’s marketing, customer acquisition, and develops the digital operating system and the supply chain.

About 65% of the new subsidiaries are located in Where Luckin Coffee has a strong presence. Luckin Tea is headquartered in Xiamen, the capital of East China’s Fujian province, which is also the headquarters of Luckin Coffee. Fuzhou, the capital of Fujian, hosts one subsidiary of Luckin Tea, while Quanzhou, another city in the province, hosts another.

Eastern Jiangsu province is home to five Luckin Tea subsidiaries, located in Nanjing, Changzhou, Yangzhou, Zhenjiang, and Wuxi. Luckin Coffee had more than 200 bricks-and-mortar stores by the end of June in Jiangsu province.

Zhejiang province, which is also located in East China, is home to one subsidiary of Luckin Tea, located in Ningbo city.

Beijing and Guangdong province, where there are more than 200 Luckin Coffee stores, each is home to one subsidiary of Luckin Tea.

However, Guangzhou, the capital of Guangdong province, which was one of the earliest two cities where Luckin Coffee started to test its tea business in April, has not opened a subsidiary yet. The only subsidiary in the Guangdong province is located in Shenzhen. Shanghai has not hosted a Luckin Tea subsidiary yet.

Luckin Tea’s current move is quite different from other market players in Chinese top-tier cities.

Meituan-backed tea house chain operator Heytea runs 49 stores in Shanghai and 40 stores in Guangzhou while Shenzhen-based Naixuecha operates 19 stores in Shanghai and 18 stores in Guangzhou.