China’s on-demand beverage chain Luckin Coffee has finally completed its quest to outnumber Starbucks storefronts in China, local media Jiemian reported citing research firm Thinknum Alternative Data.
Founded in 2017, the coffee startup took three years to set up 4,910 brick-and-mortar stores in China as of December 16, 2019, surpassing its US rival by more than 600 stores. In comparison, Starbucks took 20 years to reach 4,300 locations as of December. Luckin’s original plan was to open 4,500 stores by the end of this year.
Data from Thinknum shows that the two massive coffee chains have tied in storefront numbers in China in early November when they both had about 4,200 locations. Since then, Luckin has opened about 700 more stores nationwide while its US archrival set up around 100.
Luckin located its latest stores in China’s less developed areas where Starbucks has not expanded to. This is slightly different from the startup’s early expansion strategy that focuses on larger cities in the country, Thinknum said.
More than 90% of Luckin’s stores are pick-up stores according to the company’s Q3 earnings result, which tends to be smaller with limited seating. The Chinese coffee startup mainly focuses on in-store pick-ups and delivery services, whereas Starbucks stores are more spacious for sit-down customers.
Even though Luckin now has outnumbered Starbucks’ store tally, it commands a mere 2.1% market share as of 2018, trailing behind McDonald’s 5% and Starbucks’ whopping 58.6% per a Forbes report citing market consultancy Euromonitor.
Luckin reported a total net revenue 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 still 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.