Luckin Coffee — the longtime rival of Starbucks China — has surpassed the Seattle-based coffee giant in revenue for the first time this quarter, as first reported by The Wall Street Journal. Although Luckin Coffee has outpaced Starbucks in terms of physical growth for a long time (ending the second quarter with 10,829 locations in China compared with Starbucks’ 6,480 locations in the country), this is the first time the rapidly growing chain’s finances inched past Starbucks with $855 million in revenue, as compared with Starbucks’ $822 million in revenue for the China market.
China has been one of Starbucks’ largest and most profitable international markets for years— as the company’s store network in the country has grown by 65%, with plans to operate 9,000 stores in China by 2025, Belinda Wong, co-CEO of Starbucks China said during a recent Starbucks Investor Day summit. Wong added that there is plenty of “room for growth” as coffee culture is still emerging in China, and it is not an everyday beverage like it is in many other countries. Though that goal of opening more than 2,500 more stores over the next two years would not even reach Luckin Coffee’s current portfolio count of nearly 11,000 cafes, Starbucks has differentiated itself from its top competitor by emphasizing quality of product over quantity of store locations.
Luckin Coffee, meanwhile, has experienced several ups and downs over time as the company’s share of China’s growing coffee culture has ebbed and flowed over the years. In 2019, all eyes in the China market were on Luckin as the company filed for its U.S. IPO, priced at $17 per share, and raising an initial $645 million. But then the company’s value and public good will plummeted in May 2020 as Luckin fired its top executives amid fraud allegations that the company had fabricated reports of $310 of its sales figures, which eventually led to Luckin’s Nasdaq delisting in June 2020.
Since then, Luckin Coffee has made a major comeback after being relisted in Jan. 2022, about two years after its initial scandal. The company has pushed its way to the top of the China coffee market through rapid geographic growth and constant beverage innovation and has launched more than 25 new beverages in 2023 alone, according to The Wall Street Journal, including a low-proof latte made with Moutai—a Chinese spirit known as the country’s “national liquor” — that hit menus in September.