China’s new popular coffee brand Luckin Coffee may just become another unicorn on the country’s tech scene in half a year.
The Beijing-based coffee retail store is reported to have raised $200 to 300 million in Series A funding, valued at more than $1 billion, according to 36Kr (in Chinese). The company didn’t respond to requests for comment by the time of publishing
Luckin Coffee started trial operations at the beginning of this year and has undertaken aggressive expansion. It opened 40 stores in the week of June 5. Until now, it has opened more than 500 stores in 13 cities. During an interview in early May, funder and CEO Qian Yazhi, former COO at UCAR, one of China’s biggest car rental services, said the company had served more than 1.3 million customers and sold around 5 million cups.
The company defines itself as part of China’s “new retail” trend, combining e-commerce platform and brick and mortar stores. After placing orders online, customers can choose to either pick them up in nearby stores or have them delivered within 30 minutes which will only be possible if there is a sufficient number of stores in the region.
Meteoric cafe startup Luckin Coffee threatens Starbucks with unfair competition lawsuit
The more exciting appeal of Luckin Coffee for many customers, however, is its promotion strategy. Customers will receive coupons if they top up a certain amount money at their Luckin Coffee accounts. For instance, customers will receive 5 cups of free coffee when they pre-pay for 5 cups of the same or higher value.
Qian said the company didn’t have a clear schedule yet regarding when the company would profit, saying they are ready to run at a loss for a relatively long period of time.
Coffee consumption in China has been rising. Coffee consumption grows 15% annually and the market is expected to reach RMB 1 trillion in 2025. Before Luckin Coffee, other “new retail” coffee brands have also started to gain grounds in China. Coffee Box (连咖啡), a coffee delivery platform, raised RMB 158 million in series B+ funding.