Briefing: Luckin Coffee to add 2,500 shops and more subsidies in 2019

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China’s loss-making start-up Luckin Coffee doubles down on subsidies to win customers from Starbucks – SCMP

What happened: Chinese coffee startup Luckin Coffee said on Thursday that it aims to be the largest coffee chain in China by the number of cups sold and outlets by 2019. To achieve the goal, Luckin plans to increase the total number of outlets to 4,500, adding 2,500 new stores in the coming year. At the same time, subsidies will remain as one of the company’s core strategies, at least in the next three to five years, according to a company executive.

Why it’s important: Luckin’s announcement comes amid its escalating battle with Starbucks for China’s coffee drinkers. The company’s projected plan would overtake Starbuck’s more than 3,600 shops.  Similar to many of China’s internet startups, Luckin’s lightspeed expansion is powered by its highly subsidized marketing and tech-centric purchasing experience. Despite the quick expansion, the company is still loss-making, which highlights the crucial role of capital in its development. Luckin completed its $200 million Series A round at a $1 billion valuation in July 2018.