Today (8 Jan 2020), while announcing new vending machines, Luckin Coffee’s CEO Qian Zhiya also revealed that the number of outlets in China has reached 4507.

Starbucks web site claims more than 4100 outlets across 168 cities in China. Therefore, Luckin Coffee has at least for now overtaken Starbucks to become the biggest coffee chain in the country.

Well we also need to bear in mind that Starbucks is growing fast too, and its density in Yangtze River Delta, one of the richest and most urban regions in China, is very high. Typical order size at Starbucks is twice that of Luckin, at least.

However, Luckin is not stopping there – the two types of new vending machines, selling coffee and snacks respectively, are expected to help the company increase its density without the costs of opening and maintaining full outlets with human staff.

It is a nice complement to the existing strategy and expected to further enhance customer stickiness – especially when customers are also required to make orders (and pre-orders) through the same app.

Now anyond remembers Ubox, the largest provider of auto vending machines in China? Ubox has a coffee machine business, amongst its most profitable.

The other very profitable businesses including the unmanned karaoke booths, which I wrote about more than two years ago.

Alas, I feel old now.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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