Luckin Coffee Enters U.S. Market Targeting Starbucks
Luckin Coffee, China’s largest coffee chain and former challenger to Starbucks in the Chinese market, has initiated its expansion into the United States. As of mid-September 2025, the company has launched five locations in New York City, marking its first significant foray into Starbucks’ home turf.
Innovative Model and Aggressive Discounts
Luckin’s stores operate without cashiers, requiring customers to place orders exclusively via its mobile app. While the menu prices are comparable to Starbucks, Luckin heavily relies on discounting strategies, frequently offering coupons ranging from 30% to 50% off to stimulate demand and build customer loyalty.
Financial Viability and Market Strategy
According to Bernstein research, Luckin’s current pricing and store volume strategy is not sustainable in the short term, as initial U.S. locations are operating at a loss. Bernstein analyst Danilo Gargiulo notes that unlike Starbucks, which targets a minimum 15% margin per store, Luckin prioritizes brand recognition over immediate profitability in its U.S. launch.
Corporate History and Recovery
Founded in 2017, Luckin Coffee quickly rose in prominence, going public on Nasdaq in 2019 before facing a major setback due to an accounting fraud scandal in 2020. The company’s COO was found to have fabricated $310 million in 2019 sales, leading to a Nasdaq delisting and bankruptcy filing. Since then, Luckin has restructured under new leadership and shifted to trading on the less regulated over-the-counter (OTC) market.
Dominance in China and Growth Outlook
By 2023, Luckin surpassed Starbucks’ revenue in China, generating over $3.5 billion and operating more than 26,000 locations compared to Starbucks’ 8,000 stores in the region. The rapid scale-up highlights Luckin’s aggressive growth model, which it now seeks to replicate in the U.S. market.
While Luckin’s entry introduces a new dynamic to the U.S. coffee sector, its long-term success depends on balancing growth ambitions with sustainable profitability.
FinOracleAI — Market View
Luckin Coffee’s U.S. expansion represents a bold attempt to challenge Starbucks by leveraging aggressive discounting and a tech-driven, cashier-less model. This strategy may attract price-sensitive consumers and build brand awareness quickly but poses significant risks related to profitability and operational sustainability. Investors should monitor how Luckin adjusts its pricing strategy and store economics as it scales in the competitive U.S. coffee market.
Impact: neutral
