Starbucks Rival Luckin Coffee Surges After IPO

By Douglas A. McIntyre Updated Jan 6, 4:31AM EST · Published May 18, 8:30AM EDT

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Starbucks Rival Luckin Coffee Surges After IPO — © Watson_images / Getty Images

Luckin Coffee Inc. (NASDAQ: LK), framed as a primary rival to Starbucks in China, posted a 20% rise in trading to $20.38 on the day of its market debut. Some traders obviously believe that the company has a chance of taking a dominant role in what could become the world’s largest coffee shop market.

Starbucks has roughly 3,700 stores in China. Luckin Coffee has 2,370, but it only started to open them in 2017. On paper, that would indicate the demand for more Luckin locations is extraordinary, almost beyond comprehension. It also begs the question of how Luckin could fund such growth without access to capital from the public markets.

Luckin also has a different business model from Starbucks. Starbucks operations in China are like those in the United States. It is a true coffee shop where people can gather. Luckin is primarily a place where people can pick up coffee. Ironically, this model is like the relatively new Starbucks system, which allows people to order from its app and pick up their orders as they enter the stores and, in many cases, leave with them.

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Luckin is betting that there is room for both coffee retail markets in China. Starbucks is too large, too well-branded and too well-financed to go away. No matter how good Luckin’s growth appears, it is still chasing the market leader.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.