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  • August 2020 (Revised February 2021)
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Luckin Coffee (A): Caffeine-fueled Growth?

By: Ramon Casadesus-Masanell and Karen Elterman
  • Format:Print
  • | Language:English
  • | Pages:44
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Abstract

This case describes the founding of Chinese coffee chain Luckin Coffee in 2017 and its path to surpassing Starbucks as the largest coffee chain in China (by number of stores) in 2019. Unlike Starbucks stores, which were designed to be welcoming “third places” for customers to gather away from their homes or offices, most of Luckin’s stores were small and bare, reflecting its mission to provide convenient takeout or delivery coffee to busy customers. With its app-based ordering, cashierless stores, and “smart,” cloud-connected kitchen equipment, Luckin positioned itself as a technology company, rather than just a coffee shop, and attracted a number of big-name investors.
However, Luckin used deep discounts on its products to attract new customers, and as of 2019, it had yet to be profitable on a company level. The case asks whether Luckin’s business model could be sustainable, even in the absence of these promotional prices, and whether Luckin’s focus on takeout and delivery (soon to be expanded through a network of vending machines and express coffee machines) was enough to differentiate it from competitors.

Keywords

Business Model; Business Earnings; Cost; Cost Management; Financial Statements; Financial Condition; Financial Management; Stocks; Profit; Revenue; Price; Food; Business History; Employment; Brands and Branding; Product Positioning; Marketing Strategy; Business Strategy; Expansion; Competitive Strategy; Food and Beverage Industry; Technology Industry; Asia; China

Citation

Casadesus-Masanell, Ramon, and Karen Elterman. "Luckin Coffee (A): Caffeine-fueled Growth?" Harvard Business School Case 721-370, August 2020. (Revised February 2021.)
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About The Author

Ramon Casadesus-Masanell

Strategy
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Related Work

    • August 2020
    • Faculty Research

    Luckin Coffee (B): Revelations of Fraud

    By: Ramon Casadesus-Masanell and Karen Elterman
    • August 2020 (Revised February 2021)
    • Faculty Research

    Luckin Coffee (A): Caffeine-fueled Growth?

    By: Ramon Casadesus-Masanell and Karen Elterman
Related Work
  • Luckin Coffee (B): Revelations of Fraud By: Ramon Casadesus-Masanell and Karen Elterman
  • Luckin Coffee (A): Caffeine-fueled Growth? By: Ramon Casadesus-Masanell and Karen Elterman
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