Founded in October 2017 by Chinese entrepreneur Jenny Qian Zhiya, Luckin Coffee has come a long way in a short time to challenge Starbucks’ dominance of the coffee beverage market in China. Luckin is the first large-scale threat to Starbucks’ coffee franchise built over two decades. While Starbucks in recent years has been moving more high-end, as shown in the Bali outlet it just opened, Luckin is taking almost the opposite approach in China.
Instead of spacious lounges that allow coffee drinkers to linger, Luckin focuses on efficient “delivery kitchens” that pump out coffee fixes to people on the go. Smaller stores mean Luckin pays less on rent, a savings it can pass on to customers, to whom it gives one free cup of coffee for every two they buy. The stores don’t accept cash, only electronic payments are accepted. Overall, Luckin is pricing its beverages below those for a similar offering from Starbucks. “Chinese consumers really demand convenience in addition to quality and price,” says Luckin’s chief strategy officer Reinout Schakel, who in January left Standard Chartered Bank in Hong Kong to join Luckin in Beijing.
While taste is subjective, one YouTube reviewer in a blind taste test in December last year declared a Luckin latte superior to Starbucks’ offering. The Luckin latte had “more of an original coffee aroma and taste,” declared Youtuber TechZG in his video entitled “Is Luckin Coffee About to Defeat Starbucks?” Luckin says it served 12 million customers 85 million cups of coffee last year.
Valued at $2.2 billion in a recent round of funding from a group of investors that included Singapore sovereign wealth fund GIC and China International Capital, Luckin is reportedly preparing for a U.S. IPO later this year with advisor Credit Suisse, at a valuation said to be at least $3 billion. Schakel declined to comment on any IPO plans. The Xiamen-based chain is burning cash to win China’s caffeine race: Luckin predicts full-year losses for 2018 of at least 800 million yuan ($118 million). It hasn’t projected how soon it will break even.
Luckin executives are confident theirs is a winning strategy though, saying that many of China’s coffee drinkers are alienated by the long queues and high prices they find at Starbucks. “A lot of people don’t like waiting in line,” says Ben Cavender, director of Shanghai-based consultancy China Market Research. That’s good news to Luckin’s investors, who also include two Beijing-based venture capital firms, Legend Capital and Joy Capital.
Luckin will achieve profitability eventually, says Liu Erhai, founder of Joy Capital, by improving efficiency, optimizing personnel and reducing operational costs. For now, making money isn’t the priority while Luckin is building scale, he says. “I don’t feel unhappy about the losses,” Liu says. On the contrary, Liu says he’d like to see Luckin spend even more, move even faster and capture more market share from Starbucks.
The small performance happened Friday night in front of about 150 people at the Blue Door Coffee Company.
The coffee shop shared a photo of the surprise concert on their Facebook.
Copyright © 2019 KTRK-TV. All Rights Reserved.
Sarah Levine has gone to a corner in fast-growing Kensington for a second location of Luna Cafe, her homey Old City bruncherie.
Luna has taken the spot at Third Street and Cecil B. Moore Avenue last occupied by Usaquen.
Menu is similar to that served on Market Street, with breakfast served all day.
Hours: 7 a.m.-3 p.m. weekdays, 8 a.m.-3 p.m. weekends.
There’s more luna-cy on the way. The Lunar Inn, a neighborhood bar and bottle shop, is several weeks out at Richmond and Clementine Streets in Port Richmond.
DRACUT — For most Merrimack Valley residents, the number 978 is the local area code, but for Dara Svay, it’s about the eatery he opened in early March, the 978 Cafe.
Located in the Walbrook Plaza at the intersection of Hampson and Pleasant streets, the cafe accomplishes Svay’s high school dream.
He’s dreaming bigger now, however, and envisions more such coffee houses throughout the region. Svay believes in community and the 978 area code represents that.
Svay emigrated from Cambodia when he was 12. His parents were already here. They came ahead of their children to become settled in Massachusetts. He grew up in Lowell and went to St. Patrick’s School, where he began to learn English.
He wanted to learn English more quickly so he took advantage of the Pollard Memorial Library’s proximity, spending hours there reading. Then he would take DVDs home to perfect his English skills.
At Lowell Catholic High School, he helped pay the tuition by painting school walls.
His friend Tyler Dumont says, “He has always been the hardest worker of any friend I have.”
Svay also did stand up comedy to improve his English skills. According to Dumont, “He’s a really funny guy.”
Sitting at one of the custom tables in his cafe — Poirier Woodworks in Lowell crafted the tables — Svay describes the moment in high school when he decided he wanted to open a cafe. He and some friends were talking about their dreams and he blurted out his ambition.
Svay studied human services at Middlesex Community College and then web design at UMass Lowell. He worked as a web designer, but never abandoned his goal.
He did not feel the time was right when he was in his early 20s, but at 26 he said, “This feels right. Let’s do it.”
Finding the space for his cafe and getting it ready to open was stressful. He still feels stressed now that it is open “but it’s good stress trying to get to know people.”
The space he found was once a retail business, but it was closed for some time. With the efforts of friends and family, he renovated it. Non-supporting columns came down, and walls were patched and painting.
In addition to family and friends, he credits Dracut officials for help in permitting. “The people were very helpful and so nice and genuine. The Board of Health agent Dave Oullette was especially helpful. He recommended things to do before I could open.”
His advice to younger entrepreneurs is simple, “Go after your vision.”
He’s proud of the coffee he serves, Café Solar from Honduras. It makes a very smooth cup of coffee.
He’s building the restaurant’s menu methodically, not trying to rush things. He does not serve lattes and cappuccinos, yet. His menu features artichoke toast, which selectmen teased him about when he came to them for his final permit, pig-in-a-blanket sandwiches, and doughnuts from Donut Dynasty on Broadway Street.
He also prepares several kinds of smoothies. Each is named after a local community. The biggest sellers are the Dracut (a blend of milk, yogurt, mango and honey) and the Lowell (a blend of milk, strawberry, honey, and peanut butter). His fiancé wanted a vegetable smoothie, so the Methuen is also on the menu.
The café is open from 8 a.m. to 7 p.m. Mondays through Saturdays and 8 a.m. to 3 p.m. on Sundays.
For years, Starbucks (NASDAQ:SBUX) has billed China as one of its top growth opportunities. Former CEO Howard Schultz said he expected it to one day be the company’s biggest market, and the coffee chain is growing faster in China than in any other nation. Last year, it opened 612 new stores in China, and the current plan is to add another 600 stores a year through 2022.
Starbucks has succeeded in the tea-drinking nation by playing to customers’ tastes for conspicuous consumption and positioning itself as an affordable luxury. Beyond the status symbol factor, its strategy of offering a “third place” — away from home or work — has also resonated in China. Like people elsewhere, Chinese consumers have come to see Starbucks as an attractive place for a work meeting, casual date, or just a relaxing break.
However, in business, success attracts competition, and Starbucks’ success in China hasn’t gone unnoticed. Now, the company faces a serious new competitor that has come virtually out of nowhere.
Two can play that game
Luckin Coffee was founded in 2017, and opened its first store in China last January. Since then, it has grown like wildfire, reaching 600 locations by last summer and ending the year with around 2,000 stores. This year, the company plans to add another 2,500 stores, giving it more than 4,500 by the end of the year, which would eclipse Starbucks’ total of 3,521 as of Sept. 30, 2018, the end of its last fiscal year.
Luckin is far from a Starbucks copycat, however. While the U.S.-based chain has long promoted its stores as a “third place” where customers could feel comfortable spending an extended time, Luckin’s are geared toward delivery. In fact, nearly half of them don’t have any seating at all. Luckin is also undercutting Starbucks on price — its coffee is up to 30% cheaper. The start-up is subsidizing drinks with generous “BOGO”-type offers, and management is content to operate at a loss as it builds out the chain.
According to Fortune, CEO Jenny Qian said the company was “in no rush to make a profit,” an unusual approach for a restaurant chain, and one that could cost it down the line. Luckin Chief Marketing Officer Yang Fei said, “Subsidy will remain as one of our core strategies, at least in the next three to five years.” Finally, Luckin doesn’t accept cash — it takes payments either through its own app or through Tencent’s (NASDAQOTH:TCEHY) ubiquitous WeChat platform. Luckin views Tencent as a valuable partner.
Though Starbucks has said that it welcomes competition in China, and asserts that there’s plenty of room for other coffee chains, the company has been shifting its strategy there in response to Luckin’s growing popularity.
In August, Starbucks announced a new partnership with Alibaba (NYSE:BABA) that includes using its Ele.me on-demand platform to provide delivery from 2,000 stores in China. Mimicking one of Luckin’s key strategies, Starbucks said it would open “Starbucks Delivery Kitchens” inside Alibaba’s Hema supermarkets that would be specifically dedicated to delivery.
Starbucks’ comparable-store sales growth has slowed in China in recent quarters. In the first quarter of fiscal 2019 — its most recently reported quarter — comp sales there rose just 1%, with a 2% decline in transactions, compared to 6% growth in fiscal Q1 2018, before Luckin had opened any stores. While China’s economic growth also slowed during that time and there could be other factors at play, Luckin’s rapid spread likely had some impact, as Starbucks had regularly put up strong comp sales growth in prior years.
During its December Investor Day conference, Starbucks said it would continue to expand rapidly in China to build a first-mover advantage, but also projected long-term comparable sales growth in the 1% to 3% range in the market, slower than the 3% to 4% range it forecast for the U.S., and likely below the expectations of some investors. Among the headwinds Starbucks noted were cannibalization (as it more deeply penetrates major markets like Beijing and Shanghai) and the slowing Chinese economy, but the company also called out competition.
“We have to acknowledge that competition is intensifying,” CFO Patrick Grismer said. “Now, it’s our belief that that competitive impact is relatively short-lived because of the strength of our brand proposition in China.”
Whether the impact from Luckin and other entrants like Coca-Cola’s newly-acquired Costa Coffee will be temporary, as Grismer says, remains to be seen. Certainly Luckin’s loss-generating strategy carries significant risk, as the company lost more than $100 million last year, but with 2,500 locations coming on line this year, its impact on Starbucks may get more intense before it eases.
What is clear is that Starbucks is making smart moves to prepare itself to face the threat, including partnering with Alibaba and quickly rolling out delivery to 2,000 stores in China. While Starbucks’ growth path in China may have gotten bumpier, the java giant still appears to be on the right track.
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/ Source: TODAY
By Julia Curley
Forget the Burger. Burger King wants to make sure its customers stay caffeinated this month — and beyond.
On Friday, the burger chain launched an extremely cheap coffee subscription service that might just dethrone McCafe as the premeire fast-food coffee staple. For $5, Burger King is offering “unlimited” coffee for a month … but, of course, there are a few caveats.
The “BK Café Coffee Subscription,” which is only available through the restaurant’s app, allows guests to enjoy one hot cup of coffee anytime, every day, for 30 days in a row.
According to Burger King, “anytime” means just once a day and there are no refills. Subscribers are only allotted one cup per visit, so you won’t be able to stroll in and order a bunch of free coffees for the whole office.
Still, if a morning brew is already a part of your daily routine, the one-time fee is a good deal since it’s easy to spend about $5 on just one coffee drink at Starbucks. And, without the subscription, one small BK Café coffee costs $1. Since this is a subscription model, users will automatically be charged $5 at the start of each monthly billing cycle.
Some Twitter users have raved about Burger King’s coffee, calling it just as satisfying as a pricier alternative.
A big squad of BK coffee drinkers also praised the chain’s iced coffee.
Unfortunately for iced coffee fans, the subscription only applies to the hot stuff, and it won’t work on other speciality coffee drinks, like BK’s frappe.
Regardless, the burger chain is clearly looking to compete in the crowded quick-serve coffee space, as a rep for the chain told TODAY Food that this deal simply “can’t be beat.”
Jan. 16, 201901:36
In order to sign up for the service, customers must download the BK app and navigate to the “Offers” tab. Subscribers can use the app each day to redeem a brewed cup of coffee. According to a rep for the chain, the app-based deal works at all Burger Kings across the U.S., excluding Alaska, Hawaii and Puerto Rico.
Although the subscription marks Burger King’s first go at a coffee-centered promotion, Starbucks has been making a splash with app-based rewards for years.
Currently, Starbucks Reward members pay through an app at checkout and earn stars toward a free drink. Typically, you have to buy 150 Starbucks brews to earn a free cup of anything. So that adds up to a lot more than $5 for a free drink.
Starbucks isn’t new to cheaper, limited-time offers either, of course. Last January, customers who bought the chain’s reusable silver cup got one free coffee or tea each day for a month. The cup cost $40 but it still excited many fans of the brand. That January deal, however, followed a holiday cup promotion that flopped, according to many coffee-drinking critics.
Burger King’s new subscription mimics many of Starbucks’ ideas, just in a cheaper way. The chain has yet to announce an end date to the subscription plan.
A decision on whether or not the River Cat Cafe, operated by New Hope Borough Councilwoman Alison Kingsley, can continue preparing food on-site was delayed Thursday night.
New Hope Councilwoman Alison Kingsley and a crowd of supporters will have to wait until next month to know whether the River Cat Cafe can continue selling prepared food.
Kingsley operates the business at the property owned by Ted and Eva Short. It was cited in November for multiple zoning violations, including preparing meals at the 142 S. Main St. location, running afoul of local zoning laws.
The board adjourned after nearly two hours of testimony and public comment Thursday night, opting to render a decision at its April 11 meeting at 7 p.m.
Attorney Paul Cohen, representing the cafe, closed his case at the meeting this week, followed by a statement and “information packet” submitted by George Fernandez, a landlord of a neighboring property who first brought the matter to the borough council on Oct. 16.
Since the cafe opened last May, it has served a mixture of breakfast and lunch foods, and occasional dinner foods at events.
However, a 2015 zoning decision that referred to the property as a “low key” coffee and tea shop at the corner of South and Main streets did not permit food to be prepared on-site.
Kingsley and the Shorts are appealing the violations, and Kingsley is attempting to have the 2015 opinion overturned. Other zoning citations already have been addressed since hearings began in January.
Issues regarding the location of Dumpsters, and the concrete pads they sat on, was apparently resolved between January and Thursday’s hearings.
An unresolved parking issue that was not discussed in depth Thursday is being reviewed by the borough’s staff, and is unlikely to be included in the zoning board’s decision.
Thursday’s testimony seemed to reinforce Cohen’s argument that the 2015 food prep ban “prevents the operation of a restaurant in a competitive manner.”
Architect Moira McClintock, a partner at Ford 3 Architects LLC, in New Jersey, included in her testimony this week the cafe is also on the border of a zoning district that does allow cooked meals.
The River Cat Cafe is in the borough’s limited commercial district, which is defined as a “transitional” zone between residential and commercial development.
A financial advisor to Kingsley also testified the business without food service would ultimately be unsustainable.
A crowd of about 60 people came to the meeting, filling up most of one side of the room — the same side where Cohen and Kingsley sat.
Fernandez reiterated statements the cafe was not operating within the letter of the law, and raised concerns that increased traffic and food deliveries would eventually lead to someone getting hurt.
He was interrupted in reading his statement at least once from scoffs and laughs from the crowd when he raised safety concerns.
During a public comment period that lasted over half an hour, several area residents said they felt the cafe is a boon to the community and posed no safety issues.
DALLAS — Foxtrot Delivery Market, a Chicago hybrid coffee shop-bar-café and grocery story that also offers 60-minute delivery of local goods, has announced it will expand to Dallas with three locations set to open by the end of the year.
The first Dallas location of this “contemporary evolution of the corner store” will open in Uptown along McKinney Avenue by summer, with two more openings planned by the end of the year.
You can click here to see photos of the Foxtrot concept.
In addition to stopping by for morning coffee, a midday meal or late-night drink or snack, Foxtrot customers can order local beer, fine wines, curated gifts and everyday essentials for delivery in less than an hour via the company’s app and website.
“Whether you’re coming over to meet friends for coffee, swinging by to pick up a new bottle of wine to try, or firing up the app to get some ice cream in a hurry, we’ve got you,” said co-founder and CEO Michael LaVitola.
The 3,600-square-foot Uptown location will be located in the space formerly occupied by McKinney Avenue Tavern. Delivery service will be available in the Uptown and Downtown areas, Knox/Henderson, Park Cities and Lower Greenville and Lakewood, with plans to expand delivery further north as the other locations open.
Foxtrot is partnering with Oak Cliff Coffee as its exclusive local brewer.
The stores will also regularly host events as a hub to discover and interact with local and national and meet interesting makers, the company said.
The Dallas locations will be Foxtrot’s first stores outside of Chicago.
Foxtrot’s other co-founder, Taylor Bloom, is a Dallas native.
It is that time of year when the coffee world is abuzz about the London Coffee Festival. After a very successful 2018 at LCF, and the mammoth task of moving our roastery at the end of last year, we were rather delighted when Prufrock asked us to be a part of the fun they are planning around the festival this year. Taking place on Saturday 30 and Sunday 31 March, Prufrock Coffee and Prufrock Training & Consulting will be hosting two “not to be missed” events shaping the world of coffee.
Paying homage to High Tea, and in celebration of London Coffee culture, Prufrock Coffee is planning a rather fancy High Tea, High Coffee Tra-la-la. Featuring our El Romerillo filter from Peru, they are offering a sit-down tasting of three coffees, from three different roasteries, paired with a delectable selection of in-house savouries and sweets by Fortitude Bakehouse, taking coffee appreciation to new heights!
In many ways, the jewel in the crown of our Peruvian selection, sourced by our Head Roaster Courtney, we are rather chuffed that we can exclusively launch the very talented Leydi Burga’s El Romerillo on such a fun platform, and can’t wait to see it shine in the context of a pairing.
It is with even greater delight that our Ecuadorean La Perla, produced by Magda Zabala has been selected as one of the coffees to be featured at Prufrock Training and Consulting’s Best of the Festival cupping. Showcasing exciting coffees from the most interesting roasters, PT&C will take time to taste and discuss these coffees side by side in a calm and encouraging environment designed to be an oasis of serenity and appreciation in contrast to the frenzy of the festival.
Elegant with jasmine and floral notes, La Perla has been described as pure joy in a cup, and was a runner up in Taza Dorada 2018. We simply can’t wait to hear your thoughts, and share in the chats and discussions around the cupping table!
To book your tickets and time slots, follow the links below, and don’t miss the opportunity to experience and appreciate some of the best coffees the world has to offer in the heart of London coffee culture, Prufrock Coffee.
Ahoy there Sprudge reader—please allow us now brief update on a project we’re very excited about, headed into a busy coffee events weekend. Just a few short weeks ago we invited our readers around the world to nominate oustanding coffee professionals for the Sprudge Twenty, a new leadership initiative presented by Pacific Barista Series. And nominate you did, with an outpouring of entries received from around the globe.
Nominations for the series are now closed. The first full class of Sprudge Twenty honorees will be announced on Monday, April 8th, in advance of the 2019 SCA Event in Boston (also home to the 2019 World Barista Championship and World Brewers Cup Championship). Winners receive spotlight features on Sprudge, mentorship opportunities from Pacific Foods Barista Series, and much more to be announced in the weeks and months to come.
It’s our hope that you’ll be thrilled by our inaugural class of honorees, and that you find this work to be as exciting and compelling as anything we’ve done in our near-decade of publishing Sprudge—the site’s 10th anniversary is this September. Watch this space, and be sure to follow this weekend’s live coverage of the 2019 US Coffee Championships, happening this weekend on Twitter and at Sprudge Live, our sibling site dedicated to coffee sports.
Spectrum Coffee is a new roasting company out of Brooklyn. The folks at Spectrum have been roasting out of the Pulley Collective in Red Hook for three years with the hopes of opening their own space sometime in 2019. Spectrum roasts coffee from Nordic Approach, Collaborative Coffee Source, and Bodhi Leaf Coffee Traders. You can find their coffees at cafes like L’impremerie, Babydudes, Cafe Beit, and their sister cafe Dweebs out of Bushwick.
Spectrum packages their coffee in Biotre bags housed in a sturdy white box with clean lines, gold foil, and a pop of color on the top. All of the coffee information is kept in a tidy colorful band that distinguishes the type of coffee. The design process was a 50/50 effort between the Spectrum team and their designer friends. We reached out to Will Douglas and Sam Stoothoff digitally to learn more.
When did the coffee package design debut?
This most recent iteration released about a month ago. We’ve sort of been improving our packaging piecemeal since we started a few years ago. We’re pretty happy with it now, but as I’ve learned in this process, at least for me, I like change. I love working with people on new designs and the little sparks of idea you get in the shower that have to get translated into reality. We always looking to improve though, and through this design we already have fun new things we want to try next time.
Who designed the package?
The design was about 50% in house, 50% friends. We were lucky that one of our employees’ brother, Matt Varner, worked at a prominent design firm in New York. He created our logo font and layout, and we took it from there. The “scatter” logo on the bottom of the package was done by our friend Kaela Chambers, an independent artist in Jersey City.
The coffee information is on a wrap around the box—what kind of information do you think is important to share with the coffee drinker?
That’s been an interesting point of discussion for us. We include all the basics, like elevation, process, varietal, producer, etc. Something we’re interested in doing soon is including the price per pound that we paid for the coffee. Transparency is cool, but it needs context. A lot happens along the way to bump up the retail price, and we’re working on a way of communicating that so our customers know what they’re paying for. Cupping score is another metric we’re thinking about adding to the label. We’re figuring out how to present it so that consumers understand how the score fits in the bigger picture. A lot happens along the way that affects price, for instance, Costa Rica has a high minimum wage (cool and good) which leads to a more expensive final product that may score equal to a cheaper Colombian coffee. If you’re reading this and have thoughts, please reach out, we’d love to hear your ideas about what label info you’d be most interested in seeing!
Why are aesthetics in coffee packaging so important?
Coffee is fun and beautiful and deserves to be presented as such. If it weren’t dangerous and probably illegal we’d put one of those dumb party poppers in every box that would shoot confetti in your face the first time you open it.
Tell us the specifics on the design details.
The labels on the coffees are polypropylene. With our old retail design we needed something that wouldn’t rip. With this new one we’ll be switching to paper labels since they’re more environmentally friendly. We used a company called Packwire for the boxes. They were really nice to work with and manufacture in Canada. For a slightly higher price per unit we cut out an entire transpacific voyage compared to having them made in China. The gold foil is Crown #170 from Crown Roll Leaf.
The box itself is recyclable and the Biotre bag inside is 60% compostable. What 40% isn’t.
The innermost lining of the Biotre bags aren’t compostable, but they use an additive that allows them to break down in 5-10 years. The outermost two layers are totally compostable.
Where is it currently available?
Online or at one of our dope partners in Brooklyn and Manhattan.
Company: Spectrum Coffee
Country: United States
Designer: Matt Varner & Kaela Chambers
Zachary Carlsen is a co-founder and editor at Sprudge Media Network. Read more Zachary Carlsen on Sprudge.