Hua Er Jie Jian Wen·2025-07-28 03:45Core Viewpoint - Luckin Coffee has officially entered the U.S. market, posing a strong challenge to Starbucks, which is currently facing declining same-store sales for five consecutive quarters [1][6]. Group 1: Market Entry and Competition - Luckin Coffee has opened its first two stores in Manhattan, with one located less than 200 feet from a Starbucks, directly competing with the global coffee giant [1]. - Luckin has surpassed Starbucks to become the largest coffee chain in China, leveraging a mobile app-driven and low-price business model [1][4]. - Starbucks is experiencing a decline in market share in China, dropping from over 40% in 2017 to an estimated 14% by 2024 due to the rise of Luckin and other local competitors [5]. Group 2: Business Model and Strategy - Luckin Coffee's core competitive advantages include a technology-driven mobile app and a low-price strategy, with new users in New York able to purchase drinks for as low as $1.99 [2]. - The app features gamification elements, quick order fulfillment, and a short wait time of 3-5 minutes for recent orders, catering to fast-paced urban consumers [2]. - In contrast, Starbucks has faced challenges with its mobile order management, leading to complaints about crowded pickup areas and long wait times for in-store orders [2][3]. Group 3: Financial Performance and Future Outlook - Starbucks reported revenues of $36.2 billion for fiscal year 2024, while Luckin recorded $4.7 billion [7]. - Analysts suggest that if Luckin can increase sales and gradually reduce discounts, it may achieve profitability at the store level in the U.S. within the next 12 to 18 months [5]. - Luckin's second U.S. store is numbered 00002, indicating the company's ambition for further expansion in the U.S. market [5]. Group 4: Starbucks' Response - In response to increased competition, Starbucks has lowered prices on over 20 drink categories, with an average reduction of $0.70 per grande drink [6]. - New product offerings, including sugar-free options, are aimed at expanding Starbucks' customer base and increasing sales, particularly during afternoon and evening hours [6].