Luckin Coffee(US:LKNCY) Di Yi Cai Jing·2025-11-14 09:12Core Insights - The trend of foreign brands in China reflects a strategic shift towards "risk outsourcing" and growth efficiency in a competitive market [1][2][5] Group 1: Foreign Brands' Strategies - Starbucks has formed a joint venture with Boyu Capital to operate its retail business in China, with Boyu holding up to 60% of the joint venture [2] - Costa Coffee is reportedly in discussions for acquisition by Luckin Coffee's major shareholder, Dazhong Capital, indicating a trend of foreign brands seeking local partnerships [1][2] - Many international giants, including Domino's, McDonald's, and Burger King, are restructuring their operations in China by introducing local shareholders and relinquishing control [2][3] Group 2: Market Performance and Expansion - Yum China, which includes KFC and Pizza Hut, has expanded significantly since selling its Chinese operations in 2016, with KFC increasing its store count to 12,600 by Q3 2025, nearly 40% of which are in lower-tier cities [3][4] - McDonald's has tripled its store count in China to over 7,100, with a rapid opening rate of 2-3 new stores daily, and aims to reach 10,000 stores by 2028 [4][3] - Luckin Coffee surpassed Starbucks in revenue for the first time in Q2 2023, with a total net income of 12.36 billion yuan, reflecting a 47.1% year-on-year growth [9][10] Group 3: Challenges for Foreign Brands - Foreign brands are facing increased competition from local players, leading to a decline in market influence and necessitating a reevaluation of their business strategies [6][8] - Starbucks has had to lower prices and offer promotions to compete with local brands, which have gained significant market share [6][10] - The shift towards local partnerships is seen as a way for foreign brands to mitigate risks and adapt to the rapidly changing market environment in China [5][8]