Core Viewpoint - Mixue Ice City is expanding its second growth curve overseas, with its coffee brand Lucky Coffee preparing to open five stores in Malaysia, potentially marking its first international venture [2]. Group 1: Company Expansion - Lucky Coffee is viewed as the next Mixue Ice City, having rapidly expanded to over 7,000 stores in China, making it the fourth largest fresh coffee brand domestically [2]. - The brand aims to replicate its low-price strategy in Malaysia, where it will face competition from local coffee brands that have adopted similar pricing models [2][3]. - Mixue Ice City has successfully expanded in Southeast Asia, with significant growth in Indonesia and Vietnam, indicating a proven strategy for entering new markets [6][10]. Group 2: Market Competition - Southeast Asia is home to several local coffee brands that mimic the business model of Luckin Coffee, including Fore Coffee, Flash Coffee, and ZUS Coffee, all of which have established a strong presence in the region [2][3]. - Flash Coffee recently went bankrupt due to overexpansion and lack of operational experience, highlighting the risks associated with rapid growth in competitive markets [4]. - Lucky Coffee's entry into Malaysia will require it to compete against established brands like ZUS Coffee and GIGI Coffee, which have already captured significant market share [9]. Group 3: Pricing Strategy - Lucky Coffee's strategy involves offering coffee at a price point of 6.6 yuan, which is lower than competitors, aiming to attract price-sensitive consumers in Malaysia [5][9]. - The brand's success in China was largely due to its integration with Mixue Ice City's supply chain, allowing for lower operational costs and competitive pricing [5][7]. - The coffee market in Southeast Asia is fragmented, with diverse consumer preferences, making it essential for Lucky Coffee to adapt its offerings to local tastes while maintaining its low-price strategy [3][10]. Group 4: Financial Performance - Luckin Coffee reported a revenue of 91.4 million yuan in Singapore for the first three quarters of 2024, but its expenses reached 167.7 million yuan, indicating challenges in achieving profitability in international markets [8]. - The overall coffee market in Southeast Asia is significantly smaller than that of China, which may limit the profitability potential for brands like Luckin Coffee and Lucky Coffee [10].

Core Insights - Luckin Coffee has opened two stores in New York, marking a significant step in its U.S. market entry, adopting a more cautious approach compared to its aggressive domestic expansion strategy [1][3] - The pricing strategy in the U.S. aligns closely with Starbucks, with drink prices ranging from $3.45 to $7.95, indicating a shift from the "high cost-performance" model familiar to domestic consumers [3][5] - The locations of the new stores are strategically chosen to attract Chinese students and international tourists, enhancing brand visibility and competition with local coffee giants [3][5] Pricing Strategy - The pricing of Luckin's beverages in the U.S. is comparable to Starbucks, with the most expensive item priced at $7.95 and the cheapest at $3.45, reflecting a new market positioning [3][5] - Compared to Dunkin', Luckin's prices exceed by 50% to 100%, which may complicate its market integration and slow down expansion efforts [6] Operational Strategy - The two stores serve as a "control experiment" for Luckin to test profitability and competitive strength against established brands like Starbucks [5] - The company aims to adapt its offerings based on local consumer preferences and feedback, enhancing its brand's local adaptability [5] Market Potential - The U.S. coffee market is projected to grow from $28 billion in 2024 to $39.2 billion by 2033, presenting a significant opportunity for Luckin if it can establish a foothold [5] - As of the end of Q1, Luckin had a total of 24,097 stores globally, with only 65 located outside China, primarily in Singapore, indicating room for international growth [5] Challenges - Initial entry into the U.S. market presents challenges such as high store and labor costs, as well as supply chain adaptation issues, which may lead to increased overall costs [5] - The company may consider promotional strategies similar to those used in China, such as distributing coupons and offering discounts, to accelerate market penetration [6]

Core Viewpoint - Luckin Coffee is entering the U.S. market with a new strategy, aiming to compete directly with Starbucks in its home territory, following its previous financial scandal in 2020 [5][10]. Group 1: Market Entry - Luckin Coffee opened its first U.S. stores on June 30, 2023, with locations targeting young students and business professionals [6][9]. - The store near New York University aims to attract local students, while the other store in the Empire State Building area targets tourists and business customers [6][9]. - The proximity of Luckin's store to a Starbucks location symbolizes its competitive intent [8]. Group 2: Marketing Strategy - Prior to the store openings, Luckin utilized a marketing campaign involving flash events and promotions to attract customers, such as offering free coffee for app downloads and social media shares [8]. - Unlike its domestic strategy of aggressive discounts, Luckin's U.S. pricing is comparable to Starbucks, with drinks priced between $3.45 and $7.95 [9][16]. Group 3: Competitive Landscape - The U.S. coffee market is highly competitive, with over 500 coffee chains, making it different from when Starbucks entered the Chinese market [12][14]. - The U.S. coffee market is projected to reach $28 billion by 2024, with a per capita consumption of over a thousand cups annually [12][19]. Group 4: Challenges and Adaptation - Luckin must adapt its business model to the U.S. market, focusing on local operations, product localization, and supply chain management [15][23]. - The company faces challenges related to higher operational costs and stricter regulations in the U.S. compared to China [15][21]. - Luckin's previous financial scandal continues to impact its brand reputation, necessitating efforts to rebuild trust in the U.S. market [16][23]. Group 5: International Strategy - The company is taking a cautious approach to international expansion, having previously opened stores in Singapore before entering the U.S. [18]. - Different Chinese coffee brands are adopting varied strategies for international markets, with Luckin being more conservative compared to faster-moving competitors [18][19]. - The future of Chinese coffee brands in international markets, particularly in the U.S., is promising but fraught with challenges [22][23].