A fight brewing: Luckin targets Starbucks for China’s coffee crown

Luckin’s caffeine-fueled growth has come at the expense of profits. (Reuters)
Updated 04 January 2019

A fight brewing: Luckin targets Starbucks for China’s coffee crown

  • The firm has expanded at breakneck speed, propelled by a focus on technology, delivery, and heavy discounting, even at the cost of mounting losses

BEIJING: Chinese coffee startup Luckin is aiming to open 2,500 new stores this year and overtake Starbucks as the largest coffee chain by number of outlets in the world’s second-biggest economy, it said on Thursday.

The firm, which only officially launched its business at the start of last year, has expanded at breakneck speed, propelled by a focus on technology, delivery, and heavy discounting, even at the cost of mounting losses.

“What we want at the moment is scale and speed,” Yang Fei, Luckin’s chief marketing officer, told reporters on Thursday at a presentation in Beijing.

“There is no point talking about profit,” he said, adding that subsidies to lure more users would
be an important part of the firm’s strategy for the coming few years.

Luckin said that it was targeting a total of more than 4,500 stores by the end of 2019, which would take it past Seattle-based Starbucks, which has long dominated China’s coffee scene and has more than 3,600 stores in the country.

Luckin’s caffeine-fueled expansion is in stark contrast to Starbucks, which opened its first China store in 1999 and has spent two decades reaching its current store count.

The US chain, which spearheaded the growth of a coffee culture in China, started to see competition rise from smaller peers over the last 18 months, though Luckin has stood out as the most aggressive competitor.

But Luckin’s rise has not come cheaply. The company recorded a loss of more than 800 million yuan ($116.34 million) last year, which its chief marketing officer said was in line with expectations as it pushed to expand.

Luckin, backed by Singapore sovereign wealth fund GIC and China International Capital Corp, opened more than 2,000 locations in the past year, gaining a valuation of $2.2 billion after raising $200 million in a funding round last month.

The firm’s CEO, Qian Zhiya, told Reuters last year that Luckin aimed to outnumber Starbucks
in China.

Reuters previously reported that Luckin was also in early-stage talks with investment banks about an overseas initial public offering.

The firm, however, declined to answer questions about IPO plans on Thursday. 


Pakistan witnesses significant rise in digital banking between July and September — central bank

Updated 03 December 2020

Pakistan witnesses significant rise in digital banking between July and September — central bank

  • Growth in digital payments reflects changing consumer preferences amid the coronavirus pandemic, says State Bank of Pakistan
  • Mobile phone banking users increased by 41 percent while the number people availing internet banking option reached 4.3 million

KARACHI: Digital banking has acquired increasing popularity in Pakistan since the emergence of the coronavirus pandemic, said the central bank on Thursday, adding that the country had witnessed 253.7 million electronic transactions worth Rs19 trillion during the first quarter of the current fiscal year.
"The most promising uptake was seen in internet banking and mobile banking transactions as the number of registered mobile phone banking users reached 8.9 million showing an increase of 41% over Q1-FY20 and the number of internet users touched 4.3 million with a growth of 26% over the same period," the State Bank of Pakistan (SBP) said in its Quarterly Payment System Review (QPSR) for the first quarter between July and September 2020.
During this period, mobile banking transactions increased to 36.4 million or Rs908.7 billion. This implied an increase of 139 percent in terms of volume and 211 percent in terms of value when compared with the same period last year.
Similarly, internet banking transactions increased to 18.9 million or Rs1.1 trillion, registering a growth of 55 percent in volume and 89 percent in value.
"The digital payment transactions in Pakistan have increased significantly largely due to the impact of measures taken by the SBP that created incentives for customers," the central bank said in a statement. "Growth in digital payment infrastructure as well as emergence of new payment aggregators have also been a contributing factor in this increase. Moreover, it also reflects the changes in consumer preferences for digital transactions amid the COVID-19 situation."
The country's total payment transactions increased by 23 percent in volume and eight percent in value when compared to the previous quarter, according to the report.
E-banking transactions comprise real-time online branches transactions, ATM transactions, internet banking transactions, mobile phone banking transactions, e-commerce, and interactive voice response banking.
Another major avenue of e-banking transactions is through points of sale, whereby people make transactions using credit or debit cards for shopping purposes.