Coffee startup Luckin plans to open 2,500 new stores in China this year to overtake Starbucks in the country.
“What we want at the moment is scale and speed,” Luckin Chief Marketing Officer Yang Fei said at a presentation in Beijing, according to Reuters.
Luckin’s strategy for its fast expansion process has focused on technology, delivery, and providing customers with steep discounts. But the company recorded a loss of 800 million yuan ($116.34 million) in 2018, which Fei said was expected.
“There’s no point talking about profit,” he said, explaining that subsidies to attract more customers are still an important part of the company’s strategy for the next few years.
Luckin plans to open a total of more than 4,500 stores by the end of 2019, which would overtake Starbucks, which has more than 3,600 stores in the country.
Backed by Singapore sovereign wealth fund GIC Private Ltd. and China International Capital Corp Ltd., Luckin raised $200 million in a Series B funding round in December, bringing its valuation to $2.2 billion. It also raised $200 million in July.
Luckin currently has stores in 21 major Chinese cities, with a total of more than 1,700 shops. The startup says it has a location within a 500-meter radius of anywhere in downtown Beijing and Shanghai.
For its part, Starbucks said in October that it building a new store in China every 15 hours, and that boosting growth in the country is one of its “three strategic priorities,” said Starbucks CEO and President Kevin Johnson.
The company plans to open another 2,000 stores by 2021. In fact, Starbucks builds more new company-operated locations in China than in its home country of the United States.
“To us, we open 500-plus stores a year, but to us, it’s not about 500,” said Belinda Wong, CEO of Starbucks China. “It’s about opening a store 500 different times because you’re in a different neighborhood and we’ve got to build that relationship with our customer.”