Luckin Coffee from China does not share the same philosophy/market position as Starbucks. It will be naive to proclaim Luckin as ‘the next Starbucks’, as it is more a mobile-first approach to coffee than a Third Place for its customers.
Luckin’ reality in the eye
It was a humid, mid-summer day in Chengdu, the panda capital of China. Walking along the main boulevard in the bustling city and brushing by youngsters with bubble tea in one hand (phone in another, of course), I was impatient to grab a drink at Luckin and get some respite from the crowd.
I did my homework and had the Luckin Coffee app pre-installed. (And as Google Play Store is not available in Mainland China, without a VPN one can only download the .apk file directly from the official website.) I was offered a free drink upon signup, courtesy of Luckin. Sure, I did give away some personal details and my phone number along the way, but that’s a fair price to pay for a perfect cup of coffee in hot summer.
The mobile app also generously offered 50% off food orders, 60% off other coffee/juice order as well as a buy-10-get-10 free promotion, but for lack of friends/appetite I picked my Hazelnut Latte to-go. I thought the comment in the product description section on the power of coffee and its cohesive relationship with the Earth, the Sun and Nature, displayed alongside the avatar of some coffee celebrity chef who won WBC in China (sort of like World Cup for Coffee) kind of sweet (pun intended). Even before having a sip I was feeling empowered.
Large, round logos with green mermaids appeared in my peripheral vision. Not batting an eyelid, I marched with determination towards my destination. Life would become known as ‘before-Luckin’ and ‘after-Luckin’ after I encounter the unicorn.
The Luckin branch I was luckin’ for (sorry, I had to) was located on the second floor of a somewhat decrepit, dimly lit shopping mall along the prime shopping street. Housed in the same mall was an app-enabled smart locker, an app-enabled vending machine and an app-enabled power bank rental service (one of many, I hear). Everything can be shared and everything had to be QR code-coated. I rubbed my eye a little. Even the Luckin logo looked like a clickable navigation icon. The blue deer smiled and winked at me as I took the escalator up.
I was expecting some sort of sleek, minimalist cafe space that gets featured in magazines, the kind you can find in many cosmopolitan cities across the world. Except it wasn’t. Luckin coffee was more an app-only Bubble Tea Store than coffee paradise. There was no cashier, naturally. Baristas were busy checking orders that arrive in real-time electronically in byte streams and churning out to-go coffees in plastic cups. It felt more like a factory assembly line than a welcoming environment to meet friends, hang out or plot my own independent state.
The order I placed using the app went through several servers, got prepared in mere minutes and neatly lined up on the collection counter. All I had to do was to scan my QR code, collect my order and I am good to go. All without looking in the eye of any Luckin coffee employee or exchanging a word with another human being.
Is this the Future? Is this what would replace Starbucks?
FYI, the coffee tasted really bad.
The Luckin app offers a map for users to find Luckin stores nearby. Stores were divided into five categories: Elite, Relax, Pickup, Flash and Express. There were but a handful of Relax stores in Chengdu, a city of 14 million people; over 90% were classified as Pickup, which offers the kind of self-service kiosk experience outlined above. Upon some research, I learnt that this is representative of how Luckin operates in China, even in bigger cities like Shanghai and Beijing. Most are Pickup, and there is (as of time of writing) not yet an Elite (i.e. flagship) Luckin store anywhere on Earth. Unlike its supposed rival Starbucks, which has fancy flagship stores in the best parts of China’s major cities.
The tech-oriented, streamlined order flow was indeed quite something, but it’s also something that can immediately be imitated (c.f. Starbucks’ recent launch of an express store in China). With such aggressive marketing campaigns, Luckin bleeds cash every time they make (not even ‘sell’) a cup of coffee. Although this is done in the name of customer acquisition, it is dubious how many would stick when the promotions have ended.
Some say Luckin’s access to millions of customers’ purchase data (location, purchase preference, etc) would save the day. Also, Luckin has recently announced its planned expansion in the Middle East and India (car culture going hand-in-hand with the pickup model, I imagine). After drinking the coffee, I am skeptical… to say the least.