Image Source: EPA-EFE/Roman Pilipey
Luckin Coffee is back after two years, and it is aiming for greater heights this time around.
It can be recalled that the Chinese startup was involved in a scandal several years ago, and it was then removed from Wall Street.
However, with new outlooks and a revamped system, the coffee chain announced its comeback on Tuesday, posting its first-quarter earnings, which skyrocketed to an almost 90% increase amid COVID lockdowns and a tight market landscape.
Luckin Coffee also finished the first quarter with 6,580 stores in mainland China beating industry leader Starbucks which has only 5,650 branches in China. With this, Luckin Coffee considers itself the largest coffee chain in China.
Several of its stores are self-operated, and others are under their partners, in contrast to Starbucks’ chains in China that are company-owned.
The recent revenue posted by the company is proof that they are recovering from the slump that they had two years ago when they were removed by the Nasdaq.
CEO Jinyi Guo said in an interview that the company may still face doubts among investors and analysts considering the issues they have been involved in the past. “We have taken a lot of measures to clean up our own house,” revealed Guo. Since 2010, the company has been ramping up efforts to revamp its operations and reorganize its internal structures. Guo was then senior vice president of product development when the crisis occurred. He was promoted to CEO at the time.
“Because of the pandemic, there are a lot of people not able to travel to China, to see for themselves how it looks like in our shops,” he added. “If they’re able to see for themselves how we operate, then they would know that the figures are true, and they shouldn’t be skeptical about it.”
The coffee chain was founded in 2017 and trended among consumers as an alternative to the traditional coffee providers in the country. Its target was mostly young people, and it has, since it started, catapulted to being just a new challenger to a billion-dollar chain with over 2,000 stores opened in just 12 months.
Two years after its inception, Luckin Coffee entered the US market. Luckin was welcomed by many investors as it exhibited the potential to challenge other mainstream coffee shops like Starbucks.
However, it was ejected in 2019 following a report that it had fabricated its revenue. It was then delisted from Nasdaq and was fined $180 million by the US Securities and Exchange Commission.
The CEO and chairman were also fired, allowing Guo to enter the scene.
Since then, Guo has focused on boosting and improving its services. And two years after its exit, Luckin Coffee hopes to enter the market once again with a newer and brighter outlook.
Opinions expressed by NY Weekly contributors are their own.