Luckin Coffee, China's largest seller of coffee based on revenue and the number of stores, as well as its biggest rival Starbucks, boosted their performance in the emerging coffee market in the second quarter amid consumption recovery.
Luckin Coffee turned a net profit of CNY998.7 million (USD139 million) in the three months ended June 30, reversing a net loss of CNY114.7 million in the same period of last year, according to financial results that the Xiamen-based firm published on August 1. Revenue increased by 88 percent to CNY6.2 billion (USD863.1 million).
The company widened its network by almost 1,490 stores to have nearly 10,840 in total, about 66 percent of which are self-operated while the remainder is franchised stores.
In the 13 weeks till July 2, Starbucks earned USD821.9 million in revenue in China, up 51 percent from a year ago, the Seattle-based company released in a financial report on August 1. After deducting foreign exchange rate fluctuations, the increase is 60 percent.
During the same time period, the American coffee chain added almost 240 new stores in China, or more than ever in the second quarter, to run 6,480 stores in 250 mainland cities. The addition is bigger than the sum of the two past quarters.
A big part of the Chinese firm's appeal comes from discounts and convenient takeout experiences. Luckin Coffee launched promotional events in June to celebrate store anniversaries and issued weekly vouchers to offer coffee for just CNY9.9 (USD1.40) per cup. The events were welcomed better than expected and the firm decided to extend the campaign by at least two years to increase its market share, Guo Jinyi, chairman and chief executive, said during a meeting held to release the results.
Belinda Wong, chairwoman and chief executive of Starbucks China, said that the company welcomes competition since it actually expands coffee markets and helps more people access such beverages at a quicker pace. Different brands can bring different experiences to consumers, she added.
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