Luckin Coffee vs. Starbucks: Different paths, different destinations

Luckin Coffee vs Starbucks

About Luckin Coffee

On December 25, 2018, the news that "Luckin Coffee's plan to open 2,000 stores has been achieved" attracted everyone's attention. At this moment, it has been just over a year since Luckin Coffee was "born". Since its birth, Starbucks, which has always claimed to be a benchmark, took 17 years to complete the layout of 2,000 stores in China. However, Luckin's crazy market coverage has made it controversial.

Competing with Starbucks? Following in the footsteps of OFO? Amid increasing doubts, Luckin Coffee’s popularity has reached its peak!

1

We are different paths, how can we have the same destination?

From the beginning to the end, Luckin Coffee and Starbucks were not on the same track.

Starbucks stores themselves are the user usage scenarios, while Luckin Coffee’s user scenarios are outside the stores and in the APP. This is the core difference between the two.

Although Starbucks is a coffee retail company, its core is to provide people with a "third space", similar to the concept of "hourly rooms", that is, to provide people with an informal public place where they can meet with a few friends on weekends to reminisce about the past or meet with customers and merchants to discuss business, etc. Starbucks has designed many usage scenarios for users, such as horizontal queuing, providing comfortable chairs and sofas, and watching the barista make a drink at the bar, etc. In short, it provides a relaxed, comfortable and convenient scene for communicating with others, and the core is social attributes .

Luckin Coffee saw something different. Its founder Qian Zhiya found that 70% of Chinese coffee consumers drink coffee on the go, and only 30% drink it in the store. What Luckin Coffee needs to do is to compete for these 70% of customers and provide them with a cup of good coffee anytime, anywhere. Therefore, the user scenario of Luckin Coffee is in the APP, where you can order through the APP and then pick it up in the store. In other words, the core of Luckin Coffee is retail attributes.

Therefore, the tones of these two coffees are different, and the target groups of people they serve are also different.

Star dad's status is unshakable

Furthermore, due to Luckin Coffee’s retail attributes, the benefit is that Luckin Coffee can collect data from all customers to make better sales forecasts and customer judgments.

Perhaps in the future, Luckin Coffee can sell different products to different users based on their consumption habits. And by understanding user preferences, it can better launch food, peripherals, etc. in the future, that is, use data to drive the company.

Starbucks or more traditional coffee shops are still at the stage where merchants and businesses don’t know who the consumers are or what they like.

However, Starbucks, as the largest coffee company, cannot be easily shaken by Luckin Coffee because consumers drink not only coffee but also culture. This culture includes feelings, scenes, and other things. This is also the brand image that Starbucks has been working hard to create. For example, when you order a cup of hand-brewed coffee, the clerk will tell you about the origin and flavor of the coffee, and will also let you smell the aroma of the freshly ground coffee powder. Such usage scenarios and customer experience cannot be created by an APP.

Starbucks

Luckin Coffee

Luckin Coffee has none of these. Its exponential expansion relies on financing to build stores and subsidies to attract customers. As a "reverse Starbucks" operation model that focuses on takeout, self-service, and a small amount of dine-in, Luckin Coffee's content for users is simplified to the word "coffee". The stores are so simple that they are more like factories in the back than stores in the front.

"A cup of cheap good coffee" has become the only brand image that Luckin Coffee has gained through burning money. In this regard, it is incomparable with OFO, which was stuck in a deadlock due to its crazy expansion but once gained recognition with its unique shape and novel travel experience.

Qian Zhiya has said publicly many times that Luckin Coffee aims to make coffee affordable for Chinese consumers and is targeting a more inclusive mass market. "Good things are not expensive, or the profit margin should be controlled at 5%, which is more in line with my business philosophy."

The future of Luckin Coffee

Luckin Coffee is not a reckless person, and neither is the capital behind it. Instead, they made this move with a clear vision. Who will win between Luckin Coffee and Starbucks in the future? This is fundamentally a false proposition, because the pie itself is expanding.

However, in the next few years, Luckin Coffee still needs to open stores on a large scale and subsidize users, using capital to subsidize and seize the market and even educate the market, using capital to exchange for space, and then stop subsidies and start making profits. Especially by the end of 2021, Luckin Coffee plans to open 10,000 stores. It can be seen that Luckin Coffee has no plans to make a profit in the next few years, and there will be a lot of capital expenditures. The focus in the next few years should be on Luckin Coffee's financing capabilities.

Ms. Qian Zhiya said in her speech: Luckin Coffee has, to date, already had very high barriers and very strong competitive advantages, and has entered a very cycle, forming two positive flywheels. One is that the more stores we open and the more products the stores have, the more consumers will consume with us because we can meet their daily consumption needs.

On the other hand, we have more and more consumers and more and more data. At this time, our purchase volume is getting larger and larger, and the prices we can get are getting better and better. In this way, the products we provide to our customers will become more and more abundant, and the price performance ratio will become higher and higher. This forms two positive flywheels, which enables us to continuously form our competitive advantages in future development.

Different people have different tastes

Healthy competition

Maybe that's not a bad thing.

But after talking so much

Starbucks and Luckin

Which one is your first choice?

Tell me in the comments

End