Before his debut on Wall Street this Friday, "Chinese Starbucks" captured $ 561 million in public offering (OPV). In particular, the company placed 33 million shares of American deposits (ADS, an acronym in English) for investors at a price of $ 17. Each ADS is backed by a total of eight ordinary shares of Luckin Coffee. Yesterday, these stocks rose by about 20%.
Luckin Coffee was founded in October 2017 and currently has 2,370 direct-use locations making it the second largest in China. IPO is linked to an expansion plan.
But beyond the explosive growth, Lucin Cafe has defenders and opponents. On the one hand, there are people who claim that this will revolutionize the industry and generate sustainable business. Critics, however, warn that coffee in the Chinese market will never be able to overtake tea as the most infused infusion and question its model on very low prices. In fact, so far, your bills are not profitable.
Battle with Starbucks
The shape of the café offered by Lucin is diametrically opposed to that of Starbucks. Coffee for walks and seats without chairs. In addition, he does not have ATMs and has the ability to order online and withdraw the order in the store. His model is at very low prices.
According to the latest records, the US chain had almost 51% of the Chinese market until last year and is present in 150 cities. His ardent contender barely had 2.1% in 28 cities. And how is this "David" who thinks of the victory over Goliath? With a large-scale model, with aggressive expansion that does so at the expense of accumulation of losses. In invoicing, local Lucin only raises U4 334 daily, while Stabucks earns five times more in this country.
Although in a market like China with more than 1.38 billion consumers everything is possible, the truth is that it is one of the countries with the lowest consumption per capita in the world.