 Logo used since 2017 | |
 A Luckin Coffee store in Kunming, China (2024) | |
Native name | 瑞幸咖啡 |
|---|---|
| Company type | Public |
| OTC Pink Limited:LKNCY (formerlyNasdaq: LK, but delisted 29 Jun 2020) | |
| Industry | Coffee shop |
| Founded | October 2017; 7 years ago (2017-10), in Beijing, China |
| Founders |
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| Headquarters | Xiamen, Fujian ,China |
Number of locations |
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Area served | China Singapore[3] Malaysia[4] |
Key people |
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| Products |
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| Revenue | FY 2020 $618M USD[7] H1 2021 $492M USD[8]Q3 2021 $367M USD[9] Q1 2023 $646M USD[10] |
| Owner | Centurium Capital |
| Website | luckincoffee |
| Footnotes / references [11][12][13] | |
Luckin Coffee Inc. (Chinese:瑞幸咖啡;pinyin:Ruìxìng Kāfēi) is a Chinese coffee company andcoffeehouse chain. It was founded in Beijing in 2017. As of March 2023[update], it managed 9,351 stores which include 6,310 self-operated stores and 3,041 partnership stores. Monthly active customer numbers reached 500 million in June 2022. On 18 July 2024, the total Luckin coffee store number reached 20,000.[14] The company operates shops, stores, and kiosks that offer coffee, tea, and food.[15] Customers need to download an app to order and pay for drinks online.[16][17] Luckin is currently headquartered inXiamen. Luckin Coffee quickly expanded over the years and outnumbered the number ofStarbucks stores in China by 2019.[18]
In April 2020, the company revealed that it had inflated its 2019 sales revenue by up to US$310 million. It resulted in the stock price crashing and several executives being fired.[19] Trading was suspended and the company was delisted from NASDAQ on 29 June 2020.[20] The company filed forChapter 15 bankruptcy in the US in February 2021.[21] In December 2021, Luckin Coffee received court approval from a federal judge in Manhattan to restructure $460M worth of debt and to settle a number of class-action lawsuits over the fabricated sales figures.[22][23] In 2022,The Wall Street Journal had reported that the company has emerged from bankruptcy after completing the restructuring of its financial debt under United States code, and also replaced most of its top management who were held accountable for the earlier fraud.[24]
Luckin Coffee was incorporated in October 2017, and by January 2018 had opened its first shops inBeijing andShanghai.[15][25] The company announced the completion ofSeries A financing to a total of US$200 million in July 2018 backed byCenturium Capital,Joy Capital andGIC.[26]
By October 2018, the company had opened 1300 stores, surpassing the number ofCosta Coffee stores to become the second-biggest coffee brand in China.[27] Luckin Coffee also signed a strategic cooperation agreement withTencent.[28][29] Much of Luckin's expansion was fueled by an aggressive marketing strategy which saw the company spend three times as much as it earned to feed its growth.[16]
In January 2019, the company announced that they planned to open 2500 new stores and surpass Starbucks to become the biggest coffee brand in China.[30][31] Luckin also gained exposure in the US stock market, applying to theNasdaq[32] and starting to trade at $17 a share.[33] After reaching $25.96 on the first day, the stock dropped to $16 on its second day of trading.[34][35]
In early January 2020, the company raised more capital through a share placement and a convertible bond sale, with worth totalling $821 million as it sought to expand into deploying vending machines that would serve fresh hot beverages and snacks. It was also offering a $400 million five-year convertible bond separately.[36]
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On 31 January 2020, short-selling firmMuddy Waters Research published an anonymous 89-page report onTwitter, claiming that Luckin Coffee had falsified financial and operational figures.[37] The report claimed that the number of items sold per store was inflated by at least 69% in the third and by 88% the fourth quarter of 2019, supposedly backed by 11,200 hours of video footage. Before the U.S. stock market opening on 3 February 2020, Luckin Coffee responded by formally denying all allegations made in the report.[38]
On 2 April 2020, the company announced that an internal investigation found that its chief operating officer, Jian Liu, had fabricated the company's 2019 sales by "around RMB2.2 billion" (US$310 million).[39][40] The next day, theChina Securities Regulatory Commission said that it would investigate the company for fraud.[41] On 8 April, the U.S. stock market halted trading on all Luckin shares over the fraud probe.[42] In the month of April, the company's stock fell by over 80%.[43] In mid-April 2020, American investment bankGoldman Sachs announced that it would seize and sell the Luckin stock holdings of the company's chairman,Lu Zhengyao, after he defaulted on a $518 millionmargin loan.[43] The $400 million bond offered just prior toMuddy Waters Research's release of the anonymous report also had imploded by 24 April 2020, with the notes selling as low as for 10 cents on the dollar value of bond.[44]
On 15 May the company received adelisting notice from NASDAQ.[45] After over a month of being halted for trading, the company's stock was able to be traded again on 20 May 2020.[46] On 28 May, shares of the company plummeted more than 20% afterThe Wall Street Journal released a report claiming that firms linked to the company's chairman and controlling shareholder played a central role in its accounting scandal.[47] On 29 June 2020, the company suspended trading on NASDAQ and filed for delisting, after the exchange ordered the company to delist.[48] Banks including Credit Suisse had won court orders in Cayman Islands on 22 June 2020, and in British Virgin Islands on 9 July 2020, to wind up Lu's controlling entities of Luckin Coffee Inc for liquidation, after Lu's margin loan default.[49][50] The company thereby entered into a state of provisional liquidation.[51] In September 2020, China's markets regulators fined a group of firms including Luckin Coffee for a combined $8.98 million in relation to Luckin's falsification of financial and operational figures.[52] On 16 December 2020, the US SEC settled the accounting fraud case with the company for $180 million. The company agreed to the settlement without admitting or denying the SEC allegations which include defrauding investors by materially misstating revenue and expenses, inflating its growth rates and understating its losses.[53] On 5 February 2021, the company filed for Chapter 15 bankruptcy in New York, less than a year after the company said that more than a quarter's worth of business may have been faked.[54] By 22 September 2021, the company revealed its plans to restructure.[51][55] On 30 September 2021, Luckin Coffee settled a US class-action lawsuit to resolve investors' claims for $187.5 million.[56] In December 2021, Luckin received court approval to restructure a large amount of debt and settle a number of lawsuits over fabricated sales figures.[22]
According toThe Wall Street Journal, Luckin Coffee emerged from bankruptcy in March 2022 and has replaced most of its top management and ousted its former chairman, chief executive and other employees who carried out the earlier fraud.[57] Additionally Luckin Coffee is now being run by a Chineseprivate equity firm Centurium Capital, who had earlier made capital injections worth $240 million into the company in the spring of 2021.[58][59]
The company opened its first overseas locations inSingapore on 31 March 2023, launching two stores inMarina Square andNgee Ann City respectively.[3] By the end of the year, thirty locations had been opened in the country.[60]
On 29 November 2024, Hextar Industries Berhad announced that they have obtained the exclusive right to bring in the coffee brand into Malaysia. The right enables Hextar to develop, open and operate coffee shops nationwide under the Luckin Coffee brand for a period of 10 years, with optional renewal for another 10 years.[61]
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