China’s Starbucks Rival Luckin Coffee Opens Its First U.S. Stores in Manhattan

Luckin Coffee’s new location, in Manhattan’s NoMad neighborhood, has been bringing in customers with promotional campaigns. (Photograph by Nicole Fara Silver)

On Thursday morning, Chloe Chan rode her scooter a couple blocks up from the home she was catsitting at in Manhattan to pick up her first iced coconut latte from Luckin Coffee . As a consumer of Chinese media, Chan knew how popular the coffee was in China, so a first taste was a no-brainer for her.

After parking her scooter by the curb, she entered the dimly lighted store as a dozen customers surrounded the midnight blue-painted walls and dark wooden furniture. She ordered her drink 10 minutes before she arrived and when she walked in, it was already on the counter.

Chinese chain Luckin Coffee opened its first two U.S. stores in New York City’s Greenwich Village and North of Madison Square neighborhoods last Monday. Since then, the company has rolled out several promotional campaigns including $1.99 cent beverages for first-time customers and a chance for one person to win free daily coffee for a year by downloading the app.

Outside of the deal, caffeinated beverages and refreshers range from $3.45 to $6.75, with its most expensive drink—a kale blended juice—priced at $7.95. Aside from coffee classics like cappuccinos and lattes, Luckin offers signature drinks including the Coconut Latte and Velvet Latte, which was coined for its creamier milk consistency. The coffee chain also sells fruity cold brews featuring raspberry, pineapple and orange flavors.

Luckin Coffee’s new location in Manhattan’s NoMad, Manhattan neighborhood. Photo: Photograph by Nicole Fara Silver

Despite its TikTok fame and promotional deals, Luckin’s entry to the U.S. coffee world could be bumpy. The company will have to compete with Starbucks’ real estate kingdom across the country and work to achieve a stronger economies of scale or higher cost savings as production becomes more efficient. “It’s going to be an expensive business model to run at least initially, so they’re probably going to have to accept making a loss,” says Neil Saunders, managing director at GlobalTrade Retail. “Even two or three years out, you still may not be making fantastic money. So it’s going to be interesting to see how committed they are to the U.S. market.”

Luckin Coffee didn’t respond for comment.

Luckin is a technology-driven coffee company centered around an online order-only system via a mobile app that integrates payment platforms like Apple Pay and PayPal for transactions.

A variety of Luckin’s drinks on display at the NoMad shop. Photo: Photograph by Nicole Fara Silver

Chan, the customer on a motor scooter, said she liked Luckin’s grab-and-go dynamic and its various customization options without additional charge. “There wasn’t any extra add-on if I wanted to change to oat milk or add syrups and cold foams,” she told Barron’s. “I don’t really see that as much in other coffee shops because you know with Starbucks, they’ll charge you for like every little thing.”

Downtown near Astor Place, 20-year olds Susan Cong and Ivy Yang stopped by Luckin after grocery shopping at a nearby Whole Foods. Originally from China, the two are avid customers of the coffee chain and were enticed by the newcomer deal. While Cong is more of a tea-drinker, Yang said she usually satisfies her caffeine kick by purchasing cappuccinos at Starbucks three to four times a week. Now, she says she’ll be buying more Luckin when she craves a sweeter drink.

The company is the largest coffee chain in China with more than 22,000 stores. In all, it operates more than 24,000 stores across Singapore, Malaysia and China. Luckin Coffee shares have jumped 52.2% since the start of this year. By comparison, Starbucks operates more than 32,000 stores globally with more than 7,700 locations in China.

A Luckin’s iced coffee in a Beijing store. Photo: Gilles Sabrie/Bloomberg

Starbucks has struggled in recent years as it adapts to a more cautious consumer environment and increased competition. More recently, the coffee chain lowered its prices on non-coffee beverages in China amid dipping sales. Starbucks has also underperformed in the U.S. as same-store sales declined 2% in this year’s second quarter. Shares have been down nearly 4% since the start of this year.

But Luckin just might be one more competitor within an overcrowded field. “For it to really matter, you might need a thousand Luckins in similar places to Starbucks,” says John Zolidis, president and founder of equity research firm Quo Vadis Capital. “Even with that, it’s not clear to me that Luckin wants to displace Starbucks specifically versus just taking share within the coffee market.”

Nothing’s set in stone for the future, though. If Luckin continues to prioritize competitive pricing, speed and innovation, it could secure a foothold in the competitive U.S. market.

“This is the biggest market for coffee and they’re aggressive competitors,” Zolidis, who recommends Luckin stock over Starbucks, said. “They want to win.”

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