After facing an accounting fraud two years ago which led to its withdrawal from Nasdaq-listing, China’s Luckin Coffee believes it has emerged from its “darkest moment” and remains committed to expand its business.
Luckin admitted in 2020 that about US$310 million of its sales were fabricated in the previous 3 quarters, bringing the coffee maker to the brink of collapse, after bragging on it being a strong contender to Starbucks in China.
Centurium Capital, a China-based equity firm, has now become the major shareholder in Luckin Coffee after it acquired shares from two of Luckin founders for more than US$400 million. Centurim has also injected a further US$240 million to restructure Luckin’s business with major changes to top management.
The result from this has been encouraging as Luckin reported its first quarterly operating profit in May this year.
Luckin plans to continue to open new stores despite the challenging Covid-19 pandemic curbs in China. Presently, it has 7,200 stores in China, making it probably the largest coffee chain as compared to Starbucks (5,761), as of July 2022.
Luckin plans to add more stores particularly in the top-tier cities such as Beijing and Shanghai.
Meanwhile, its main competitor Starbucks has also recently announced plan to increase its number of stores in China to 9,000 by 2025.