Starbucks has been the king of coffee in America for many years, but while the chain strives to dominate foreign markets, local companies can show how popular they can be. Starbucks has over 10,000 stores in China, but in 2025, another chain started outgrowing them, Luckin Coffee.
Luckin Coffee has managed to open over 20,000 stores in China and become the largest coffee chain domestically through competitive pricing and digital-first ordering. Luckin Coffee has had revenue growth of over 40% year-over-year in Q1 of 2025 and has made an announcement that it has plans to open in the United States.
A Different Kind Of Store
While Starbucks focuses on store models that give customers the opportunity to relax or work in spacious cafes, Luckin Coffee has a different model that’s all about speed and efficiency. The stores are notably small pickup locations, so customers can get their coffee quickly or have it delivered.
The benefits of this model include paying less rent on smaller spaces and having to pay less staff to run chains. These small stores can also pop up almost anywhere in high-density urban areas since their floor space is not very large. This model appeals to coffee-centric people who have a tight schedule.
Lower Prices
Starbucks coffee isn’t always the most affordable place to get coffee, but they keep customers coming in through brand loyalty, consumer satisfaction, and high-quality products. Luckin Coffee, however, offers coffee at much more affordable prices, normally being 30% to 50% cheaper than their competitor in China.
The franchise also offers discounts, coupons, and referral programs to push for a wider consumer base. Starbucks is susceptible to economic uncertainty, where people have tighter budgets, while Luckin Coffee is trying to appeal to the same budget-oriented consumers who see that they can get coffee for cheaper there.
Technology Is An Important Factor
When it comes to technology, Luckin Coffee might just have the edge. While Starbucks has an app where consumers can order and pay before getting delivery, but lacks the innovation that Luckin Coffee has leveraged on their own app, making the process quick and convenient to consumers.
Luckin Coffee customers use the app to order, pay, and then track their delivery digitally. The app also gives consumers AI marketing, helping draw in more customers and increase operational efficiency.
Strong Financial Growth
Luckin Coffee has shown promising growth, with revenue growing by more than 40% year-over-year in Q1 2025, rising to $1.45 billion. Starbucks may have a bigger presence globally, but its revenue has declined by 7% during the same time. Over the last two years, Luckin Coffee’s potential has not gone unnoticed, and it has seen more investment, with its stock price going up by 200%.
While Starbucks still dominates in the domestic market, they often struggle to establish a longterm and profitable foothold in China and other foreign markets. Lucking Coffee, looking to expand its reach, should also be a concern to Starbucks.
Entering The U.S. Market
While Starbucks is well established in America, Luckin Coffee still hopes to break into the market in the future. The bustling urban areas of New York City are set to be the first locations for Luckin Coffee in America, but the company’s strategy is different from Starbucks.
While Starbucks has tried to break into foreign markets with store models similar to the United States, Luckin Coffee looks to establish delivery only locations and won’t advertise physical locations, at least initially. The U.S coffee store market is already a highly saturated one, but Luckin Coffee’s unique model could propel it ahead of some competitors and cause concern among domestic coffee chains.
Making Their Stores Relevant
Each nation has distinct cultural tastes that differ from one another, and Luckin Coffee will be trying to appeal to local preferences, such as Coconut Latte and Cheese Coffee, which are currently viral orders.
Starbucks, on the other hand, has recently downscaled its menu for a simpler ordering experience and cutting costs associated with unpopular choices. Luckin Coffee could leverage this once its first stores land on U.S. soil, giving consumers a place with a wide variety of items that suit their tastes.
A Change In Customer Habits
In recent years, the cafe experience that was once popular is starting to lose steam. Cafes were once the most popular place for people to meet for coffee and sit down to catch up. In the modern age, younger consumers prefer speed and convenience above all else. A survey revealed that nearly 70% of Chinese millennials are in favor of fast service and app-based ordering models.
Luckin Coffee’s cheaper menu items could appeal to Gen Z’s budget-oriented mindsets and offer innovation through their app ordering and convenient delivery. Starbucks’ sit-down stores may not draw in the same customers as a quick and efficient order-only rival.
Outdated Trends
Starbucks has always tried catering to consumers, emphasizing personal service and ambiance inside of its stores. However, they have tried making recent innovations to stay relevant, with “Starbucks Now” stores offering greater efficiency above all else and creating better rewards programs.
With larger stores, Starbucks naturally has higher operational costs, which means that they can only cut their menu prices by so much to stay competitive. The traditional Starbucks model may just be becoming outdated while companies like Luckin Coffee swoop in with tech innovations that a younger generation is drawn to.
Coffee Culture Is Changing
Coffee culture is rapidly changing in the 21st century. For decades, people would walk or drive to coffee shops to sit down and enjoy a cup of coffee alone or with friends and family.
Today, there is more of a focus on moving forward rather than taking the time to relax midway through the day at a coffee shop. While leveraging a new generation’s values, Luckin Coffee still has a way to go as it plans to break into the U.S. market. Whether or not it can replicate its domestic success remains to be seen.
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