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>> Coffee at your doorstep at half the price of Starbucks, that's the pitch for Chinese coffee startup, luckin. And it's become an aggressive new threat in Starbucks number two market. luckin only fully launched in January, but it's already opened 660 outlets across the country. That took Starbucks over a decade to do in China.
luckins's also been poaching baristas at rival brands and flaunting steep discounts on drinks.>>
> The taste is very different compared to Starbucks. If there's a Starbucks close to me, that would be my first choice. If luckin no longer offers a discount or it goes back to the normal price, then there will be a big question whether it can still lure in so many customers.
Meanwhile, Starbucks is seeing troubling signs this year in China. It's seen sales growth hit zero or below, and shares took a beating. But as Reuters Pie Li reports luckins' fast rollout doesn't come cheap.>> Their business model is very much reliant on subsidies. Their customers only need to use a mobile phone to either order a coffee delivered to their location, or choose to pick up at a store at a huge discount.
The company burns over 1 billion yen in half a year, and they recently raised another $200 million.>> It's a practice that's not uncommon among Chinese Internet startups, burning cash to gain sky high evaluations. The company's CEO told Reuters she's got no timeline for profit. Internet startups in China are often fueled by a huge amount of money from investors who are lured in by future potential, but often see little payoff.
But not everybody is sold on luckin coffee's brand.>>
>> luckin directly challenged Starbucks in a lawsuit this year for what it called monopolizing the market and pressuring suppliers. That won some publicity in China, but hit a nerve with Starbucks who brushed it off as a marketing ploy.