When Luckin Coffee burst onto China’s café scene in 2017, it seemed destined to unseat Starbucks as the nation’s go-to coffee brand. But after a spectacular rise—and an even more spectacular collapse amid an accounting scandal—Luckin staged a remarkable comeback that’s still unfolding today. Here’s the story of how China’s homegrown coffee champion went from hero to zero and back again.
Founded in October 2017 in Beijing, Luckin Coffee quickly disrupted the market with a technology-first strategy: app-based orders, convenient pick-up kiosks, and aggressive discounts. This innovative model allowed it to rapidly expand its store count, surpassing Starbucks in China by 2019 and becoming the country's top coffee brand. Its rapid growth culminated in a successful Nasdaq IPO in 2019, raising approximately US$561 million.
However, this impressive expansion concealed significant financial misconduct. In January 2020, short-seller Muddy Waters Research published an investigative report alleging falsified financial and operational figures. Although Luckin initially denied the claims, an internal investigation in April 2020 confirmed that its chief operating officer had fabricated approximately US$310 million in 2019 sales revenue. This revelation led to executive firings and a dramatic stock price crash. Trading was suspended, and Luckin was delisted from Nasdaq on June 29, 2020. The company subsequently filed for Chapter 15 bankruptcy in the US in February 2021 and settled SEC charges for US$180 million in December 2020, without admitting or denying the allegations.
Post-2020, Luckin embarked on a significant restructuring effort, emerging from bankruptcy in March 2022 after completing its financial debt restructuring under U.S. law. This included replacing most of its top management responsible for the fraud. Centurium Capital became a key backer and the controlling shareholder in January 2022, holding over 50% of the voting interest. By August 2022, Luckin fully redeemed its offshore debt securities, eliminating its only offshore debt.
Luckin's impressive comeback has been fueled by a renewed commitment to its app-driven, cost-efficient new retail model. Key elements of its strategic rebirth and growth, with a focus on technology, cost control, and supply chain management, include:
Luckin's business is deeply rooted in technology, covering every aspect from customer engagement to supply chain management.
Luckin's model emphasizes cost advantages to provide high affordability to customers.
Luckin emphasizes a strong supply chain with high resilience and premium quality.
Luckin's strategic efforts have translated into significant financial recovery and expansion. As of December 31, 2024, the company operated 14,540 self-operated stores and 7,749 partnership stores across over 300 cities in China, including Hong Kong, with an additional 51 self-operated stores in Singapore. It has also recently expanded into Malaysia via franchise rights. By the end of 2024, Luckin had amassed 334.0 million cumulative transacting customers.
Financially, Luckin reported total net revenues of RMB34,474.8 million (US$4,723.9 million) in 2024, a 38.4% increase from 2023. The company achieved an operating income of RMB3,538.1 million (US$484.8 million) and a net income of RMB2,931.7 million (US$401.7 million) in 2024, marking a strong return to profitability. By 2023, Luckin had surpassed Starbucks to become China’s top coffee chain in both revenue and store count. Its OTC-traded shares have rebounded over 38 times from their 2020 lows.
In a bold move, Luckin debuted in New York City in June-July 2025, launching two app-only pickup stores. Its U.S. strategy mirrors its successful China playbook: app-first ordering, minimal-store formats, loyalty rewards, and aggressive promotional pricing (e.g., US$1.99 introductory drinks).
However the U.S. expansion has its unique challenges. The app-only, no-cash model, while efficient in China, has met with complaints from some U.S. consumers who prefer in-person ordering or cash payments. Additionally, while Luckin's prices are lower than Starbucks without coupons, they are not significantly cheaper than other affordable U.S. coffee chains like Dunkin' or McDonald's, suggesting a different market positioning challenge in the U.S..
Luckin Coffee's story is truly a unique comeback. Its digital-first, low-cost, and vertically integrated model has proven incredibly effective in China and is now being tested on the global stage. Whether it can redefine the global coffee landscape and maintain investor confidence will depend on its ability to navigate cultural nuances, sustain its competitive edge, and uphold stringent governance standards. Time will tell.
