Big Chinese Coffee chain Luckin recently floated on the stock market is already going back to the market to raise more cash. Luckin also announced a new strategy of un-staffed cafes using vending machines and the company’s e-commerce app.
The company said that it had 4,507 stores at the end of 2019, pushing it ahead of rival Starbucks’s 3,600 outlets in China and making it the biggest coffee chain in China. In 2019 they served 40 million customers.
The company was only founded in 2017 and floated on an IPO in May 2019 which raised it $651m. It subsequently raised another $550m which was spent on deep discounts to lure customers away from the Starbucks brand.
The business cash-burn (the level of monthly cash being lost, typically while a business is investing in growth) has been considerable and the strategy to move towards vending machines is seen as a way to control costs going forward.
Losses narrowed in Q3 2019 which investors like – pushing up their stock price by 68% at one point.
” By working closely with global suppliers and significantly reducing channel costs, Luckin Pop MINI terminals will enable the firm’s customers to enjoy the convenience of vending machines and low e-commerce prices at the same time”, Qian Zhiya, the company’s chief executive, said in a statement.