Bloomberg Opinion: Why Starbucks Struggles With Luckin Model in China

[@jklee5419]

Key factor: price. One cup of Starbucks is more expensive than 2 Luckin. And the quality is almost the same

[@TheBooban]

But coffee is just the secondary reason to go to Starbucks. I go there to sit on the comfortable chair and to use the clean toilet.

[@vincesiy1403]

@@TheBooban Yes we basically pay for the chairs, aircon and toilet in starbucks. I also use it before to relax and even take a nap in. But like the guest speaker here mentioned, in China most people are in a hurry and just wants to get a quick cup aside from preferring milk teas. So for them it will not be worth it to pay triple for a coffee on the go.

[@jackchan6624]

@@vincesiy1403 disagree , China have too many coffee brands and those brands provide comfort seats as well.. what u say is totally irrelevant … China overalls is not at the speed of Hong Kong , Singapore or japan in terms of of hurry ness of citizens

[@thejeffinvade]

Sadly Chinese commercial competition is about race to the bottom, who is the cheapest. That's not very healthy from profits/capital point of view.

[@TheBooban]

@@vincesiy1403 sure, but this makes no sense. It’s like saying most people want to eat fried rice but Starbucks doesn’t have any. It’s a different market! Is it still crowded in Starbucks? Then there is no problem.

[@cwaddle]

It’s not just in China, but Starbucks business model is really easy to copy so you can offer for exactly the same product and experience at a much lower costs

[@lilnerv11]

@@cwaddle mhm just of curiosity, who might you define as not just China? Because I believe we're fooling ourselves if we think Americans don't eat this ish up on a daily basis. And the two markets that really only mean anything are the US and China. So I'm curious who does it so much better for cheaper in the two largest markets in the world

[@AlejandroPikoulasPlata]

​@@lilnerv11 they already explained it, Chinese prefer Americano or espresso without anything inside. Starbucks offers things that the Chinese aren't interested in.

[@lilnerv11]

@@AlejandroPikoulasPlata right correct, but I asked what other than China, and this idea was purely about China. So I'm still curious, what is defined as not just China

[@terencekwong3033]

@@lilnerv11 They have boutique coffee shops all over Asia that serve coffee comparable or better than Starbucks. They basically gave up in Vietnam cuz they couldn't compete with $1 Vietnamese coffee, Thailand and Taiwan have a big coffee culture and Hong Kong have their own style too. I'm travelling in Malaysia right now and had to go in to use their wifi, it cost $9 for a frap. That's super unnecessary in Asia.

[@TheBooban]

@@terencekwong3033 The question is, why do they have to charge so much? They are operating locally with the same conditions and sourcing beans from presumably the same sources too. So why do they charge so much? I bet you because the CEOs are dumb and think they can charge US prices. They can just change this.

[@youlihanshu]

so many local brands, manner, m3, coddie, not alone luckin, they are good at making good coffee too!

[@Camelotfree]

The price is too high compared to the quality and experince

[@joeqiu88]

ordering syrups in coffee doesn’t make one’s taste sophisticated.

[@hermesliteratus882]

It's basically sugary water.

[@cshan5424]

If Starbucks only wants keep their premium prices unchange and maintains the same markets shares, it would be hard in China. Surviver is to change to the market react.

[@yangz1803]

I used to lived in Canada but now in china. While in Canada, Tim Hortons and MacDonald were my prior choices to Starbucks. They were cheaper and tasted better. You can laugh at me but that was my own experience and preference. Now in China, things are bit different. I can no longer find a similar taste I can have from Canada. In China, there is such a thing called Americano （美式）. Americano to me is some worst taste coffee can be and I have no idea why people would drink something like that expect for taking it as a wake up drug for work. And if it’s for waking up, there will be no different if I drink Starbucks or something else. Luckin is just one of the competitive brands to Starbucks. There are too many franchise brands that at the end, you don’t care which one you pick to drink. And they are all cheaper than Starbucks.

[@jasonchang8601]

Starbucks coffee sucks ass.

[@hermesliteratus882]

It's basically sugary water.

[@hybridstryker233]

Bro Starbucks is expensive bro and is a big scam

[@hermesliteratus882]

Local Chinese consumers are getting tired of being ripped off by Starbucks with their iconic sugary water.

[@tastyaffordabledelicious7391]

Have tried both, Luckin is far superior in taste, their price tops it. Try them both yourselves.

[@kaijunjiang9763]

You’re all missing the point. There are abundant free public toilets in China so people don’t need Starbucks for bio break.

[@i6power30]

Starbucks brand perception is a nice public toilet.. Imagine that.

[@WalkOverHotCoal]

If you are to have too many outlets selling basically a dark fluid made of charred coffee beans, you cannot continue to charge double the price unless you are really exclusive such as those frivolous French perfumes and silly designer outfits.

[@jt6231]

“Frivolous French perfumes…”😂😂😂. I do splurge on those nice thing but not the “silly designer outfit”

[@WalkOverHotCoal]

@@jt6231 I tried the "frivolous French perfume", I have dogs growled at me. I gave the silly designer outfits as well, they fell off in strong wind. So I settled for a simple designer T-shirt from Walmart.

[@jt6231]

@@WalkOverHotCoal not Walmart….better go with Target!

[@MithunOnTheNet]

It's what Chinese companies do in many sectors. Copy & sell cheap to capture marketshare. That's it.

[@oscc9035]

卖个咖啡 还说复制 你是个脑残？

[@quirrow]

Unfortunately Starbucks no longer offers that individuality. One reason why Luckin grew was due to their innovative and seasonal drinks that captures local demands. Luckin drinks like their Moutai Latte and Coconut Latte offers more individuality than Starbucks.

[@vrealzhou]

There are so many unique coffee shops serve much better coffee with a little bit higher prices for people willing to reward themselves in big cities or tourist destinations. People in office just drink it for refreshing doesn't care about the taste too much but want the cheaper price. Starbucks was provided a place can have informal business talks with style originally, the customers there don't really care about the coffee taste but the environment. The guest will feel respected and also relaxed. Now it's not the only option anymore and also less opportunities as well.

[@luogl]

They didn't dig their supply chains while not improving coffee quality. Make itself extremely vulnerable, also sugar high investment in China during COVID, great job guys.

[@shanghaidiscovery2664]

What the hell is that commentator on about Chinese consumers not being sophisticated? There are thousands of craft cafes in Shanghai (in fat it is the city with the most cafes in the world) and everywhere in China. Yes Luckin is doing well but they are not the only game in town... and Starbucks is expensive, pretty substandard quality wise and it doesn't really follow local trends. Oh did I mention they are far more expensive than everyone else? and also given they have been around for 30 years they just aren't cool anymore. youths dont want hangout in same places as thier parents

[@jt6231]

True…lots of not sophisticated American consumers too. Starbucks coffee is average but they are more popular than others. We prefer Peets coffee.

[@terencekwong3033]

Used up all my data while travelling in Malaysia and had to buy a Starbucks for their wifi, it came to $9 CAD for a frap. I don't know how locals afford this, would have assumed they'd be replaced a while back.

[@jackchan6624]

How frappucino is rm 27.00 per cup in malaysia . Either u lied or u scammed . Is around rm 17-20 no way rm 27

[@allblacks405]

Even mom-and-pa coffee-shops in Singapore offer much better-tasting coffee than Starbuck's. In the past, it was the snob appeal that attracted pretender customers to savor Starbucks coffee. Now these same people are feeling more and more silly by the day.

[@NorCalMoDo]

I live in Shanghai. It is NOT the Business Model, it is the TASTE. Starbucks coffee is too simple (taste) and too expensive.

[@Dondondon-bobogaga]

Chinese consumer don’t have sophisticated concepts about what is the brand experience. They simply need product, which is just coffee to drink.

[@kenyup7936]

well because our country is facing deflation, in a slow downed economy ppl want cheap stuff, and it's really highly competitive here for starsbucks and lucking coffee franchise. and a lots of cheap coffee franchise you might never heard . sorry starsbucks investors, my prediction is starsbucks sooner or later need to withdraw China,btw Pizzahut in China is struggling too.

[@damingchen7497]

I don’t think uniquen problem in China, even in the west, Starbucks is way too expensive and quality of the taste varies depending on the day… and the person who makes your drink…; plus Starbucks in USA is not a place to enjoy a coffee like it used to, it’s more to-go shop

[@jjz636]

Lucking is only 2 dollars or less while Starbucks is like 6 or 5 dollars....and they taste not that much different, so why the pricing one

[@leonc4653]

Something shuliren is getting wrong; milk tea is caffeinated as much as coffee. The perspection on milk tea has changed so much in the last 5 years in china.

[@ambiencenow5476]

Starbucks drinks in China are fine, but coffee tastes terrible compared to Luckin or Cotti.

[@dunkinpossum]

Her little laugh at the end was her being truthful about the matter 😂

[@happymelon7129]

😂

[@happymelon7129]

Even HK 大家乐 coffee taste better than Starbucks

[@lyttlebee]

China's current price system (CPI) is basically "shrinking" compared to GPD growth. You may say China is in some sort of deflation situation, but the collective West is for sure on a crazy inflation mode. So western companies like Starbucks who basically adopt a univeral price globally will find it hard to compete with Chinese peer local brands for the foreseeable future.

[@lwty]

It is not just Luckin or milk tea. The coffee related market in China is booming. There are many brands, local or foreign. And many of them provide better coffee than Starbucks. Starbucks failed to provide competitive products.

[@kenbehrens5778]

In the fourth quarter of fiscal 2024, Starbucks reported $783.7 million in revenue from China, a 6 percent increase from the previous quarter despite a 7 percent year-on-year decline. The drop was attributed to intensified competition and a challenging macroeconomic environment affecting consumer spending. China Daily 20th Nov. For the full fiscal year, Starbucks China added 790 new stores, reflecting a 12 percent year-on-year growth in its store number. They open a new store in China every 11 hours. Over 2 new outlets a day. Maybe their divestment of selling a stake is a strategic growth strategy.

[@zill8021]

Does anybody understand the individualism and appreciation comment by the Chinese commentator? It is crap. For Chinese, it is all about the price.

[@RealisticMgmt]

If and when Luckin expands into the West, it will need to change its approach. As said in the video, Starbucks is valued not only for its drinks but also for its coffeehouse environment. People like to sit down, talk, work, and drink for hours on end. Luckin will need to cater to that side of the market.

[@jt6231]

Not really….i see more and more people do mobile app ordering to go from Starbucks.

[@danielb7253]

In china starbucks has a very limited snack menu. Luckin is nationalistic and less money for a cup. She is right chinese consumers are not very sophisticated coffee drinkers.

[@Chinapaul]

Strangely, Luckin doesn't sell Espresso in China.

[@vrealzhou]

Very few Chinese stomachs can handle Espresso TBH. The prefer strong tea in that cases.

[@YSKWatch]

I only ever buy espresso in Starbucks once because I was super sleepy. I guess rarely people need just the espresso. or maybe different country have different preference.

[@raizin4307]

The Chinese realized that it would be cheaper if they imported beans.

[@seymorefact4333]

❤ Luckin is SOOOO MUCH BETTER!. Europeans don't like Starbucks either.

[@rudyalfonsus686]

when you sell your products too high, you create opportunities for competitors. it is nature

[@AfrikanTribesman]

😂The Chinese have been saying that American food sucks ever since they started posting on Western social media. But Bloomberg's script is "The Chinese are not sophisticated enough to appreciate Starbucks"? 😂😂

[@DanBurgaud]

Starbutts complaining "Luckin Overcapacity"

[@xiaoyu2270]

in china. milk tea like coffee ,coffee like milk tea ! that's why

[@ricotheman8139]

It’s just coffee, not some cutting edge high tech stuff. What do you expect?😂😂

[@Anne-vc7sf]

Starbucks Coffee is Not Good at all! The guest does not have any insight into the question. Wrong guest.

[@dingyiyu9228]

Starbuck is a costy chain shop pretend to be a craft cafe. Everyone in China know it.

[@willylao5430]

Istabaks... Well, you can't get more Chinese than that. 😂🤣😂🤣

[@RamonDesantis]

Because the R and L are not traditional letters found in Chinese and Japanese languages. Are you ignorant?

[@jabsdrahm.3232]

starbucks cost tooo much more double Luckin

[@wiljan6198]

You don't need an expert. Price!

[@coreana.aesthetics]

overpriced chained coffee shop may no longer work.

[@windsong3wong828]

Starbucks is not that great. I have to order triple shot of coffeee to have any taste. It is way too expensive for a cup of coffee. It only serve the purpose of having a place to sit down and rest …..hahahaha….. Especially when you are traveling.

[@sepilokfui]

just lousy expensive coffee like dirty water, nothing more, good that they are not doing well...

[@domfel2123]

Starbuck sells garbage

[@anthonyshi1901]

That Asian commenter is talking bullshit.

[@dunkinpossum]

Yup, her little laugh at the end was her being truthful about the matter 😂

[@DLL-y4p]

Luckin coffee tastes like shit

[@jsyo9639]

Coffee is rubbish

in which country is starbucks considered fancy? do you guys just hire any person with an asian face willing to say whatever bullshit you want them to?

[@manplay1981]

expensive,normal taste and too many better competitors.