Grace Jia in New York and Fang Yuan in Shanghai
The world is flat. Millions of Chinese tea drinkers have converted to coffee in record time. China’s fastest-growing coffee chain, Luckin Coffee (Nasdaq:LK), which began operating in 2018, reported in its latest financial report that it had opened 3,680 stores across China, and its quarterly revenue has increased sixfold YoY. In comparison, it took Starbucks 20 years to establish its 4,000 locations in China.
In May 2018 Luckin unveiled its “Any Moment” strategy , that harnesses the power of the Internet and cutting edge “new retail” concepts to facilitate customer service. Luckin’s growth is fed by its pick-up store-focused model which satisfies the needs of young Chinese hoping to grab a quick coffee on the go. It was the first coffee chain to pioneer this business model. This September, Starbucks announced that it would open its first pick-up store based on the company’s success in China allowing customers to order on their phones and grab their drinks in “express” shops without waiting. Finally, during the first week of November, Starbucks’ first pick-up store opened in Manhattan. AllTechAsia sent our teammates to pick up lattes at Starbucks in New York and at Luckin coffee in Shanghai.
Penn Plaza, New York – Grace Jia
I placed my pick-up order after I got off the subway at Penn Station. I ordered a grande original latte (USD 5.06) from the Starbucks mobile app. After I placed the order, the app told me that the baristas probably needed 4-7 minutes to make my drink.
Starbucks pickup store in Penn Plaza
It took me about five minutes to walk from the subway to Penn Plaza and another five minutes to find the store. When I entered, I found my name was on the order screen. I went to the pickup location and told the barista my name, and she handed me my drink. The whole process was so smooth and convenient. The latte was the same as in normal Starbucks outlets, and the store has a condiment counter equipped with sugar and milk. The store is newly decorated and is a little larger than half the size of an average Starbucks, but there is no real seating area. Instead, customers can pick up their orders and leave. However, the vibe is cozy. This is really a “pick-up only” store.
Starbucks pickup store (Photo by Grace Jia)
The baristas told me that customers can also walk-in without ordering ahead, but that it’s not encouraged. I saw baristas help other customs download and learn to use the app. Basically, the pick-up concept is about encouraging customers to order on the app and pay ahead so that operations are streamlined and customers can easily pick up their drinks. However, the pickup store will still sell the company’s full menu of food and drink options, even though they won’t be displayed in the store.
What’s more, the pick-up-only stores could also become hubs for deliveries. The coffee chain is expanding its delivery service through a partnership with Uber Eats.
New City Center, Shanghai-Fang Yuan
I opened my Luckin Coffee app and picked the nearest pick-up outlet. While waiting for the elevator, I quickly picked a CNY 24 regular latte. I decided to go hot because it was chilly outside. I chose how much sugar I wanted and whether to add milk, though milk alternatives such as soy and oat were not available. The app design is straightforward and easy to use, and I had already linked my WeChat wallet with the app. It took me less than 1 minute to place my order, even faster than the waiting time for the elevator. It was 9:36am, and the app told me my drink would be ready at 9:39am.
On my way over the outlet, I received a notification from Luckin’s WeChat service account at 9:38am telling me my latte was ready. That was definitely very fast! No waiting time at all, literally.
The outlet I chose is on the ground floor of an office building called New City Center. There is no Luckin sign outside of the building. Luckily, I have been there multiple times, but if it had been my first visit, I would probably have needed some instructions from the app. However, the outlet is right on the right side of the entrance, and no one could miss it once inside the building. There is nothing fancy about the store’s setup.
Luckin pickup store at New City Center (Photo by Fang Yuan)
My latte was on the countertop waiting for me. There was no line at all. I checked the code on the cup and then scanned my pick-up bar code. As I reached for my drink, someone was approaching the counter. I turned around and saw a delivery guy. He greeted the barista and grabbed two packed paper bags. “Delivery?” I asked. The guy nodded and quickly walked away. The barista smiled and said, “He is on the clock.”
Luckin Coffee pickup store at New City Center (Photo by Fang Yuan)
I sipped my coffee and walked back to my apartment. The tasty drink felt warm in my hand on the early winter day. Luckin coffee gives me coupons each time I make a purchase, which makes me more likely to choose it over other brands. I think Luckin’s pick up models are perfect for the fast-paced environment in Shanghai and many big cities in China. No one wants to “waste” time on errands or speaking with strangers. Luckin Coffee’s business model fits the needs of Chinese customers very well.
Luckin’s rush delivery service has an average wait time of just 16 minutes, setting the brand apart from competitors. By the end of 2018, the company claimed to have achieved its “500-meter coverage” layout in downtown Beijing and Shanghai, meaning customers in the area can arrive at the nearest Luckin store within just five minutes.
At a glance comparison
In summary, on a 1 to 5 scale where 5 is the best, we graded our respective lattes as follows. We did not grade taste since it is very subjective.
|Starbucks at Penn Plaza, NYC||Luckin Coffee at |
New City Center, SH
|3 (there are 3 regular Starbucks stores around the corner. The similar names really confused the customers whether it is the pickup only store)||4, close to subway station, office buildings and residential communities|
Ease of Use
|Overall food and drink options||5||5|
|Price||4, the price of lattes in NYC is a bit expensive||5|
Grace Jia is ATA’s guest writer in New York. (Top photo by Grace and Fang)