Luckin Coffee (Nasdaq:LK), China’s largest coffee chain, joins a list of world-famous tech giants including Snap, Tesla, and Apple on the 2020 “World’s 50 Most Innovative Companies” list recently released by Fast Company. Notably, Luckin ranks 17th on the list, even higher than Apple, which was listed 39th. But why?
Fast Company said Luckin earned such a high spot for pioneering and “caffeinating the data driven chain restaurant” model. In other words, the chain took only two years to overtake Starbucks to become China’s largest coffee chain.
On its list of most innovative Chinese companies, Fast Company ranked Luckin Coffee No.1, followed by on-demand services giant MEITUAN-DIANPING and China’s largest e-commerce firm Alibaba. Fast Company wrote that Luckin’s “distinctive, digital model allows it to learn where its customers are and proliferate its small, pickup-only coffee counters as close to them as possible.” It added: “Data informs virtually every decision Luckin makes, from store placement to pricing to supply forecasting.”
Reinout Schakel, Luckin’s chief strategy officer and CFO, commented on Fast Company’s ranking and shared what drives the coffee chain’s innovations, saying: “We started as an online model, so 100% of the transactions give us data.” From the beginning, Luckin’s mission was to provide its customers with “high quality, high affordability and high convenience.” Luckin has invented the “Pickup” store model, smaller branches that allow fast deliveries where customers wait an average of just 16 minutes, setting the brand apart from its competitors.
Aware that young Chinese people are drinking more and more coffee and ordering online, the coffee chain has quickly expanded. Launched in 2018, Luckin had opened 4,507 stores around China by the end of 2019, surpassing Starbucks’ 4,100 domestic stores. Furthermore, the company has achieved its “500-meter coverage” goal in downtown Beijing and Shanghai, meaning customers in those areas can walk to the nearest Luckin store within just five minutes.
Luckin shares are currently trading at USD37 on the Nasdaq. In February, its stock price rose by 21.8%. On top of its excellent stock market performance, the coffee chain is making profits. In its 2019 Q3 financial report, it reported a revenue increase from USD34.6 million (RMB 240.8 million) to USD221 million, about a sevenfold jump YoY. According to QuestMobile data, the number of monthly Luckin customers increased by 51% during 2019 Q3 and by a whopping 460% YoY. The data shows that Luckin had between 9 and 10 million customers during Q3.
Other notable innovative Chinese companies on the regional list include Kuoshou, a popular short-video streaming app, as well as PINDUODUO, China’s fastest growing group buying app.
The “World’s 50 Most Innovative Companies” list seeks to identify businesses that exert profound influence or offer strong contributions to various industries. Each year, Fast Company’s ranking considers businesses across multiple sectors in various regions of the world.
(Top photo made by ATA Staff)