A Comeback?! Lu Zhengyao Returns to the Coffee Race!

Lu Zhengyao's New Venture: Cotti Coffee

Recent reports suggest that Luckin Coffee founder Lu Zhengyao is preparing a new venture: a brand-new coffee brand called Cotti Coffee, widely described as his third major business endeavor.

Strictly speaking, though, Cotti Coffee isn't actually his third startup. Over the years Lu Zhengyao has been involved in many fields through unlisted ventures. CAR Inc. was his first listed project, and Luckin Coffee his second.

After being forced out of Luckin Coffee in 2020, Lu Zhengyao moved into the unfamiliar food-and-beverage industry, registering a company called Shejian Technology. Its development appears less than ideal, however - the company has yet to announce any listing plans.

So with Cotti Coffee being billed as his "third venture," could an IPO be in the works? Only time will tell.

Company Background and Key Players

According to Tianyancha data, Cotti Coffee (Tianjin) Co., Ltd. was established in May 2022, with Wang Baiyin as its legal representative and registered capital of $100 million. Its business scope covers catering services, food sales, and online food retail. The company is wholly owned by MAIN MARVEL LIMITED, although the brand's trademark was registered by Shejian Technology (Beijing) Co., Ltd.

The two men go back a long way, to Lu Zhengyao's time leading Borgward and the Shenzhou group of companies - close business partners, though not related. Back in 2020, when the American short-selling firm Muddy Waters Research published its report exposing Luckin's financial fraud, it directly alleged that Lu Zhengyao had funneled benefits to Wang Baiyin.

Wang Baiyin may be the legal representative on paper, but judging from the trademark holder and the makeup of the project's management team, Lu Zhengyao is almost certainly the one orchestrating Cotti Coffee behind the scenes.

Reportedly, the Cotti Coffee management team is drawn from major new-economy companies such as Luckin Coffee, CAR Inc., and Shenzhou Chauffeur - most of them founded and led by Lu Zhengyao himself.

Strategic Vision and Brand Concept

Compared with founding Luckin, the Cotti Coffee venture can be seen as the distillation of Lu Zhengyao's years in the food-and-beverage business: the playbook he used at Luckin, plus the market and consumer needs he has observed over the past two years, plus the future consumption trends of coffee drinkers - all rolled into a brand-new, coffee-centered lifestyle concept.

The name carries meaning too. "Cotti" comes from the Italian biscuit "Biscotti," which simply means "biscuits." These hard, crunchy cookies are a coffee-shop staple: a cup of coffee and a biscotti can fill an entire afternoon. The name also hints that coffee shops shouldn't just sell coffee, but serve as places for people to relax and socialize.

Business Model and Strategy

According to leaked pages from Cotti Coffee's brand manual, the chain will run two store formats: standard stores of 80-200 square meters and mini stores of less than 50 square meters.

The menu makes the positioning clear: all-day dining. Coffee and biscotti in the morning, meals at noon, snacks in the afternoon, and alcoholic drinks in the evening.

Taken together, the store structure and menu suggest Cotti Coffee is aiming to "capture" both the Luckin and Starbucks markets - combining Luckin's speed and affordability with Starbucks' sit-down comfort while addressing each brand's weaknesses, and layering on light meals and other beverages.

Market Position and Competition

In today's coffee landscape, competitors generally fall into a handful of camps: independent specialty coffee shops, small-format fast coffee, large space-oriented stores, light-meal-and-snack concepts, e-commerce-focused sellers, and cross-brand collaborations. New entrants usually pick one of these tracks.

Competition is fierce and the tracks look crowded, but judging from the team and its determined business approach, Lu Zhengyao seems to be trying to build a track of his own by fusing the strengths of the existing ones.

Future Prospects

With Lu Zhengyao back in the game, can Cotti Coffee carve out a place for itself? It's a prospect worth watching. For consumers, after all, comprehensive service plus real value for money is what makes a brand genuinely appealing.

Image source: Internet

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