Smoke Rising? Lu Zhengyao Brings Cotti Coffee to Shanghai!

Lu Zhengyao Returns to Coffee with a New Brand, Cotti Coffee

When it comes to the chain coffee brand Luckin Coffee, Lu Zhengyao is an unavoidable figure. The two names, once deeply intertwined and then parted, have reappeared in the same arena after two years.

Cotti Coffee, the new brand created by Luckin Coffee's founder and former core team, recently opened its first Shanghai store at Tianhui HQ, formerly known as Sky SOHO. Nearly every chain coffee brand in Shanghai has opened in this building: Starbucks, Luckin, and Manner all run more than one store here, and Three Cubic Coffee previously chose it for its own first Shanghai location.

According to public reports, Cotti Coffee registered and established operations in Beijing, Changsha, Zhengzhou, and Hainan last month. A few days earlier, a Cotti Coffee insider told media that "Cotti has internally moved its 10,000-store target forward to before June 30, 2023, and is even offering salaries double Luckin's to poach people aggressively from the old team." As pandemic controls ease, competition in the coffee industry looks set to accelerate.

Asked why Cotti chose this location, a staff member replied: "Offices are the single largest use case for coffee. Tianhui HQ has a dense office population and a concentration of coffee brands, which is good for brand exposure." In a market like this, every major chain wants to plant its flag first.

At the store, customers can buy not only coffee but also unusual limited drinks, such as the yerba mate drinks Messi favors, "Lemon Yerba Mate" and "Yerba Mate Cold Brew Coffee," alongside Argentine-series offerings like "Pampas Blue Raw Cheese Dirty" that other stores have carried.

Notably, Luckin hits such as Raw Coconut Latte are also sold at Cotti Coffee, and every product currently sits between 9.9 yuan and 18.9 yuan. Cotti's positioning was never just "another" coffee shop: the brand's business scope covers coffee, baking, light meals, and bars.

Rapid Expansion and Ambitious Goals

After opening its first Fuzhou store on October 22 this year, Cotti Coffee had quietly entered more than 40 cities by the count on its own ordering mini-program. Between November 15 and 25 alone, it opened 12 stores at a pace of "ten cities in ten days," rolling out a nationwide footprint.

After that first store in October, Cotti boldly proposed opening 10,000 stores in three years. While the "three-year, ten-thousand-store" plan was still making headlines, reports emerged that "Cotti has internally moved its 10,000-store target forward to before June 30 next year."

Back in his old trade, Lu Zhengyao is running Cotti Coffee by burning money. His ambition shows not only in a store-opening speed that outstrips Luckin's early days. In less than two months, Cotti has completed its brand naming, supply-chain operations, corporate structure, and core staffing, drawing on many veterans who once fought alongside him while continuing to offer high salaries to poach talent and build the team.

Business Model and Industry Impact

One difference between Lu Zhengyao's Cotti Coffee and Luckin Coffee is that Cotti did not present an open franchise model to investors, calling it instead a "fully managed joint operation model" and its partners "joint operators." According to reporting by Times Finance, however, some analysts argue that its joint operation model is no different from franchising; many chains avoid the word "franchise" mainly to sidestep legal and regulatory risk.

Cotti has existed for less than two months. Lu Zhengyao's rapid comeback after Luckin's financial fraud case shows how strong the pull of the coffee industry remains for him. Facing a layout advanced on this scale, one question lingers this winter: who feels the chill more, Starbucks or Luckin?

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