Why is Luckin Coffee so popular? How Luckin pioneered a new business model in the coffee industry

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Luckin Coffee Surpasses Starbucks in Store Count Nationwide

"Luckin Coffee's number of stores has surpassed Starbucks, ranking first nationwide." No one expected that Luckin's comeback would be so rapid.

According to Luckin Coffee's third-quarter 2022 financial report, Luckin Coffee's total number of stores has reached 7,846, including 5,373 self-operated stores and 2,473 joint-operated stores. This number has already surpassed Starbucks, making it the coffee chain with the most stores in the country (Starbucks: I lost, I lost again).

In just one short year, from applying for bankruptcy protection to surpassing Starbucks in store count, Luckin has completed a spectacular comeback. As a coffee enthusiast, I naturally wanted to dig into the reasons. Little did I know that netizens had already uncovered the truth:

In April 2022, on the first anniversary of the launch of its Coconut Latte, Luckin announced that it had sold 100 million cups (how many times around the world would that be?). Just how good is the Coconut Latte—perhaps it's less guilt-inducing than milk tea, yet offers more freshness than a classic Italian espresso, "a touch of well-balanced dopamine," as netizens described it.

Besides the Coconut Latte, Luckin, known as a "hit-making machine," also launched a trendy new product: Cheese Latte. On the day of its launch, sales directly broke through 1.31 million cups! It became the new "first-day single product champion" following the Coconut Cloud Latte.

Marketing Strategy Behind Luckin's Success

In fact, Luckin's ability to make its products go viral and achieve soaring sales is not a random coincidence, but rather full of strategic planning.

As everyone knows, Luckin is a master among masters in social media marketing. On Xiaohongshu (Little Red Book), the marketing copy about Luckin is as comprehensive as an encyclopedia.

Luckin really knows what it's doing. During the Qixi Festival (Chinese Valentine's Day), it launched a "reverse marketing" campaign, collaborating with Pepe the Frog to introduce "Frog Luck Strawberry" drink.

On the paper bags were printed photos of Pepe the Frog and his girlfriend Cuihua making heart gestures, along with a small "peony" Easter egg specifically for single people, wishing all consumers, whether single or not, to find happiness and joy. This move directly captured the hearts of single young people.

The so-called reverse marketing is actually about leveraging psychological contrast to create a sense of incongruity or unexpected surprise in public perception.

Luckin's collaboration stood in opposition to the "couple's carnival" of the Qixi Festival, providing a "festival" for single people. To some extent, this exceeded consumer expectations, using memes to resonate with young people and earning another wave of goodwill.

User Operation and Product Innovation

Luckin's success is not only reflected in its well-planned marketing strategies but also attributed to its refined user operations and speed of new product launches.

In terms of user operations, Luckin has opened a brand-exclusive livestream room on the Douyin platform, using a companion-style livestreaming approach with high-profile hosts to complement Luckin's good-looking hit products, maximizing the livestreaming effect.

In the livestream room, various high-value coupons are essentially first-come, first-served items. The 9.9 yuan Thick Milk Latte coupons, in particular, were sold out immediately upon release. Netizens expressed that they couldn't grab them at all and hoped the promotion would continue (preferably with one for everyone).

When it comes to coupons, Luckin has never been stingy, which might be why many people are willing to purchase Luckin products.

The speed of Luckin's new product launches can be attributed to its young R&D team. Being youth-oriented has always been an important policy of Luckin's management. Luckin's employees are predominantly young, and they believe that only young people truly understand young people, so whether coffee tastes good or not should be judged by young people themselves.

Luckin's new product development always goes through numerous internal tastings. An employee mentioned, "The tasting sessions for a new product are divided into multiple stages. The final Matcha Frappé might have started as just a cup of matcha."

The Secret to Luckin's Remarkable Comeback

By leveraging marketing, focusing on user operations, and vigorously launching new products while using young people to attract young people, Luckin has successfully completed its remarkable comeback.

Looking at the domestic coffee industry and general coffee consumption habits, to develop well, it still depends on affordable chain coffee shops. Specialty coffee shops and Starbucks might have slightly less influence compared to Luckin.

If you think about it carefully, Luckin's target consumer group might be broader. Most people are ordinary consumers who don't have overly high requirements for coffee. Some just need a coffee-like flavor. Therefore, Luckin's extremely high cost-performance ratio has made significant contributions to the promotion of coffee consumption in China.

And now, the Luckin Coffee that everyone thought wouldn't last more than two years has successfully entered its sixth year. Luckin's comeback story has just begun, and its experience is a microcosm of a company breaking through from extreme difficulties. Although Luckin may face countless tough battles in the future coffee market, a market-respecting, mature, and steady company like this is likely to have good fortune.

Image source: Internet

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