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Business
Luckin Coffee pledges to continue with “cash-burn” to earn market share
CKN
2018/12/24 09:27:34
1,951
China's News, China's Financial News, Luckin Coffee

Dec 24, 2018 (China Knowledge) - Chinese coffee start-up Luckin Coffee has pledged to continue with its cash-burning ways and subsidize customers to gain market share despite having burned through more than USD 123 million during the first three-quarters of this year.

Luckin Coffee admits that its full year loss is likely to be much larger but also stated that the losses were within its expectations and are part of its expansion strategy to capture as large of a market share as possible in the shortest time.

It seems that this strategy does have its merits given that Luckin has sold more than 85 million cups of coffee and acquired a customer base of 12 million within 1 year of its launch. The coffee start-up, currently, has 1,700 stores across 21 cities in China and claims to have an extensive coverage of downtown Beijing and Shanghai.

During this period, the company’s valuation has surged to USD 2.2 billion during its latest USD 200 million series-B funding round led by investors, Singapore wealth fund GIC, China International Capital Corp and Centrium Capital.

The company’s strategy has also been used to great effect by many startups such as Meituan-Dianping, Ele.me and Didi Chuxing in China.

The company will also be looking to partner up with Meituan-Dianping for delivery services, mirroring a partnership by rivals Starbucks and Ele.me for delivery services.

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