Luckin may soon arrive in Hong Kong. Recently, a recruitment advertisement for Luckin Coffee circulated on the Xiaohongshu platform, which listed work addresses in multiple areas such as Yau Tsim Mong and Central in Hong Kong, China. The positions for this public recruitment include full-time store manager, full-time deputy store manager, and full-time or part-time barista, with monthly salaries ranging from HKD 16000 to HKD 30000 and hourly wages of HKD 65; In terms of welfare, full-time employees are entitled to meal and transportation subsidies, performance-based bonuses, employee drinks, referral bonuses, and mandatory provident fund benefits.
On September 27th, Interface News sought confirmation from Luckin Coffee regarding this matter and more details about opening a store in Hong Kong. The relevant staff stated that there has been no response yet.
Luckin Hong Kong recruitment information posted on social media platforms
Even if they go to Hong Kong to open a store, Luckin Coffee probably won't bring 9.9 yuan coffee here.
Strategically speaking, Luckin's approach to going global is different from that in mainland China, and it will not be too aggressive.
Taking Singapore as an example, the first destination for Luckin Coffee's overseas expansion, in March 2023, two Luckin stores were opened simultaneously at the shopping centers of Esplanade and Orchard Road. By August of this year, the number of Luckin stores in Singapore had increased to 38.
In terms of price, Luckin Coffee has not fully continued its strategy of grabbing the domestic market for 9.9 yuan overseas. For example, Luckin Coffee's popular product, the Coconut Latte, is priced at 8 Singapore dollars (approximately 41 yuan) and sold at a 20% discount; The price of a Starbucks latte in Singapore is 7.1 Singapore dollars (approximately 36.7 Chinese yuan). Luckin still maintains the practice of offering coupons for promotions, but overall its positioning in Singapore is already considered mid to high end - previously, many Singaporean media used the term "Chinese version of Starbucks" to describe Luckin.
According to sources close to Luckin Coffee cited in Latepost, Luckin Coffee will not follow the domestic price war and rapid expansion strategy when going global, nor will it seek to quickly eliminate local brands. Instead, it prefers cautious expansion.
From the perspective of the local market environment in Hong Kong, the low price strategy may not be sustainable. Prior to Luckin Coffee, Manner Coffee and Kudi Coffee had already opened stores in Hong Kong, and these brands had also helped Luckin Coffee test the waters.
In January 2023, the chain coffee brand Manner Coffee officially opened its first store at the World Trade Center in Causeway Bay. However, as the brand name has already been registered, Manner is called Maners Coffee in Hong Kong and currently has only one store in the Hong Kong area; In October 2023, Kudi Coffee opened its first store at the Infinite Plaza in Sheung Wan, Hong Kong, and subsequently opened three more stores in Wan Chai, Causeway Bay, Kwun Tong, and other places. Currently, there are a total of four stores in Hong Kong.
Kudi Coffee's Hong Kong store is almost the same as its mainland counterpart, with an area of around 30 square meters and a latte priced between HKD 20-25. At the beginning of its opening, Kudi Coffee also distributed coupons to attract new customers, but the frequency and intensity were not as high as in the mainland market. Due to the generally higher rent and labor costs in Hong Kong compared to mainland China, lower prices may be difficult to sustain.
When Manner Coffee first opened its store, it was priced at 20 Hong Kong dollars for American style coffee and 35 Hong Kong dollars for latte. However, after more than half a year of operation, the prices of these two products have quietly increased to 30 Hong Kong dollars and 40 Hong Kong dollars.
And this entry into the Hong Kong market may be a step in Luckin's large-scale overseas strategy.
Luckin Coffee had planned to launch a large-scale overseas expansion plan from the fourth quarter of 2024 to the first quarter of 2025, with a focus on the Southeast Asian and American markets. Singapore was chosen by Luckin Coffee as its first destination for going global, mainly due to its local coffee culture and huge market potential. According to statistics, Singapore consumes approximately 2.6 kilograms of coffee per capita annually, making it a country with a relatively mature coffee culture. Starting from Singapore, Luckin Coffee can also radiate to various Southeast Asian countries.
In the next 3-5 years, Luckin Coffee plans to establish its Southeast Asian headquarters in Singapore and gradually expand into neighboring countries and regional markets. The strategy adopted is not a price war, as there are many small and beautiful local coffee brands in various countries' markets. Luckin Coffee's first step in going global is to establish consumer awareness of the brand.
In fact, in the fiercely competitive coffee market and the constantly emerging environment of various collaborations, Luckin Coffee's pressure is also increasing.
Luckin Coffee experienced significant performance fluctuations in the first quarter of this year, with an operating loss of 65.1 million yuan and a net loss of 83.17 million yuan in the first quarter of 2024. This allowed Luckin Coffee to return to losses after achieving profitability for two consecutive years in 2022 and 2023.
Although Luckin Coffee finally emerged from losses in the second quarter of this year, its operating profit and operating profit margin have both declined to varying degrees under US accounting standards (GAAP). Meanwhile, in the two quarters of this year, the growth rate of same store sales in Luckin's self operated stores slowed down, reaching -20.3% and -20.9% respectively.
The average monthly number of trading customers showed a month on month decline in the first quarter of this year. Although Luckin returned to growth in the second quarter, it had to cope with the pressure of rapid expansion and the 9.9 price war with competitors.
Luckin clearly needs to find future growth opportunities, and the pressure on its performance has accelerated its pace of large-scale overseas expansion.