logo
Starbucks under fresh pressure as China's biggest coffee chain opens first US locations with $2 drinks

Starbucks under fresh pressure as China's biggest coffee chain opens first US locations with $2 drinks

Daily Mail​15 hours ago
A Starbucks competitor has opened its first location in the US.
Luckin Coffee, known for its no-frills menu and ultra-low prices, has already given Starbucks a run for its money in its home country of China.
It has now opened its first two American shops this week — both near the campus of New York University. The Big Apple's newest coffee shop opened on Monday.
The chain celebrated Monday's opening with free tote bags with for the first 100 guests and $.99 drinks for early customers.
In China, the no-frills coffee chain has consistently pulled in young shoppers, with aggressive TikTok campaigns and low prices.
Luckin's strategy is clear: keep it simple and cheap. Lattes, matchas, and cold brews go for as little as $2 to $3 — significantly less than Starbucks.
It also has a small assortment of pastries. Diners can order some fruit-forward refresher drinks, too.
In China, the brand has leaned into aggressive TikTok marketing and a grab-and-go model that caters to students and professionals on the run.
The chain has a history of undercutting Starbuck's value. A standard cup of Starbucks coffee will typically cost New Yorkers around $6 to $7.
In China, Starbucks drinks are typically 30 percent more expensive than Luckin's.
Luckin has used its simple, easily-scaled restaurants with bargain basement prices to become one of China's biggest restaurant chains.
By 2019, the brand had overtaken Starbucks as the largest coffee chain in China. It currently operates 22,000 stores in the country, triple the size of the Seattle-based brewer's Chinese locations.
Meanwhile, Starbucks' forray into the Chinese market is appearing to lose steam. The company is fighting off rumors that it was exploring a sale of all its Chinese store locations.
The New York openings also come as Starbucks attempts to mount a sales ressurgence back in the US.
Last year, Starbucks posted declining growth, prompting a wave of changes in the company's restaurants and in the C-suite.
The coffee chain slashed products from its menus, changed its perks programs, and pilfered Chipotle's CEO to become the coffee chain's top boss.
The chain has reintroduced ceramic mugs, slashed some of its complicated menu items, and changed its rewards program to become more competitive
'People love Starbucks, but I've heard from some customers that we've drifted from our core,' Brian Niccol, the new CEO, said during a 2024 earnings call.
'As a result, some are visiting less often, and I think today's results tell that same story.'
In April, the company reported a two percent increase in net sales. But Niccol said the company is still facing headwinds from higher costs and decreasing consumer strength.
Meanwhile, Starbucks might not be the only coffee chain in the Chinese coffee-makers sights.
Luckin's new stores could also lure coffee drinkers away from Dunkin ($2.15 to $3.50 average coffee price) and Tim Hortons ($3 average price).
If it expands westward, the Chinese coffee chain could set its sights on Dutch Bros ($5.25 average price).
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

US, Indo-Pacific partners agree to strengthen maritime, critical minerals cooperation
US, Indo-Pacific partners agree to strengthen maritime, critical minerals cooperation

The Independent

time31 minutes ago

  • The Independent

US, Indo-Pacific partners agree to strengthen maritime, critical minerals cooperation

The United States. Australia, India and Japan have agreed to expand their cooperation on maritime security in the Indo-Pacific and further collaborate on supplies of critical minerals and rare earths that are key components of high-tech production. The foreign ministers of the four countries, known as the 'Quad,' met in Washington on Tuesday as the Trump administration seeks to expand U.S. influence in the Indo-Pacific to compete with a rising China amid tensions with partners over trade and defense issues. In a joint meeting with his three colleagues, Secretary of State Marco Rubio said the Quad must be a 'vehicle for action' that goes beyond statements of intent and stressed that commerce and trade will be critical to ensuring the group's relevance in the future. To that end, the four announced in a statement the creation of a 'Quad Critical Minerals Initiative' that aims 'to strengthen economic security and collective resilience by collaborating on securing and diversifying critical mineral supply chains.' The statement did not provide details of the initiative. 'We are deeply concerned about the abrupt constriction and future reliability of key supply chains, specifically for critical minerals,' they said. 'This includes the use of non-market policies and practices for critical minerals, certain derivative products, and mineral processing technology.' The statement did not mention China by name, but Chinese domination of the critical minerals supply chain has long been a concern of the U.S. and others. The ministers expressed specific concern about rising tensions in the East and South China Seas, where Beijing has become increasingly assertive of maritime and territorial claims that are rejected by its smaller neighbors. 'We reiterate our strong opposition to any unilateral actions that seek to change the status quo by force or coercion,' they said. 'We express our serious concerns regarding dangerous and provocative actions, including interference with offshore resource development, the repeated obstruction of the freedoms of navigation and overflight, and the dangerous maneuvers by military aircraft and coast guard and maritime militia vessels, especially the unsafe use of water cannons and ramming or blocking actions in the South China Sea.' The ministers also condemned North Korea for continuing to launch ballistic missiles, expand its nuclear weapons program and engage in malicious cyberactivity. In a veiled reference to North Korean support for Russia in its war against Ukraine, they expressed 'deep concern about countries that are deepening military cooperation with North Korea, which directly undermines the global nonproliferation regime.'

Goldman Sachs names Raghav Maliah global chairman of investment banking, memo shows
Goldman Sachs names Raghav Maliah global chairman of investment banking, memo shows

Reuters

time37 minutes ago

  • Reuters

Goldman Sachs names Raghav Maliah global chairman of investment banking, memo shows

HONG KONG, July 2 (Reuters) - Goldman Sachs (GS.N), opens new tab on Wednesday named Raghav Maliah chairman of investment banking, a global position in addition to the banker's regional investment banking roles, according to a memo from the bank. A spokesperson for the bank confirmed the contents of the memo. Raghav will continue to serve as co-head of mergers & acquisitions in Asia Pacific, and head of the Technology, Media, and Telecommunications Group in Asia Pacific Ex-Japan, the memo shows.

Exclusive: Intel's new CEO explores big shift in chip manufacturing business
Exclusive: Intel's new CEO explores big shift in chip manufacturing business

Reuters

timean hour ago

  • Reuters

Exclusive: Intel's new CEO explores big shift in chip manufacturing business

SAN FRANCISCO, July 1 (Reuters) - Intel's (INTC.O), opens new tab new chief executive is exploring a big change to its contract manufacturing business to win major customers, two people familiar with the matter told Reuters, in a potentially expensive shift from his predecessor's plans. If implemented, the new strategy for what Intel calls its "foundry" business would entail no longer marketing certain chipmaking technology, which the company had long developed, to external customers, the people said. Since taking in March, CEO Lip-Bu Tan has moved fast to cut costs and find a new path to revive the ailing U.S. chipmaker. By June, he started voicing that a manufacturing process that prior CEO Pat Gelsinger bet heavily on, known as 18A, was losing its appeal to new customers, said the sources, who spoke on condition of anonymity. To put aside external sales of 18A and its variant 18A-P, manufacturing processes that have cost Intel billions of dollars to develop, the company would have to take a write-off, one of the people familiar with the matter said. Industry analysts contacted by Reuters said such a charge could amount to a loss of hundreds of millions, if not billions, of dollars. Intel declined to comment on such "hypothetical scenarios or market speculation." It said the lead customer for 18A has long been Intel itself, and it aims to ramp production of its "Panther Lake" laptop chips later in 2025, which it called the most advanced processors ever designed and manufactured in the United States. Persuading outside clients to use Intel's factories remains key to its future. As its 18A fabrication process faced delays, rival TSMC's ( opens new tab N2 technology has been on track for production. Tan's preliminary answer to this challenge: focus more resources on 14A, a next-generation chipmaking process where Intel expects to have advantages over Taiwan's TSMC, the two sources said. The move is part of a play for big customers like Apple (AAPL.O), opens new tab and Nvidia (NVDA.O), opens new tab, which currently pay TSMC to manufacture their chips. Tan has tasked the company with teeing up options for discussion with Intel's board when it meets as early as this month, including whether to stop marketing 18A to new clients, one of the two sources said. The board might not reach a decision on 18A until a subsequent autumn meeting in light of the matter's complexity and the enormous money at stake, the person said. Intel declined to comment on what it called rumor. In a statement, it said: "Lip-Bu and the executive team are committed to strengthening our roadmap, building trust with our customers, and improving our financial position for the future. We have identified clear areas of focus and will take actions needed to turn the business around." Last year was Intel's first unprofitable year since 1986. It posted a net loss attributable to the company of $18.8 billion for 2024. The Intel chief executive's deliberations show the enormous risks - and costs - under consideration to move the storied U.S. chipmaker back onto solid footing. Like Gelsinger, Tan inherited a company that had lost its manufacturing edge and fell behind on crucial technology waves of the past two decades: mobile computing and artificial intelligence. The company is targeting high-volume production later this year for 18A with its internal chips, which are widely expected to arrive ahead of external customer orders. Meanwhile, delivering 14A in time to win major contracts is by no means certain, and Intel could choose to stick with its existing plans for 18A, one of the sources said. Intel is tailoring 14A to key clients' needs to make it successful, the company said. Tan's review of whether to focus clients on 14A involves the contract chipmaking portion of Intel, or foundry, which makes chips for external customers. Regardless of a board decision, Intel will make chips via 18A in cases where its plans are already in motion, the people familiar with the matter said. This includes using 18A for Intel's in-house chips that it already designed for that manufacturing process, the people said. Intel also will produce a relatively small volume of chips that it has guaranteed for (AMZN.O), opens new tab and Microsoft (MSFT.O), opens new tab via 18A, with deadlines that make it unrealistic to wait for the development of 14A. Amazon and Microsoft did not immediately comment on the matter. Intel said it will deliver on its customer commitments. Tan's overall strategy for Intel remains nascent. So far, he has updated his leadership team, bringing in new engineering talent, and he has worked to shrink what he considered bloated and slow-moving middle management. Shifting away from selling 18A to foundry customers would represent one of his biggest moves yet. The 18A manufacturing process includes a novel method of delivering energy to chips and a new type of transistor. Together, these enhancements were meant to let Intel match or exceed TSMC's capabilities, Intel executives have previously said. However, according to some industry analysts, the 18A process is roughly equivalent to TSMC's so-called N3 manufacturing technology, which went into high-volume production in late 2022. If Intel follows Tan's lead, the company would focus its foundry employees, design partners and new customers on 14A, where it hopes for a better chance to compete against TSMC. Tan has drawn on extensive contacts and customer relationships built over decades in the chip industry to arrive at his view on 18A, the two sources said.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store