Latest news with #Luckin
CNBC
7 hours ago
- Business
- CNBC
China's homegrown coffee giants are brewing up a U.S. expansion
Chinese beverage chains are redefining coffee culture in the country — and now they're trying to win over customers in the U.S. and beyond. Luckin Coffee, China's largest coffee chain, has expanded aggressively in China and overtaken Starbucks on the mainland, with more than twice as many outlets. Following an accounting fraud scandal that got the company delisted from the Nasdaq in 2020, Luckin has staged an unlikely comeback with quirky flavors and steep discounts — as low as $1.40 per cup during an earlier price war with rival Cotti Coffee. The Wall Street debacle hasn't dampened Luckin's ambitions in the U.S., where it still trades over the counter. After venturing into Singapore, Hong Kong and Malaysia, Luckin is set to take its biggest leap yet with plans to open a branch in lower Manhattan. The move mirrors Cotti's, which just opened outlets in Brooklyn and Manhattan. Founded in 2022 by former Luckin executives who were ousted over the scandal, Cotti has also grown rapidly in China and internationally, with stores in locations ranging from Southeast Asia to Dubai and California. "New York is probably culturally the best testing ground for an international brand to expand into, especially a Chinese one," said Bernstein Senior Analyst Danilo Gargiulo, citing the city's diversity and large base of young consumers. "But it's also the most saturated, one of the most competitive markets." Chinese chains combine budget pricing with unusual flavors that often blur the line between coffee and bubble tea — jarring to purists but extremely popular at home. Luckin said its alcohol-infused latte, developed with China's leading Moutai liquor maker, sold more than 5.4 million cups on its first day in 2023, generating over $13.7 million in sales. The company launched 119 different items in 2024 alone. Luckin has built its business around technology, allowing customers in China to order and get deliveries through the country's ubiquitous WeChat app, replacing the traditional cafe experience with hyper efficiency. The company also runs large coffee-bean roasting and processing operations in China to help drive down costs. The question is whether this will work in America. Luckin and Cotti did not respond to requests for comment from CNBC. On an earnings call in April, Luckin's co-founder Guo Jinyi said the company plans to "adopt flexible, locally tailored models" to steadily expand overseas. Slowing growth and intense competition in China has pushed companies to seek opportunities beyond its borders. From electric car makers to food delivery platforms, large-scale Chinese companies often follow a familiar strategy: burn cash, grab market share, worry about profit later. This helps them grow fast, but can infuriate global competitors. In the latest sign of increasing competition in China, Starbucks on Monday said it will lower the prices of dozens of drinks in the country by an average of $0.70 this summer. In New York, Cotti is selling drinks for 99 cents to first-time customers who download its app. Over time, analysts estimate that Luckin and Cotti will still be cheaper than Starbucks in the U.S., but the gap will be narrower than it is in China. Manhattan may share major Chinese cities' love for efficiency, but businesses there face New York wages and may need to accept additional payment options, adding to costs, said Allison Malmsten, China strategy director at Daxue Consulting. Tariffs on Chinese businesses may further erode their supply-chain advantages, she added. "There's a long list of things that could potentially drive the price up," Malmsten said. If Luckin's New York debut proves successful, the company could venture further afield. HeyTea — a Chinese chain known for topping its teas with foamy cream cheese — landed in New York in late 2023 and has since spread to Boston, Seattle and Los Angeles. Despite tensions between Washington and Beijing, Gen Z and younger Americans tend to perceive China differently to older generations, who may associate Chinese products with lower quality, according to Malmsten. Bargain coffee from Chinese chains could also appeal to New Yorkers facing rising costs on everything from groceries to coffee beans. Still, coffee shops that run on thinner margins need volume, analysts say. This means appealing to a wider range of customers. "If it's perceived as being only a touristy or exotic adventure, then it's not going to become part of your day-to-day consumption, it's not going to become part of your morning routine," Bernstein's Gargiulo said.
NBC News
26-03-2025
- Business
- NBC News
Chinese tea chain Chagee files for U.S. initial public offering
Chinese tea chain Chagee filed for a U.S. initial public offering on Tuesday, seeking to trade on the Nasdaq using the ticker 'CHA.' The IPO filing comes as the company prepares to open its first U.S. store in the Westfield Century City mall in Los Angeles this spring. Since its founding in 2017, the company has grown to more than 6,400 teahouses across China, Malaysia, Singapore and Thailand, as of Dec. 31, according to a regulatory filing. Roughly 97% of its locations are in China. Chagee said it generated net income of $344.5 million from revenue of $1.7 billion in 2024. Founder and CEO Junjie Zhang created the chain to modernize tea drinking after being inspired by the success of international coffee companies, according to a regulatory filing. China is Starbucks' second-largest market. Looking ahead, Chagee wants to 'serve tea lovers in 100 countries, generate 300,000 employment opportunities worldwide, and deliver 15 billion cups of freshly brewed tea annually,' according to the company's website. If Chagee goes public on the Nasdaq, it will join the dwindling number of Chinese companies seeking a U.S. listing. From January 2023 to January 2024, the number of Chinese companies listed on the three largest U.S. exchanges fell 5%, according to the U.S.-China Economic and Security Review Commission. As relations between the U.S. and Beijing have grown frostier, political scrutiny has dashed some Chinese companies' hopes of a U.S. IPO. Shein is now planning a London IPO for later this year after lawmakers pushed back on its plans to go public on a U.S. exchange. U.S. investors might also be wary to invest in another Chinese beverage chain after the example set by Luckin Coffee. Luckin was founded in 2017 and grew quickly. By 2019, it had outnumbered the number of Starbucks locations in China and gone public on the Nasdaq. But in 2020, Luckin disclosed that it had inflated its sales, resulting in its delisting from the Nasdaq. The company filed for Chapter 15 bankruptcy. Luckin emerged from bankruptcy by 2022, minus the executives that were responsible for the fraud. Since then, it has overtaken Starbucks as China's largest coffee retailer by sales.
Yahoo
28-01-2025
- Science
- Yahoo
UK's first AI classroom without teachers sparks debate
Britain's first teacherless AI classroom may be an "outlier", but it underlines the potential benefits and risks of a UK government drive to rollout artificial intelligence in education, experts say. David Game College, a private school in central London, is nearly six months into a trial in which students are taught core curriculum subjects for the GCSE state exams sat by 16-year-olds by AI platforms. "Teaching and education will be transformed by AI. There is no doubt about that, and AI is not going to go away," said co-principal John Dalton, urging people to become "agile and adopt it". The AI systems "monitor" how the students respond to course material and provide the school with "feedback information about their learning habits", he explained. Prime Minister Keir Starmer this month laid out a vision to harness the power of artificial intelligence and pledged to make Britain an "AI superpower". The government says the technology could help educators with lesson planning and correction, and has developed its own AI lesson assistant called "Aila" aligned with the UK's national curriculum. Instead of teachers, the class at David Game College has real life "learning coaches", who are qualified as teachers but do not necessarily know the content of subjects and instead guide students through using the AI systems. They also mentor them in soft skills like debating and financial literacy. The pilot, which currently has seven students and plans to have one coach for them, is a "leap of faith", Dalton admitted. Dalton, a biology teacher, told AFP the AI platforms can assess a student's knowledge "with a greater degree of accuracy than your average teacher" to enable more personalised teaching. "I believe that AI will augment and it will change the role of teachers," he said. - 'Efficient' - However, Rose Luckin, a professor at University College London (UCL) who researches AI in education, said AI was an "outlier" with an uncertain future in British classrooms. While she agreed the technology would transform the role of teachers, Luckin told AFP it was "impossible" to say what that role might become. "I don't want to be overly negative about it, because unless we try these things, we won't see how they work," Luckin said. Student Massa Aldalate, 15, has been won over to AI learning. "I was unsure at the beginning ... And then after actually being with it for a long time now, you can see the evidence right in front of you," she said, sitting on a swivelling chair surrounded by computers. Does she miss a traditional classroom? "Not really," she replied, adding people attach "sentimental value" to the idea of a classroom. "But this is just much more efficient if you actually want your studies to be done." One of her favourite subjects is English, although she had been concerned how an AI platform would tackle the creative discipline. "(For) English, I thought you just have to have a teacher with you. Apparently not, because it worked," she explained. "You just have the work in front of you. You answer the questions, and it makes sense." - 'Unequal access' - National Education Union — one of the two main UK teacher unions — last week said it was "pleased to see the focus on training for teachers in the use of digital tools" by the government. But Daniel Kebede, general secretary of the NEU, warned the government's ambitions must be "matched by significant investment in technology and IT infrastructure for schools". And Luckin questioned "exactly how effective is this AI tutor", adding she hoped the pilot would provide "solid evidence" on whether AI is having a positive or negative impact. She also voiced concerns about whether there is "sufficient social learning" for students, although the college says pupils have plenty of time with classmates. Dalton said the programme is good at pinpointing gaps in a pupil's knowledge. But with an eye-watering annual cost of £27,000 ($32,900) -- over £10,000 higher than average UK private school fees -- the model is an "elite" one, said Luckin. She also highlighted concerns about unequal access to technology and data infrastructure. The college's "high ratio of coach support to individual" is also "not something that can be replicated very much", said Luckin. "So we need to learn from these examples, but I don't see it as being representative of the future for everyone." aks/jkb/tw
