Starbuck's main rival in China, Luckin Coffee, is now set to conquer other markets as it continues to push to be a global competitor. The listed company has reportedly partnered with a Kuwait-based firm to help it expand its coffee retail business in India and in the Middle East.
Luckin Coffee announced on Monday that it has struck a partnership with retail franchiser Americana Group to help it expand its coffee retail business outside of China.
The Kuwait-based company currently operates more than 1,900 franchises across the Middle East.
The franchises the company operates include brands such as Red Lobster, Olive Garden, Krispy Kreme, KFC, and Starbucks' rival Costa Coffee.
Both Luckin Coffee and Americana have reportedly signed a memorandum of understanding in Beijing. Under the agreement, Luckin Coffee's retail business outside of China will be treated as a joint venture.
Luckin Coffee CEO Jenny Qian Zhiya mentioned in a statement that the company's collaboration with Americana represents its drive to become a leading Chinese provider of quality beverage to the global community.
The Middle East is currently a major market for Starbucks, which currently has 544 stores in cities such as Saudi Arabia, Kuwait, and Dubai. Starbucks also has an increasing presence in India, where it had partnered with Indian company Tata, to open up 146 stores.
With Luckin Coffee entering the Middle Eastern and Indian Markets, Starbuck will have new problems to contend with as it struggles to keep its international business afloat.
The company's president of operations in Europe, Martin Brock, recently announced that the company has been losing money in the UK, its sixth-largest market globally.
Luckin Coffee, which was founded in Beijing in 2017, has become a formidable force in China, nearly overtaking its main foreign rival Starbucks. Luckin Coffee's strategy to kick Starbucks out of China has been its rapid expansion of stores across the region and its relatively cheaper prices.
The company currently has more than 3,000 stores scattered around 40 major cities in China.
Plans of opening up to 4,500 new stores by the end of the year have also been announced by the company's executives. If the company manages to keep its promise, it will be officially be overtaking Starbucks, which only has 3,800 stores in the country.
Luckin Coffee has also rapidly adopted new technologies, which has given it at an edge over its competitors. Unlike companies such as Starbucks, Luckin Coffee already has a robust set of computerized systems in place, which has helped it enhance its orders, deliveries, and payment processes.
