Luckin Coffee Inc, which by the end of last year surpassed Starbucks as the country's largest coffee chain operator in terms of store numbers, said Wednesday it was joining the coffee and snack vending machine market to further extend its network.
The coffee chain operator based in Xiamen will be offering two types of machines including "Luckin Coffee Express," a coffee vending machine, and "Luckin Pop," a snack and beverage vending machine, to reach more customers, particularly in office buildings.
Luckin Coffee said it had 4,507 self-operated stores in China by the end of 2019, making it the country's largest store-related coffee chain.
In the fourth quarter of 2019, the company added 10 million new customers and had 40 million customers as of Dec 31, of the same year. Consumer development was linked to hand-brewed tea drinks, snacks and new retail outlets by Luckin.
Throughout China, Starbucks has more than 4,100 stores, with larger single-store areas compared to Luckin's. The company said that by working closely with global suppliers and receiving discounts through large volume procurement, its snack and beverage sales machine - Luckin Pop - offers lower prices than its competitors.
It is planned that the two types of vending machines will reach different locations including office buildings, schools, airports, bus terminals, gas stations, highway service stations and neighborhoods, complementing Luckin's current retail network.
Zhu Danpeng, a food and beverage analyst said Luckin could expand its retail presence further and make its products available in expanding areas by creating a new consumption scenario. Yet investment in selling machines often slows the rate of strong profit generation, he said.
Qian Zhiya, Luckin Coffee's chief executive, said the company's new network of vending machines, stores and e-commerce platforms have allowed it to create a smart retail platform that is closed-loop.
Qian emphasized the new vending machines have strengths in light expenditure and zero store decoration fees and less location constraints, which took around a year in research and development.
Luckin will continue to develop and boost its traffic as well as its goods. It is expected that its vending machines will reach more customers in the so-called heavy foot traffic areas across the country, Qian said.
China's coffee-brewing and beverage market has seen rapid growth; reaching 64.7 billion yuan in 2018, up 7.5 percent from 2017, according to consultancy firm Mintel. It is expected that the growth rate will continue until 2023, with annual growth rates of 6 percent.
