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Startups

Luckin Coffee zooms past Starbucks in China store count

New openings reflect homegrown chain's shift in focus to remote areas

A cup of Luckin Coffee at a store in Hangzhou in eastern China's Zhejiang Province. The fast-growing chain has now more Chinese stores than rival Starbucks.    © AP

NEW YORK -- Nasdaq-listed Luckin Coffee entered 2020 with a new title: the largest coffee chain in China by number of outlets, surpassing Starbucks.

The Xiamen-headquartered startup had 4,500 domestic locations opening by the end of 2019, outstripping the American competitor's 4,300, according to Thinknum Alternative Data. The surge owes to a growth-first model, with heavy spending on marketing and promotions backed by investors including BlackRock.

Luckin's Chinese store count first rose above Starbucks' in early November, when both listed around 4,200 locations, Thinknum said. But Luckin has since opened new stores in its home market at a much faster clip.

One reason Luckin can expand so fast is that its outlets are often smaller in size, sometimes without seating, as they focus on deliveries and pickups. The company's strategy has forced Starbucks to step up its own delivery game by partnering with Alibaba Group Holding.

Thinknum's analysis also shows that Luckin's latest locations tend to be in remote areas not served by Starbucks, in contrast to its earlier strategy of conquering big cities.

Despite mounting losses, the startup's stock ended Thursday up 124% from its initial public offering price in May, buoyed by a foray into freshly brewed tea -- a hugely popular beverage in China -- and improving store-level performance.

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