Luckin Coffee ways into the vending-machines landscape
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China’s largest coffee chain Luckin Coffee is moving into the vending machines market.
“It allows us to get closer to consumers and we are not restricted by the license approvals,” said Luckin founder and CEO Qian Zhiya of the new strategy. Luckin’s machines will serve freshly brewed drinks as well as food.
The firm also launched a share placement and a convertible bond worth a combined US$821 million last week, according to a report.
Proceeds will be used to open more stores and to invest further in sales and marketing.
Luckin recently overtook Starbucks in terms of the number of outlets within the territory, operating more than 4500 stores. The firm focuses primarily on the coffee delivery and pickup business, and so stores are typically smaller in size than Starbucks locations and some are without seating.
Questions & Answers
Q.What kind of products will Luckin Coffee's new vending machines offer?
What kind of products will Luckin Coffee's new vending machines offer?
The vending machines will serve freshly brewed drinks. They will also offer food items alongside the beverages. This expansion allows the company to reach more consumers and overcome licensing restrictions.
Q.How will Luckin Coffee fund its expansion and other investments?
How will Luckin Coffee fund its expansion and other investments?
The company recently launched a share placement and a convertible bond. These combined offerings raised US$821 million, which will be used to open more stores and invest in sales and marketing efforts.
Q.What is Luckin Coffee's primary business model and how does it compare to competitors?
What is Luckin Coffee's primary business model and how does it compare to competitors?
Luckin Coffee primarily focuses on coffee delivery and pickup services. Its stores are typically smaller than those of competitors like Starbucks, with some locations even operating without seating facilities for customers.
Q.What is the strategic reason behind Luckin Coffee's move into vending machines?
What is the strategic reason behind Luckin Coffee's move into vending machines?
The company's founder stated that vending machines will allow them to get closer to consumers. This strategy also helps them bypass certain license approval restrictions that might apply to physical store locations.
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