In the high-end market, Starbucks and other emerging coffee chains are the main players. Starbucks also offers flexible delivery methods - consumers can choose in-store pick up, delivery or dine-in. However, Luckin Coffee has carved out a niche market in China's fast growing coffee market and has become the second largest coffee chain in China.
In the mid-tier market, Luckin mainly competes convenient stores such as 7-Eleven or Family Mart. Family Mart has run a huge promotion in 2019 with its buy one get one free coupon. For a medium cup of Americano, with the promotion, it only costs 5 yuan ($0.70) at Family Mart. This is a very compelling value proposition for many consumers.
However, one issue with the Family Mart model is the long wait time. Peak coffee hours often coincide with peak breakfast and lunch hours, and since consumers can't pre-order coffee using Family Mart's mobile app, they have to wait in store to place the order and wait in line. This is where Luckin has an edge against the convenience stores. You can place an order on Luckin's app and pick up the coffee in 3 minutes in a nearby store. This is very appealing to many coffee drinkers who don't want to wait.
