The tea brand is expected to accelerate the company’s expansion into lower-tiered cities.
Just five months after its release, Chinese coffee chain startup Luckin Coffee has announced that its tea business will become an independent brand in a bid to speed up its market expansion.
The Luckin Tea series was initially launched in Luckin Coffee shops in April and the company says it has experienced the “strong growth” of the series “far beyond the company’s expectations”.
Luckin Coffee chief operating officer Jian Liu said in a statement that the tea drink outlets will “complement” the existing coffee shops and will help “roll out its footprint nationwide”.
“We will continue to maintain the high growth of the coffee business, while taking the tea drinks as another important driver to further explore the breadth and depth of the market,” he said.
The company added that Luckin Tea stores will focus on Tier 2 through Tier 4 cities and will initially open in leisure settings such as shopping malls. Meanwhile, Luckin Coffee stores will focus on Tier 1 and Tier 2 cities and will continue expanding in office locations.
Luckin Coffee currently operates 2,963 stores across 40 cities in China and it plans to open more than 4,500 stores by the year-end, which will make it the country’s largest coffee chain.
Luckin Coffee has also announced its pilot retail partnership that will support the Luckin Tea expansion. The company said that through this, its partners will be able to “control their service quality and mitigate investment risk while increasing profitability at their stores”.
“The launch of both our independent Luckin Tea brand and Retail Partnership model will significantly bolster our current operational capabilities. Through these initiatives, we will cover more cities while substantially improve the number of transacting customers, purchase frequency, and operational efficiency,” Liu said.
Photo credit: Luckin Coffee website
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