Luckin Coffee - A Promising Coffee Start-Up’s Rise and Fall. Can It Bounce Back?
A tech-driven coffee company faced a serious financial scandal. Can it reclaim its buzz? We take a closer look at its business model, the fraud, and its road to recovery.
At a glance
Country
China
Founded
2017
Number of stores
22,340
(as of 2024)
Net Revenue
US$ 1,3 billion
(as of 2024)
Abstract
Luckin Coffee, founded in 2017, emerged as a disruptive force in the Chinese beverage market by leveraging an app-driven, tech-enabled model to deliver affordable, high-quality coffee. Initially celebrated for its innovative O2O (online-to-offline) strategy and rapid scalability, outpacing Starbucks as the largest coffee chain in China by 2019, Luckin Coffee faced a severe setback in 2020 when it was revealed that the company had fabricated sales figures, leading to a major financial scandal. The fallout included delisting from the Nasdaq, leadership changes, and widespread investor distrust.
This case study explores the company’s meteoric rise, dramatic fall, and potential rebound by leveraging its core strengths of efficient digital operations, data-driven customer engagement, competitive pricing, and strategic store placement. The study offers key insights into crisis management, entrepreneurial resilience, and the strategic use of technology in retail and invites learners to evaluate the risks and rewards of rapid expansion, the implications of corporate governance failures, and the strategic decisions needed for long-term brand rehabilitation in a highly competitive and fast-evolving market.
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Disclaimers:
(1) Regarding Case Study Content: This case study is based mainly on secondary data and analysis of publicly available information unless otherwise stated, and is intended solely for educational purposes. Any opinions expressed by the author(s) are designed to facilitate learning discussion and do not serve to illustrate the effectiveness of the company. Additionally, banner images and logos used in the case study are intended for visualization in an educational setting and it is not used to represent or brand the company. For any dispute regarding the content and usage of images and logos, please contact the team.
(2) Regarding University Affiliation and Titles of Authors: The university affiliation and titles of author(s) seen in the case study is based on their affiliation and title during the time of publication. It may or may not represent the current status of said author(s).