If you are a busy commuter, a traveler, or just a person who appreciates efficiency, one of the most impressive innovations in a suburban or metropolitan area is the speed at which you can get a coffee.
And one of the best places to get a coffee quickly and easily is Starbucks (SBUX) -).
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The Seattle-founded coffee chain is adored not just because there's one on every corner, though that certainly helps. It's popular because the quality is consistent and reliable. Sure, you can go out of your way to try to find an independent or competing cafe, but they tend to be more sparsely located, and the quality can vary by a lot.
The international chain has scaled efficiency and mass appeal on a global level. As of 2022 data, Starbucks has over 35,000 stores in 84 countries. From the U.K. to Japan, the coffee cafe has been exporting everything from standard drip coffees to more inventive, local fare for decades.
But there's one country Starbucks has been particularly focused on – especially in recent years as tastes change and the market becomes ripe for disruption: China.
Starbucks is overtaken in China by domestic chain
For years, there's been something of a tug of war between Starbucks and its main Chinese competitor, Luckin Coffee (LK) -). As the Chinese populous warms up to coffee (it has historically been a tea drinking culture), Starbucks and Luckin emerged as two of the strongest contenders to gobble up market share and present commuters and the coffee curious with viable options.
But in 2020, Luckin was accused of an accounting scandal whereby it overstated its 2019 revenue by over $300 million. The stock, which had been a pre-pandemic darling, plummeted resulting in a Nasdaq delisting and several executives were dismissed in the wake of the scandal. It then filed for Chapter 15 bankruptcy in 2021.
But fast forward a couple of years and Luckin has been rebuilding, restructuring, and preparing for more than a comeback. The now $8.3 billion company is mounting something of a rebirth. Its stock is up over 70% in the past year, and it officially has more stores in China than Starbucks.
The latter figure is a big accomplishment. Starbucks has made no secret of its China ambitions. The American market is relatively saturated, and it would be a huge coup for the coffee chain to reign supreme in not one but two of the richest and most populous countries in the world.
But now, according to the Wall Street Journal, Luckin runs 13,300 stores in China, nearly double that of Starbucks' 6,800. This is impressive on its own, but when you consider Starbucks established its first store in China in 1999, and Luckin was founded in 2017, this growth seems almost mind-boggling.
Still, Starbucks isn't taking this lying down. New CEO Laxman Narasimhan said in early November that he still expects growth in the country, just at a more measured pace.
“We’ve only said that we would grow to 9,000 by the end of ’25, and I’ll tell you this, that is just a milestone,” Narasimhan said.
China remains Starbucks' second-biggest market, after, of course, the U.S.
