Luckin Coffee filed for an Initial Public Offering on the United States Public Stock Exchange on 22 April. The Chinese coffee start-up set an offer amount of US$100 million and intends to list under the symbol LK. Luckin Coffee is vying to become China’s largest coffee chain, with a total of 4500 stores in operation by the end of 2019. CEO Qian Zhiya says the goal is achievable because the company's business model tackles the biggest challenges facing the Chinese coffee industry: expensive prices and inconvenience. “With the development of the internet, luckin has transformed the traditional coffee chain to a new retail model, integrating offline services and online delivery services,” Qian says. “Thus, Luckin's new retail model strikes an excellent balance of price and services.” Read more: Tim Hortons opens in China Luckin Coffee challenges Starbucks in China Eyes on Yunnan Luckin Coffee’s app-based delivery service sees customers order and pay strictly through the Luckin app, as well as earn bonuses and engage socially. The strategy caught the interest of digital giant Tencent Holdings, which in September 2018, announced a partnership with Luckin that will support its extension. The company was founded in Beijing in October 2017. Since then, the company has expanded to 2073 stores in 22 cities across China by the end of 2018, serving more than 89.6 million cups of coffee to 12.5 million customers. Qian says China's younger generations are increasingly enjoying coffee and the culture surrounding the beverage. This is not Luckin Coffee’s first attempt to raise capital. In December 2018, the company announced it raised US$200 million in a Series-B round of funding, which pushed its post-money valuation to US$2.2 billion.
Luckin Coffee reported a loss of 800 million yuan (US$116.34 million) in 2018. Despite this, Qian says “the loss is in line with our expectation,” as the chain focuses on growth. An Initial Public Offering is when a private company or corporation raises investment capital by offering its stock to the public for the first time. In 2017, China’s coffee shop sales reached US$4.4 billion and is expected to reach US$145 billion by 2025, according to consultancy firm Qianzhan.