Analysis of Luckin Coffee's extraordinary comeback from its accounting scandal and how it subsequently surpassed Starbucks as China's largest coffee chain.

Despite only being around for a few years, Luckin already has already overtaken Starbucks as the largest coffee chain in China. This is incredibly impressive considering how Luckin was established 18 years after Starbucks first entered China, but even more so given Luckin’s dramatic downfall after its accounting fraud scandal was exposed back in 2020, which subsequently wiped out 97% of its stock value and sent the then highly unprofitable company into bankruptcy. Remarkably, it only took Luckin 3 years to turn its business around, posting full year profits for the first time for 2022.

Luckin Coffee’s turnaround has been called a “business miracle” by those familiar with the situation. In this video, we will uncover the factors behind its miraculous turnaround and compare its business strategy with Starbucks, to understand how Luckin was able to comeback from bankruptcy and surpass Starbucks as China’s largest coffee chain.

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00:00 Introduction
00:50 Problem with Luckin's Original Strategy
04:22 Framework for Analysing Luckin's New Strategy
04:51 Cost Reduction
06:42 Product Innovation
10:11 Marketing Strategy
12:47 Franchising Business Model
16:28 Pandemic Effects
17:58 Conclusion

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