China’s Luckin Coffee Has Overcome Its Fraud Scandal

Luckin Coffee, a Chinese low-cost coffee chain, has seen its fortunes improve four years after an accounting scandal that cost its top executives, Nasdaq listing, and $180 million in fines. Launched in 2017, Luckin went public in 2019 at a $4.3 billion valuation. In 2020, short-sellers suspected the company had inflated sales figures, leading to the resignation of its CEO and COO. The company then went public, relisted on Nasdaq, and received $260 million in bailout investment from insiders.

Luchin then took private equity money and embarked on a massive expansion drive, doubling its number of stores in 2023 and increasing its revenue by 87%. It also expanded its menu to include more sweet drinks. Luckin now has more China stores and revenue than Starbucks, which continues to invest in the country.

However, Luckin still faces stiff competition from Starbucks and Cotti Coffee, founded by fired Luckin executives. The market cap has surpassed the IPO mark, and there’s even talk about relisting on the Nasdaq. Despite these challenges, Luckin’s fortunes have improved, highlighting the resilience of a cheap coffee chain.

Read More @ Axios

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