McDonald’s Brews Up Fresh Competition for Starbucks, Luckin in China Coffee Delivery Market

McDonald’s Brews Up Fresh Competition for Starbucks, Luckin in China Coffee Delivery Market

Xu Wei

Date: Mon, 10/08/2018 - 19:21 / source:Yicai
McDonald’s Brews Up Fresh Competition for Starbucks, Luckin in China Coffee Delivery Market
McDonald’s Brews Up Fresh Competition for Starbucks, Luckin in China Coffee Delivery Market

(Yicai Global) Oct. 8 -- McDonald’s rollout of a coffee delivery service in Shanghai is set to further intensify competition in a sector where Starbucks’ long-held dominant position has been recently undermined by local upstart Luckin Coffee.

The US fast-food giant today launched a service through its McCafe sub-brand enabling consumers to place orders via its iMcCafé Delivery mini program on WeChat, as well as on vastly popular takeaway apps Ele.me and Meituan Dianping, local newspaper Xinmin Evening News reported. The service is limited to the eastern Chinese city as of now, though the company intends to extend it to other cities in the future.

McDonald’s aims to deliver hot drinks to customers within 28 minutes of ordering, which is two minutes faster than Luckin and Starbucks. The firm also uses a specially patented spill-proof lid to ensure beverages reach customers still intact.

The company’s move into the sector into coffee delivery represents another challenger to Starbucks, which has long been the country’s most popular chain. Luckin Coffee, formed at the turn of last year, has made great strides in eating into the US firm’s market share. Already China’s second-largest player by store numbers, Luckin Coffee relies heavily on a New Retail model, enriching brick-and-mortar stores with online campaigns and free delivery.

Since kicking off trial operations in January, Luckin has opened 525 stores in 13 cities including Beijing, Shanghai and Shenzhen. With a large latte priced at CNY24 (USD3.70), its coffee is about 20 percent cheaper than at Starbucks.

China’s coffee market is worth about CNY100 billion (USD16 billion), and has huge growth potential, according to news portal Foodaily. The market grows at a dizzying pace of 40 percent a year. Starbucks, aims to double its mainland store count to 6,000 by 2022, Bloomberg reported in May.

The Chinese population consumes five coffees per capita in a cafe each year, and those in the first-tier cities of Beijing, Shanghai, Guangzhou and Shenzhen consume as much as 20 cups, according to a recent industry report. The average per capita consumption in the US, South Korea and Japan is 400 cups, 377 cups and 360 cups, respectively. The tea and hot-drinking culture shared by China, Japan and Korea indicate there is significant potential for growth in the country.

Editor: William Clegg

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Keywords: McDonald’s, McCafe, Luckin Coffee, Coffee Box, Shanghai