Starbucks’ Chinese rival, Luckin Coffee, is all set to take its rivalry with Starbucks to the next level as it filed for an IPO with the U.S. Securities and Exchange on Monday.
The company expects to raise $586.5 million in its initial public offering which implies an estimated offer of 34.5 million American depository shares (ADS) priced between $15 and $17 per ADS with each ADS representing eight Class A shares.
The coffee maker has been expanding rapidly with currently 2,370 stores in 28 Chinese cities and a plan to open another 2,500 stores by the end of this year in an ambition to replace Starbucks as the go-to coffee shop.
Coffee consumption in China has doubled to 8.7 billion cups last year from 4.4 billion in 2013 and is anticipated to rise to 15.5 billion cups by 2023. The Chinese coffee maker is rooting on this increase in consumption.
Further, Luckin’s app also has the option of ordering food and beverages outside coffee.
However, the company’s growth also has a flipside - it’s running into losses and may continue to do so in the near future. To date, it has recorded net losses of $475.4 million and total revenue of $125.27 million. For the first three months of 2019, it posted a net loss of $85.3 million.
Yet, the coffee maker has some high-profile investors like U.S. money manager BlackRock (BLK) and Chinese investment firms Centurium Capital and Joy Capital.