Article | Liu Kuang
In early August, a video of a Luckin Coffee store employee using cooking tools to play and frolic in the operating area went viral online, raising public questions about the store's hygiene conditions. During the peak demand in the beginning of autumn, a Luckin store in Nanyang City, Henan Province, experienced increased pressure to serve and a physical altercation with a delivery guy, reigniting public opinion. On the surface, these two things seem to be independent and unrelated, but upon deeper exploration, it will be found that they are both problems that Luckin Coffee has encountered during its rapid expansion.
In addition, Starbucks, which has always held a leading position in the high-end market, has recently been under operational pressure due to price hikes.
On one hand, while low-priced leading brands are rapidly expanding, accidents continue to occur, and on the other hand, established high-end brands are forced to lower prices to cope with pressure.
But when we compare Luckin Coffee and Starbucks together, we can see that the competition rules in the domestic coffee market are undergoing significant changes.
The game between scale expansion and quality control management
From the perspective of scale and management, this is a major contradiction that the two companies cannot avoid.
Luckin Coffee: After rapidly expanding its market share, management and quality control cannot keep up.
The health incident and rider conflict at Luckin Coffee are essentially caused by inadequate management at the end of the chain under the Wandian model. Under the influence of high cost-effectiveness, explosive product strategy, and digital system, Luckin Coffee has expanded rapidly, with its global stores exceeding 36000 according to its Q2 2026 financial report. The vast channels have also brought benefits in terms of supply chain costs to Luckin, making it far ahead in market share.
However, once the number of stores increases to a certain scale, it becomes difficult to implement the management system and training standards of the headquarters in every store. The phenomenon of laughing and playing with food utensils after closing, losing control of emotions under pressure when orders are high, and so on, are the problems exposed during assessments.
Starbucks: Under a higher positioning, the price system has a weaker ability to resist risks.
Starbucks has taken a completely different path, with far fewer stores in China than Luckin Coffee. For a long time, we have been committed to creating a standardized operating system to enhance our brand image value with stable quality. But even if such a moat exists, it cannot avoid being affected by the internal competition of the entire industry.
At the beginning of autumn, some Starbucks products on delivery platforms, combined with various discounts, only cost around 4-6 yuan. Although the official statement states that the price drop is due to platform subsidies, it also indicates that in the context of traffic competition, even time-honored brands will face difficulties in maintaining their pricing system and brand image.
The trade-off between operational efficiency and spatial experience
There is a contradiction between scale and quality, which is ultimately reflected in the operation of the store. Two different expansion methods have resulted in two distinct business models, making vastly different choices in terms of efficiency and customer experience.
Luckin: Using algorithms to improve operational efficiency puts too much pressure on staff.
The dispute at the Nanyang store exposed the high-pressure operation status of Luckin Coffee's frontline. Luckin Coffee adopts a small shop model of self pickup and delivery, reducing the space for dine in. The system decomposes the production process of the product and divides the production time of each individual cup very finely, in order to achieve extremely high work efficiency. But under the long-term pursuit of ultimate efficiency, employees' emotions are prone to become tense, and friction situations such as reminders can easily lead to conflicts.
Starbucks: Obtaining brand premium through scene experience, easily impacted by low price competition pressure.
On the contrary, Starbucks' core selling point is the "third space", which provides customers with a place to rest and relax outside of home. Here, customers can enjoy a peaceful and comfortable environment, a relaxed and pleasant communication atmosphere, and a comfortable and leisurely living experience. Therefore, its business speed is relatively slow, and effective interaction between employees and customers can avoid most service disputes caused by urging.
But Starbucks still faces a challenge: when the low price subsidy for takeout arrives, the role of the environment as a bonus point will weaken. It can be seen that in the face of cost-effectiveness, the premium experience of beverages is particularly fragile.
Balance between financial growth and profitability
The reason for the change in store operation strategy is due to performance targets, and the model dispute is actually about how to strike a balance between growth and profitability. After these two large companies achieved impressive revenue, their respective profitability issues also emerged.
Luckin Coffee: After expanding its internal competition, costs have increased and there is an urgent need to explore new profit points.
Luckin Coffee's revenue for the whole year of 2025 has increased by 43% compared to last year, which is a very impressive growth rate; But its net profit growth rate is only 21.8%, significantly slower than the growth rate of operating income. Since the first quarter of this year, Luckin Coffee's net profit has shown a downward trend, and the phenomenon of increasing revenue without increasing profits has also begun to emerge.
On the one hand, the sustained discounts and platform subsidies have reduced the gross profit margin of individual products; On the other hand, frequent opening of new stores has led to an excessive number of storefronts in some areas, causing customers to compete with each other in the market. As a result, the profitability of individual stores has gradually declined, falling into an internal competition dilemma of "more stores, more losses".
Starbucks: Price is in a dilemma, struggling to balance traffic and brand tone.
The pressure on Starbucks has increased. After Luckin brought the price of 9.9 yuan into the psychological range of the public, Starbucks' daily consumer appeal has decreased significantly, and many consumers only purchase its products during leisure time. In the short term, relying on platform subsidies can increase some order volume, but in the long run, it will consume its high-end brand image. Brands are in a dilemma: if they maintain high prices, daily sales will become weak; If the price is lowered, then
It will cause damage to one's brand image.
The Test of Brand Trust and Crisis Public Relations
The pressure of profitability can prompt companies to take some short-term actions, but if not handled properly, it can lead to problems and cause a public opinion crisis, which can directly impact the brand's reputation.
Luckin: To regain trust, it is necessary to establish a long-term and effective supervision system.
After the butter gun incident, Luckin PR's standard was to respond immediately, dismiss the responsible personnel, destroy the problematic products, and ensure that employee training is strengthened in the future. This set of measures looks orderly, but there are still many people who doubt why regulations are always implemented after they are exposed.
Most of the rectification is done after the fact, lacking regular inspections and a regulatory system that can trace the source. A one-time fine and rectification can only treat the symptoms, not the root cause. Repeated occurrences of similar problems will continuously weaken consumer confidence. In this situation, Luckin needs to establish a long-term effective supervision system to replace one-time crisis public relations.
Starbucks: In the face of traffic, it is also necessary to maintain a firm brand tone.
The problem with Starbucks is that its value anchor is unstable. For a long time, it has established a high-end image, but its continuous price reduction and promotion behavior is slowly changing consumers' perception, making them accustomed to buying at low prices. When the subsidy disappears and the price rises, it is difficult for them to be willing to pay for high premiums anymore.
When the high-end image of a brand no longer exists, the value of the brand will suffer irreparable losses. Therefore, Starbucks needs to find a new balance between traffic and brand.
Cross border tea drinks and exploration of the second curve
Whether due to management deficiencies or confusion in positioning, the underlying reason is that a single coffee track is difficult to sustain. In order to break through the predicament, these two companies have jumped out of the competition of single product coffee and entered the tea beverage industry to seek new growth points.
Luckin Coffee: In the new market, we cannot ignore our own brand awareness of coffee.
Luckin Coffee has followed the logic of creating popular products to enter the light milk tea market and launched new products such as Qingqing Jasmine and Qingqing Oolong. By relying on data to analyze consumer needs, new products were launched in a short period of time and constantly updated, utilizing existing supply chains and store channels to reduce costs and attract young people to purchase at lower prices. However, there is also a significant risk: continuously expanding the variety of products and simultaneously developing coffee and tea drinks will make the core positioning of the brand unclear.
Enter the milk tea market using popular strategies and have strong supply chain capabilities, but be careful not to dilute the brand's impression due to the wide variety of products.
Starbucks: Enriching its product line with high-end tea drinks, but needs to address the contradiction between price and market competitiveness.
Starbucks has launched a series of new products such as "Tea Blooms" tea cafes and milk tea to fill the blank market in the afternoon and evening, hoping to improve the company's revenue structure. However, as new tea drinks have become a hot market, it is difficult to achieve high prices, so whether this new product can succeed still needs to be questioned.
The health accidents and employee conflicts of Luckin Coffee are both exposed problems during rapid expansion, and the problem of refined operation will arise in the later stage due to the scale advantage; The price war crisis encountered by Starbucks illustrates the weakening competitiveness of the old high-end model in the era of traffic. There is no absolute good or bad between the two, only different stages of development and choices of different business models.
In the future, competition in the coffee market will no longer simply rely on the number of stores or low-priced promotions to gain market share. In the new competition, what enterprises need to do is to find a suitable point between efficiency and experience, scale and quality control, traffic and brand image, and continuously improve their management system to enhance the quality of profits, while also maintaining the uniqueness of their brand and adopting a more cautious attitude towards the launch of new products.
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