Luckin Coffee's "Loss of Control" and Starbucks' "Price Breaking": The Ice and Fire of China's Coffee Market

Recently, a series of hot events have taken place in the coffee industry.

At the beginning of August, a video showing a Luckin Coffee store clerk in Jinan playing and messing around with food preparation tools in the operation area went viral online, sparking public doubts over the store's hygiene conditions. When orders surged around the Start of Autumn, a Luckin Coffee store in Nanyang, Henan Province saw increased pressure on order fulfillment, and its clerks got into a physical conflict with a food delivery rider, which once again ignited public opinion. These two incidents seem unrelated on the surface, but in-depth exploration reveals that they are both problems arising from Luckin Coffee's rapid expansion.

In addition, Starbucks, which has long held a leading position in the high-end coffee market, has recently fallen into operational pressure due to its price cuts.

On one hand, the low-price leading brand keeps encountering accidents while expanding rapidly; on the other hand, the established high-end brand is forced to cut prices to cope with pressure.

However, when we compare Luckin Coffee and Starbucks, we can find that the competition rules in China's coffee market are undergoing major changes.

The Game Between Scale Expansion and Quality Control Management

Starting from scale and management, this is a main contradiction that neither of the two companies can avoid.

Luckin Coffee: After rapidly expanding market share, management and quality control fail to keep up.

The essence of Luckin Coffee's recent hygiene incident and rider conflict is inadequate frontline management under the 10,000-store model. Driven by its cost-effective positioning, hit product strategy and digital system, Luckin Coffee has expanded at a very fast pace. Its financial report for the second quarter of 2026 shows that it has more than 36,000 stores worldwide. The huge channel network also brings Luckin Coffee advantages in supply chain cost, making it far ahead in market share.

However, when the number of stores expands to a certain scale, it becomes difficult for the headquarters' management systems and training standards to be fully implemented in every single store. Phenomena like playing with food utensils after closing and losing emotional control under the pressure of surging orders are all problems exposed under the performance assessment system.

Starbucks: With a high brand positioning, its price system has weak risk resistance capacity.

Starbucks has taken a completely different path, and the number of its stores in China is far less than that of Luckin Coffee. For a long time, it has been committed to building a standardized operation system to enhance its brand image value with stable quality. But even with such a moat, it cannot avoid being affected by the cutthroat competition across the entire industry.

Around the Start of Autumn, prices of Starbucks products on some food delivery platforms dropped to only about 4 to 6 yuan after applying multiple discounts. Although the official stated that the price drop was caused by platform subsidies, it also shows that under the background of traffic competition, even time-honored brands will face difficulties in maintaining their own price system and brand image.

The Trade-off Between Operational Efficiency and In-Store Space Experience

The contradiction between scale and quality is ultimately reflected in store operations. Two different expansion modes have generated two different operation models, which make completely different choices in terms of efficiency and customer experience.

Luckin Coffee: Improve operational efficiency with algorithms, while frontline staff face excessive pressure.

The dispute incident at the Nanyang store exposed the state of high-pressure frontline operation of Luckin Coffee. Luckin Coffee adopts a small-store model focused on in-store pickup and delivery, reducing the space for dine-in. Its system breaks down the product production process and splits the production time of each single cup into very fine segments, so as to achieve extremely high work efficiency. However, under the long-term pursuit of extreme efficiency, employees are prone to emotional tension, and frictions such as order reminders can easily lead to conflicts.

Starbucks: Gain brand premium through scenario experience, and vulnerable to the pressure of low-price competition.

On the contrary, Starbucks' core selling point is the "third space", which provides customers with a place to rest and relax other than their homes, where customers can enjoy a quiet and comfortable environment, a relaxed and pleasant communication atmosphere, and a cozy and leisurely life experience. Therefore, its operation pace is relatively slow, and the effective interaction between employees and customers can avoid most service disputes caused by order urging.

But Starbucks also faces a dilemma: when low-price delivery subsidies arrive, the role of the in-store environment as a bonus item will be weakened. It can be seen that the experience premium of beverages is particularly fragile in the face of cost performance.

The Balance Between Financial Growth and Profitability

The change in store operation strategies is caused by performance targets. The competition between different operation modes is essentially the issue of how to strike a balance between growth and profitability. Behind the impressive operating revenue of these two large companies, problems with their respective profitability have also emerged.

Luckin Coffee: Costs rise after cutthroat expansion, and it urgently needs to explore new profit growth points.

Luckin Coffee's total revenue in 2025 increased by 43% year on year, which is a very impressive growth rate; but its net profit growth rate was only 21.8%, significantly slower than the growth rate of operating revenue. Since the first quarter of this year, Luckin Coffee's net profit has shown a downward trend, and the phenomenon of increased revenue without increased profit has begun to appear.

On one hand, continuous discounts and platform subsidies reduce the gross profit margin of single products; on the other hand, the frequent opening of new stores leads to an excessive number of stores in some areas, where customers are cannibalizing each other's market share. The profitability of a single store is gradually declining, falling into the cutthroat dilemma of "the more stores you open, the more losses you suffer".

Starbucks: Its price is in a dilemma, and it is difficult to balance traffic and brand tonality.

Starbucks faces greater pressure. After Luckin Coffee brought the 9.9-yuan price into the public's psychological expectation, the attractiveness of Starbucks' daily consumption has dropped significantly, and many consumers only buy its products for leisure. Relying on platform subsidies in the short term can increase order volume to a certain extent, but in the long run, it will erode its high-end brand image. The brand is in a dilemma: if it maintains a high price, its daily sales will be very low; if it cuts prices, it will

cause damage to its own brand image.

The Test of Brand Trust and Crisis Public Relations

Profit pressure will prompt enterprises to take some short-term actions, but improper handling that causes problems and further public opinion crises will directly impact the brand's reputation.

Luckin Coffee: To regain trust, it needs to establish a long-term and effective supervision system.

After the cream gun incident, Luckin Coffee's standard public relations response is: respond immediately, dismiss the relevant responsible persons, destroy the problematic products, and promise to strengthen staff training in the future. This set of measures seems orderly, but many people still doubt why relevant norms are always enforced only after the incidents are exposed.

Most of the rectification measures are post-incident handling, lacking regular inspections and a traceable supervision system that can track down the root cause. One-off fines and rectification can only address the symptoms but not the root cause, and repeated similar incidents will continuously weaken consumer confidence. In this case, Luckin Coffee needs to establish a long-term and effective supervision system to replace one-off crisis public relations.

Starbucks: In the era of traffic, it also needs to adhere to the maintenance of brand tonality.

Starbucks' problem lies in its unstable value anchor. It has built a high-end image for a long time, but continuous price reduction promotions are slowly changing consumers' perception, making them get used to buying at low prices, and they will be reluctant to pay for high premiums when subsidies disappear and prices rise back.

When the high-end image of the 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 image.

Cross-border Tea Beverage Exploration and the Second Growth Curve

No matter it is management defects or positioning confusion, the underlying reason is that the single coffee track can no longer support continued growth. To break the dilemma, the two companies have stepped out of the competition of single coffee products and entered the tea beverage track to seek new growth points.

Luckin Coffee: When entering new markets with hit product strategies, it cannot ignore its existing brand recognition in the coffee sector.

Luckin Coffee follows its hit product development logic to enter the light milk tea market, and launches new products such as Light Jasmine Tea and Light Oolong Tea. It relies on data to analyze consumer demands, launches new products and iterates them rapidly in a very short time, uses its existing supply chain and store channels to reduce costs, and attracts young people to buy at low prices. However, there are also great risks: continuously expanding product categories and developing both coffee and tea beverage businesses will blur the core positioning of the brand.

It adopts the hit product strategy to enter the milk tea market and has strong supply chain capabilities, but it needs to pay attention not to dilute the brand impression due to excessive product categories.

Starbucks: Enrich product lines through high-end tea beverages, but needs to resolve the contradiction between price and market competitiveness.

Starbucks has launched a series of new products such as "Blooming Tea" tea coffee and milk tea to fill the blank market in the afternoon and evening, hoping to improve the company's revenue structure. However, as the new-style tea beverage market has already become a red ocean, it is difficult to set a high price, so it remains to be seen whether these new products can succeed.

Summary

Luckin Coffee's hygiene accidents and staff conflicts are the exposure of problems in its rapid expansion, and the scale advantage will face the problem of refined operation in the later stage; the price war crisis encountered by Starbucks shows that the established high-end model has weakened competitiveness in the traffic era. Neither of them is absolutely good or bad, they are just choices for different development stages and different business models.

In the future, competition in the coffee market will no longer simply rely on the number of stores or low-price promotions to gain market share. In the new competition, what enterprises need to do is to find an appropriate balance point between efficiency and experience, scale and quality control, traffic and brand image, improve the quality of profitability by continuously optimizing their own management systems, maintain the uniqueness of their own brands, and adopt a more cautious attitude towards the launch of new products.

This article is from the WeChat official account "Liu Kuang Channel", the author is Liu Kuang Channel, and it is authorized for release by 36Kr.