Chinese Beverage Chains Spread Across the US, Challenging Starbucks’ Dominance

Starbucks opened its first store in China in 1999, at a time when drinking coffee in a Western-style cafe was still a new idea for many locals. But in the years since, local coffee and bubble tea brands like Luckin Coffee, Heytea, Chagee and Mixue have gradually reduced Starbucks’ share of the Chinese market. Now they’re crossing the Pacific, hoping to compete with the Seattle-based coffee giant and other U.S. beverage chains on home turf.

We wanted to experience – and taste – what these Chinese brands offer to American consumers. Over the past week, we visited two Luckin coffee shops and a HeyTea store in New York, as well as a Chagee store in Los Angeles. We discovered that a new and different drinks culture was taking shape, built around speed, smartphone apps and premium flavors.

The arrival of these Chinese chains comes at a difficult time for Starbucks. The company has closed more than 600 stores worldwide this year and laid off about 900 employees. New York City Mayor-elect Zohran Mamdani on Thursday urged people to boycott Starbucks as union baristas at several of its U.S. locations went on strike. And earlier this month, Starbucks announced that it had agreed to sell up to 60% of its China business to a private equity firm.

Luckin’s App-First Model

The Chinese beverage brand that appears to be the fastest growing in the United States is Luckin, which opened five locations in Manhattan this year alone. Luckin is China’s largest coffee shop chain, with more than 26,000 stores worldwide. In China, there are about three Luckin coffee shops for every one Starbucks. The company was started by a former tech executive less than a decade ago and is known for its sleek, app-oriented cafes.

Zeyi visited one of Luckin’s outposts in New York’s financial district, where he got a full-size iced coconut latte that cost $7.02 after tax. He says he was struck by how calm it was: on a Tuesday at 4 p.m., there were about four customers in the store. But the eerie silence had more to do with staff behavior. Luckin asks customers to place their orders online, so there’s no need to speak to a human.

A computer screen alerted baristas when orders arrived and printed stickers for them to put on each cup. The only customer interaction occurred when Zeyi and another person appeared confused at the counter. “Is this your first time here?” » asked an employee. “We do everything online here. You can scan the code and order.” Once Zeyi’s drink was finished, he says the baristas simply left it on the counter and he had to figure out which one was his himself.

The next day, Zeyi visited another Luckin store in Midtown that he said was busier than the first store. This time, he decided to download the Luckin app: new customers who use it can get their first drink for $1.99, a pretty good deal in New York. Zeyi ordered a cold brew, and the baristas once again said nothing when it was ready.