Luckin Coffee brings deep discounts, cashierless stores to New York as it targets Starbucks

Luckin Coffee has expanded to five locations in New York City since its U.S. debut this summer, deploying a cashierless, app-driven model and steep discounting to build rapid brand awareness and challenge market leader Starbucks.

Customers place orders through Luckin’s mobile app and collect beverages at small, grab-and-go outlets. The company’s promotion strategy relies on frequent coupons and discount codes — commonly advertised at 30% to 50% off — which can bring latte, matcha and cold brew prices down to roughly $2 to $3 when applied.

Luckin marked its New York openings with promotional giveaways and heavily discounted menu items: early customers received free tote bags and some drinks were offered for $0.99. The menu at the U.S. locations is compact, focused on coffee, cold drinks and a small assortment of pastries and refresher-style beverages.

The company’s approach mirrors tactics that helped it become China’s largest coffee chain. Founded in 2017, Luckin expanded rapidly, went public in 2019 and by that year had overtaken Starbucks in store count in China. Luckin now reports more than 26,000 locations, most in China; Starbucks operates roughly 8,000 stores in China.

Analysts say the discount-driven model is designed to accelerate awareness and customer trial, but it has financial trade-offs. Bernstein research cited by industry analysts indicates Luckin’s initial U.S. stores are operating at a loss. "In the case of Luckin, the idea is I want to grow in awareness," Bernstein U.S. restaurant equity research analyst Danilo Gargiulo said. "They want to make sure that the brand gets recognized on a national basis, even though at the beginning, this means that I might need to be suffering from some smaller losses on a per store basis."

Gargiulo contrasted that approach with Starbucks’s emphasis on per-store profitability. "Starbucks is always striving to be profitable on a single occasion... Usually, trying to target a minimum of 15 percent margin per store is our estimation," he said.

Luckin’s playbook in China combined inexpensive, easily scaled outlets with aggressive social-media marketing that appealed to younger consumers. The brand leaned into short-form video platforms and promotions to attract students and time-pressed professionals. Company executives and outside observers say the U.S. rollout is testing whether those tactics transfer to American markets.

While advertised base prices at Luckin are not dramatically lower than competitors, the persistent use of app coupons makes the effective price point substantially cheaper for many customers. Industry observers note that sustained discounting can accelerate customer trial but increases the risk that outlets will operate below breakeven until either prices rise or the company extracts higher revenue from repeat customers and add-on sales.

Luckin and Starbucks were contacted for comment. Starbucks has recently faced reports that it was exploring a sale of its Chinese operations; the company has publicly denied plans to exit the market. As Luckin scales in the U.S., analysts say its pricing and promotional strategy will likely need to shift to reach sustainable unit economics, a key test for whether the chain can press its advantage beyond early urban neighborhoods and into broader national competition.

The next phase for Luckin will be whether it can convert trial driven by discounts into consistent, profitable patronage without eroding the low-price appeal that helped it expand rapidly in China.