Ousted Luckin Coffee Cofounder Plans to Launch New Coffee Brand

Charles Lu, co-founder of Chinese beverage chain Luckin Coffee, is planning another entrepreneurial project involving the launch of a new coffee brand named “Cotti Coffee,” domestic media Tech Planet reported on September 1.

After Lu was forced to leave Luckin Coffee due to a 2.2-billion yuan ($318.5 million) accounting fraud scandal, he registered A-Bite Technology and opened a noodle restaurant chain called “Quxiaomian.” After three months of operation, expansion of Quxiaomian was suspended on a large scale. After that, A-Bite Workshop, a 3R dishes startup project, was launched, although news of store closures came one after another a few months later. Cotti Coffee is Lu’s latest venture.

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According to a Cotti Coffee brand manual dated August 2022, the Tianjin-based company has registered capital of $100 million, and its core management team comes from large enterprises such as Luckin Coffee, CAR Inc., and UCAR. The name “Cotti” originates from the Italy biscuit called “biscotti,” which are often eaten as a coffee accompaniment. The brand aims to be the extension of the concept of coffee. In the future, it will offer products such as baking, light meals and drinks besides coffee.

According to the brand manual, Cotti Coffee has two types of stores in the early stages of planning: standard stores with an area of 80-200 ㎡ and mini stores with an area of less than 50 ㎡. The biggest difference from existing coffee brands is that Cotti Coffee focuses on full-time dining. They provide customers with coffee and biscottis in the morning, meals at noon, snacks in the afternoon and drinks in the evening.

A former employee of Luckin Coffee said that this business mode involves not only selling coffee, but also serving as a leisure bar, and regarded as fashionable dining. In terms of store areas, Luckin Coffee’s pickup kiosk is generally 18-30 ㎡, and it does not contain a guest area so as to reduce rental costs. “I think Cotti Coffee’s stores are at least 30 m² and the maximum is 200 m². The guest area is the biggest difference,” said the source.

Luckin Coffee, has become a fierce rival to Starbucks in China. Recently released second quarter financial reports show that the net revenue of Luckin Coffee was less than 400 million yuan different from Starbucks’ revenue in the Chinese market, and it is just around the corner for Luckin Coffee to surpass Starbucks in the second half of the year.

However, there are more competitors in China’s coffee market today. According to data by Canyan, Tims Coffee has opened 452 stores and Manner Coffee has 437 stores, both of which are supported by strong capital institutions. New tea brands with the advantage of ready-made channels have also started to enter coffee field, including HeyTea and Nayuki.

According to a report released by iiMedia, it is estimated that the coffee industry will maintain a growth rate of 27.2%, and the Chinese market will reach 1 trillion yuan in 2025.