Fast-growing Chinese coffee chain Luckin Coffee is reportedly preparing to enter the Malaysian market in partnership with an unnamed franchisee listed on Bursa Malaysia.
Expansion Plans
According to sources quoted by Selangor-based financial news outlet The Edge, Luckin Coffee aims for rapid expansion in Malaysia over the next five years. The company seeks to enhance its international presence, which currently includes 32 stores in Singapore. A letter of intent is expected to be signed soon, with a master agreement likely to be finalized by July 2024.
Financial Performance and Market Context
Luckin Coffee operates over 18,500 stores in China. However, the company reported an operating loss of RMB 65.1 million ($9 million) for the quarter ending March 31, 2024, marking its first quarterly loss in two years due to a decline in sales.
Malaysia has recently become an attractive market for international café operators. In the past year, notable entries include UK-based EL&N, Thai chain ChaTraMue, US specialty roaster Reborn Coffee, boutique concept Café Kitsuné, and Luckin Coffee rival Cotti Coffee, which now operates five stores in the country.
Malaysian Coffee Shop Market
The Malaysian branded coffee shop market comprises over 3,300 outlets and is experiencing significant growth. Domestic brands like ZUS Coffee, Gigi Coffee, and Bask Bear Coffee have expanded rapidly, with store counts reaching 443, 143, and 103 respectively within the past year.
According to World Coffee Portal’s Project Café East Asia 2024 report, the total Malaysian branded coffee shop market is projected to grow to 6,100 outlets by the end of 2028.
Conclusion
Luckin Coffee’s entry into Malaysia is part of its strategy to expand its international footprint. With a burgeoning café culture and increasing competition from both international and local brands, the Malaysian market presents significant opportunities for growth.