THAT IS A COMEBACK.
>>> NOW THIS.
THE COFFEE CHAIN LUCKIN GOES
PUBLIC TODAY.
IT'S A CHINESE COMPANY WHICH
WANTS TO USE AMERICAN MONEY TO
COMPETE WITH STARBUCKS, AN
AMERICAN COMPANY, IN CHINA.
JOINING US NOW IS LUCKIN
COFFEE'S CHIEF FINANCIAL OFFICER
AND CHIEF STRATEGY OFFICER, TO
BOOT.
WELCOME TO THE PROGRAM.
GOOD TO HAVE YOU WITH US.
>> THANK YOU SO MUCH FOR HAVING
ME.
THANK YOU.
STUART: AM I RIGHT IN SAYING
THAT AT THE MOMENT IN CHINA,
YOU'VE GOT 2,300 STORES AND YOU
WANT TO DOUBLE THAT IN THE NEXT
12 MONTHS.
IS THAT ACCURATE?
>> YES.
I THINK IF YOU LOOK AT THE
NUMBERS AS OF Q1, CLOSE TO 2400
STORES, WE ARE GROWING
RELATIVELY QUICKLY AND I THINK
WE HAVE COMMUNICATED THAT WE
WANT TO GET TO THAT TARGET BY
THE END OF THIS YEAR.
THAT'S CORRECT.
STUART: SO BY THE END OF THIS
YEAR.
SO LITERALLY EIGHT MONTHS, YOU
ARE GOING TO BUILD 2400 STORES,
RIGHT?
>> YEAH, THAT'S RIGHT.
I THINK WHEN YOU THINK ABOUT OUR
MODEL, HOW WE ARE DIFFERENT
FROM, FOR EXAMPLE, YOUR
TRADITIONAL RETAILER, FIRST OF
ALL, THE STORE FOOTPRINT WE HAVE
IS RELATIVELY SMALL.
THAT'S WHAT WE DO TO SAVE RENTAL
EXPENSES AND ALSO BY USING
TECHNOLOGY, WE'VE GOT A VERY
GOOD ASSESSMENT OF WHERE WE CAN
FIND THE DEMAND.
IT'S A DEMAND-DRIVEN BUSINESS
AND I THINK BY THE END OF THIS
YEAR BASED ON THE DEMAND THAT WE
ARE SEEING, WE WILL GET QUITE
CLOSE TO THE NUMBER.
SUSAN: YOUR LOSSES HAVE
QUADRUPLED IN THE FIRST QUARTER
AND YOUR MODEL, ACCORDING TO
SOME, IT'S ABOUT PRICE
DISCOUNTING.
CAN YOU KEEP THIS UP, THIS KIND
OF CASH BURN?
>> YEAH, HOW WE LOOK AT IT IS AS
FOLLOWS.
I THINK WHAT WE'RE DOING IS
TRYING TO DISRUPT THE INDUSTRY
BY USING TECHNOLOGY, DIFFERENT
APPROACH AND LOCATION AND REALLY
SORT OF TRY TO BRING THE PER CUP
COST DOWN.
I THINK WE HAVE BEEN VERY
SUCCESSFUL IN BRINGING THAT
DOWN.
THE WAY WE LOOK AT IT IS WE SET
OUR TARGET PRICE AROUND $16 TO '
OUR TARGET PRICE AROUND $16 $1 '
OUR TARGET PRICE AROUND $16 $17
OVER TIME.
AT THESE LEVELS WE CAN BE
PROFITABLE.
WHEN YOU THINK OF THE SUBSIDIES
FROM THE LISTING PRICE, WE THINK
THE PRICE SHOULD BE GOOD ENOUGH
TO DRIVE REALLY THE MASS MARKET
DEMAND.
WHEN YOU LOOK AT THE COST BASE,
YOU SEE THAT GOING DOWN VERY
QUICKLY.
SUSAN: YOU ARE UNDERPRICING
STARBUCKS BY 25% IN THE MARKET
AND SOME WOULD SAY THAT GIVEN
THE U.S./CHINA TRADE CONCERNS,
LUCKIN MIGHT BE BENEFITING FROM
A NATIONALIZED FERVOR IN CHINA,
MEANING ANTI-AMERICAN, SO THEY
WILL GO TO LUCKIN INSTEAD OF
STARBUCKS.
YOU THINK THAT'S TRUE?
>> WE ARE VERY FOCUSED ON OUR
OWN MODEL.
I THINK THE TRADE WAR FOR US IS
SOMETHING WE WILL MONITOR BUT
IT'S NOT SOMETHING THAT WILL
DRIVE THE SUCCESS OF OUR MODEL.
STUART: CHINESE NATIONALISM
WOULD DRIVE YOUR MODEL.
IN A TRADE FIGHT WITH AMERICA,
YOU ARE GOING UP AGAINST AN
AMERICAN COFFEE CHAMPION,
STARBUCKS, I WOULD SURELY
SUGGEST THAT NATIONALISM COULD
DRIVE YOUR BUSINESS.
>> WELL, THAT WOULD BE A TAIL
WIND I THINK, BUT THE WAY WE
LOOK AT OUR MODEL IS WE LOOK AT
THE FUNDAMENTALS OF THE MODEL
AND I THINK WITH THE POSITIONING
WE HAVE, HIGH QUALITY, HIGH
AFFORDABILITY, HIGH CONVENIENCE,
THAT'S REALLY WHAT'S GOING TO
DRIVE OUR SUCCESS.
STUART: BUT YOU CAN'T IGNORE
POLITICS HERE.
YOU CAN'T IGNORE THAT YOU ARE
RAISING AMERICAN MONEY, AMERICAN
DOLLARS, TO USE AGAINST AN
AMERICAN CHAMPION, STARBUCKS, IN
CHINA, SO YOU CAN EXPAND AND
BEAT THEM.
THERE'S A POLITICAL ANGLE TO
THIS.
>> WELL, I THINK WHEN YOU LOOK
AT SORT OF YOU WERE LISTED ON
THE U.S. EXCHANGE, WHAT WE HAVE
DONE IS ALSO GETTING A VERY SORT
OF GLOBAL SORT OF INVESTOR BASE,
INCLUDING SEVERAL WEALTH FUNDS
THAT HAVE GLOBAL POCKETS SO I
THINK WE ARE TRYING TO GET TO A
PLACE WHERE WE ARE VERY WELL
CAPITALIZED WHICH WE REACHED
TODAY IN ORDER TO BE ABLE TO
GROW AND CONTINUE OUR SUCCESS WE
HAVE SEEN IN THE LAST 18 MONTHS
AND REALLY BUILD ON THAT
SUCCESS.
STUART: I DO HAVE TO ASK THIS
QUESTION.
I HAVE HEARD THAT YOU SERVE
COFFEE WITH CREAM CHEESE IN
CHINA.
IS THAT ACCURATE?
>> WELL, ACTUALLY IT'S NOT
COFFEE.
IT'S ACTUALLY A TEA PRODUCT.
IT'S A VERY POPULAR PRODUCT IN
CHINA WHERE YOU HAVE EFFECTIVELY
FRUIT JUICE WITH A SMALL PORTION
OF CREAM CHEESE ON TOP OF IT,
AND IT'S PROBABLY ONE OF THE
MORE POPULAR PRODUCTS IN CHINA
TODAY.
SUSAN: TRY THE GRAPEFRUIT CHEESE
JASMINE TEA, ONE OF THEIR
PREMIER DRINKS.
>> IT'S GREAT.
STUART: PERHAPS YOU COULD
ARRANGE FOR DELIVERY.
>> NO PROBLEM.
I THINK WE CAN MAKE IT HAPPEN.
STUART: I'LL TRY IT ON CAMERA.
I REALLY WOULD.