Starbucks and Luckin are vying to win the coffee wars. I tested both out

Here’s my first dilemma of the day: the new Luckin Coffee near my office in Hong Kong wants me to download their app for a $2 drink. Without it, it’s $3.75.

Fine. I register, get a WhatsApp code and scroll through their menu: fruity Americanos, a seasonal kale tea and the coconut milk latte — a bestseller with five sweetness levels.

The menus are something else. This coconut comes from Luckin’s own grove in Indonesia, it says, blessed by volcanic ash and ocean nutrients. The milk is cold-pressed within four hours of cracking the fruit open. Sure, Luckin. I click iced, no added sugar.

Luckin, China’s largest coffee chain, is betting its kaleidoscopic offerings and clever pricing can take on Starbucks globally. The chain landed in Hong Kong late last year and now has a dozen stores across the city. 

This branch alone has seven other coffee shops nearby, including Cotti Coffee, a rival founded by former Luckin executives (who were ousted over an accounting scandal that got Luckin delisted from Nasdaq. But that’s another story). Cotti just opened stores in New York, and Luckin is set to follow.

I try paying with credit card instead of Chinese e-payment options, but that means entering my billing details and address in-app. Too much work. I bail and use the kiosk instead at the higher price. Still need to input my phone number though.

My 16-ounce drink promptly arrives. Chestnut brown in color, my first sip is bitter and refreshing. One stir with the paper straw and it turns pale blonde, the coconut’s silky, nutty sweetness taking over. After a few more compulsive sips, it gets heavy.

Mainstream coffee culture is converging globally, and Luckin is making it more digital, efficient — and gimmicky. Their basics — black coffee, oat milk latte — hook customers looking for a cheap caffeine fix (they cost roughly $2 each in Asia). Here, Starbucks has no real edge. “It comes down to value for money,” an Australian buying a mocha from Luckin tells me.

Office workers stream through, grabbing drinks pre-ordered on the app. Few linger. Andy Chan, 38, emerges from the nearby subway station and picks up his usual Americano en route to the office. “It’s normal,” the IT worker says of the quality. “And quite a bit cheaper than Starbucks.”

Hours later, I walk to the Starbucks down the block. Patrons are on their laptops or deep in conversation. Similar to Luckin, the drink offerings rotate through supposedly regional flavors, like matcha latte with tofu pudding. This branch just went cashless, notable in cash-stubborn Hong Kong.

I order a yuzu cold brew, which is more like citrus slushy dunked in coffee. Nearly $6 for 12 ounces feels steep after Luckin, but the sign says the cold brews are steeped for 20 hours. I ask for a glass after the barista automatically reaches for a paper cup. The flavors click into focus once the sweet, herbal ice crystals soak up the coffee. As someone who usually drinks black coffee or a flat white at most, my two caffeinated desserts today have me wired.

Businesses say they reward loyalty. Starbucks’ take is getting you to lend them money while locking you in. The Seattle-based chain sits on $1.85 billion from its stored-value cards and loyalty programs as of the first quarter this year. A portion typically goes unredeemed — turning into revenue. Sales have been declining, but Starbucks has tapped interest-free capital this way for years.

If Starbucks is acting like a bank, Luckin is like the startup gunning for scale. With coffee prices rising, chains like Luckin are grabbing market share through high turnover and compact spaces that drive down costs. Some people want the coffeehouse theater; others prize convenience and live digitally. Out of the latter, Luckin is building a treasure trove of data. 

Viral stunts like its Moutai liquor-infused latte help (I wouldn’t try their kale tea, but this I would). Luckin launched nearly 120 items in 2024 alone, likely keeping Starbucks’ Asian R&D teams up at night.

Coffee is splintering into different worlds. You can get a pricey pour-over with wine-like tasting notes, an espresso at a historical cafe, a cortado at a boutique spot, or a boba-like latte at one of Luckin’s 20,000+  outlets. Luckin may be turbocharging coffee fads with its dizzying flavor rollouts, but its core market of price-sensitive consumers aren’t going anywhere.

The future has room for different models — there are enough caffeine addicts and social drinkers to sustain various empires. But there’s no denying the pressure is on incumbents like Starbucks to refresh their identity before third space becomes third choice.