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Who owns Luckin Coffee? China-based Starbucks rival caught in fake sales scandal now files for bankruptcy

In 2020, after the coronavirus hit the economy, Luckin Coffee revealed that it inflated its 2019 sales revenue by up to $310 million

Chinese coffee company and coffeehouse chain, Luckin Coffee, has filed for bankruptcy protection in the United States. Luckin Coffee, or simply Luckin, helmed as a Chinese rival to Starbucks, stated it is negotiating with stakeholders regarding restructuring its financial obligations. In 2020, after the coronavirus hit the economy, Luckin Coffee revealed that it inflated its 2019 sales revenue by up to $310 million that resulted in the stock price crashing. Luckin Coffee has stated that its stores will remain open during its restructuring.

Luckin Coffee files for bankruptcy

Luckin’s latest move is designed to protect the company from lawsuits by US creditors, including shareholders. “The company continues to meet its trade obligations in the ordinary course of business, including paying suppliers, vendors, and employees,” the statement said.

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Who founded Luckin Coffee?

Luckin Coffee was founded by Jenny Qian Zhiya and Charles Zhengyao Lu. The first shops of Luckin in Shanghai and Beijing were opened in January 2018, and the company later announced the completion of Series A financing to a total of $200 million. By October 2018, it had opened more than 1300 stores and became the second-biggest coffee brand in China. Much of its expansion in the Asia-Pacific market was generated by its marketing strategy. Luckin Coffee caught international attention when in May 2018, it accused Starbucks of forming a monopoly by signing exclusive contracts with suppliers and property owners. Starbucks dismissed all the allegations and referred to it as a marketing stunt by Luckin.

Charles Zhengyao Lu

Lu, 50, is a Chinese businessman and the non-executive chairman of Luckin Coffee. He earned a degree in industrial electric automation from the University of Science & Technology, Beijing, and an Executive MBA from Peking University.

Lu was let go from his position from Luckin after Goldman Sachs announced that it would seize and sell his stock holdings after defaulting on a corporate margin loan. Lu has also started an auto-rental firm, CAR Inc. He has a current net worth of $680 million.

Jenny Qian Zhiya

Zhiya used to work as the COO at Lu's rental car company. Later she launched Luckin Coffee after raising $150 million from Lu and others. Back when Zhiya was still at Luckin, she owned almost 17 percent of the company, and in 2019, when the stock of the company rose to $25.96, she was worth $1 billion.

Who owns Luckin Coffee?

In 2019, Luckin announced that they planned to open over 2500 new stores in China and will surpass Starbucks to become the biggest coffee brand in China. It quickly applied at the National Association of Securities Dealers Automated Quotations and started to trade at $17 a share. The company had over 3,600 stores by the end of September 2019. However, it recorded a net loss of over $75 million in the third quarter of 2019.

In 2020, Luckin announced to the public they had opened over 4,500 stores in the past two years and have become the biggest coffee chain brand in China. In April 2020, Luckin announced that after a thorough internal investigation, they have found that the company’s COO, Jian Liu, has allegedly fabricated the 2019 sales by around $310 million. After the news of the accounting scandal surfaced, its stock fell by over 80 percent. CEO Jenny Zhiya Qian and COO Jian Liu were relieved of their positions in May 2020. In December 2020, the U.S. Securities Regulatory Commission settled the accounting fraud case for $180 million.

Around the same time, the company appointed Jinyi Guo as the new chairman and CEO after both the co-founders were removed by the shareholders.
 
Dr Jinyi Guo

Guo has received a doctorate from Bejing Jiatong University. He had previously held the Research Assistant position at China Academy at Transportation Sciences. Guo holds the position of CEO and Senior VP at Luckin Coffee. He is also one of the directors of the company.

What is the net worth of Luckin Coffee?

In 2018, Luckin reported $2 million in revenue, and when it got listed to NASDAQ, the market capitalization was around $2.24 billion.