Tim Culpan of Bloomberg notices an oddity about Luckin Coffee, China’s answer to Starbucks:
The pending Nasdaq debut of China’s Luckin Coffee Inc. begs the question of whether it’s a purveyor of beverages, or a technology company.
As I pore through its 286-page IPO filing, I find myself struggling to decide. It’s kind of like Starbucks Corp., I guess, but also a lot like food-delivery giant Meituan Dianping and ride-hailing pioneer Uber Technologies Inc. […]
Luckin posted 841 million yuan ($125 million) in revenue last year, exploding from 250,000 yuan the year prior. But its operating expenses were three times higher than sales at 2.4 billion yuan. And it wasn’t even materials, store rentals or admin expenses that blew out the bottom line.
Marketing costs were 746 million yuan last year. To make every 100 yuan from selling coffee, Luckin spent 152 yuan to produce and market that cup – not including rent and general expenses.
Spending three times more than revenue makes Luckin a tech startup, not an F&B company.
Is it also part of the Belt and Road?
I previously wrote about Luckin here.