Dive Brief:

• Luckin Coffee is launching unmanned coffee machine called Luckin Coffee EXPRESS and Luckin Pop Mini smart vending machines, according to a press release.
• The machines feature IoT and facial recognition technologies to help create a new customer experience.
• The vending machines will be placed in office buildings, campuses, airports, bus terminals, gas stations, highway service stations and residential communities.

Dive Insight:

Luckin Coffee has been expanding at a meteoric pace as it aims to steal market share from top competitor Starbucks. Unmanned coffee vending machines are another way to further saturate the market, including key places where busy people are in need of a caffeine boost, like airports and office buildings. As customers crave more convenience, the ability to grab a cup of coffee on the go in an unexpected location may also bolster brand loyalty for some coffee drinkers, or sway Starbucks drinkers into trying Luckin's coffee by placing them in an area where Starbucks isn't available.

Luckin has been focusing on getting its products into customers' hands through novel formats, so the vending machines are a natural development. Its model consists of a large number of pickup and delivery-only formats that allow users to place orders through an app. The model has resonated well with Chinese consumers who tend to be more tech savvy. It's U.S. IPO last year increased the pressure on Starbucks on its home turf, although Luckin doesn't have any units in the U.S.

Although Luckin has been a player in China since 2018 compared to Starbucks' entering the market in 1999, Starbucks is playing a bit of catchup to Luckin's tech-focused model. Starbucks offers a few unmanned solutions like its premium self-serve option that consists of a branded kiosk featuring a coffee maker and accoutrements. But its attempt to launch a branded Starbucks vending machine seems to have failed, according to Caffeine Informer.

The coffee giant is fighting back by launching its first retail express store called Starbucks Now to answer Luckin's pickup and delivery-only model last year, for example. It strategically placed the store in Beijing's financial district and offers coffee concierges to assist with order pickup and delivery, adding an element of customer experience. Last year, Starbucks rolled out voice ordering through Alibaba's smart speaker.