Controversy-ridden Chinese coffee chain Luckin Coffee is deliberating over a Hong Kong listing, as the Starbucks challenger seeks to further a comeback from its 2020 Nasdaq expulsion, reports the South China Morning Post. The chain, headquartered in the Fujian provincial city of Xiamen, obtained a so-called “light touch provisional liquidation” approval from the Cayman Islands that allowed a new management team to work with its liquidator to keep its business growing in China after firing three senior executives for fraud.
That helped Luckin expand its network of coffee kiosks – where takeaway orders are made via smartphone apps, with no dine-in space – by 26% in two years to 6,024 all over China at the end of 2021, surpassing the 5,400 outlets operated by Starbucks. Fourth-quarter revenue jumped 81% to RMB 2.44 billion ($362.83 million), and Luckin even received the endorsement of the Olympic freestyle skiing double-gold medallist Eileen Gu.
“The light touch regime allowed [Luckin’s] board to continue running the business, which is essential because it allows someone who knows the coffee business to continue to run the network,” said Tiffany Wong Wing-sze, managing director of the consulting firm Alvarez & Marsal, the provisional liquidator of Luckin since July 2020. “It’s rare for a company like Luckin to complete its restructuring so quickly; it needs the cooperation of the management, employees, the creditors and regulators.”