Luckin Coffee (China’s Starbucks) Punished for Inflated Earnings

Luckin Coffee (China’s Starbucks) punished for inflated earnings

Luckin Coffee will face penalties from China’s Ministry of Finance for inflating its profits, transaction volume, costs and revenue in 2019.

Up until this point, Luckin Coffee has been a huge success story and hailed as China’s answer to Starbucks. It opened in 2017, and, within 18 months, had listed on the New York stock exchange. By the beginning of this year, it had built up 4,507 stores.

However, in April, it was revealed that the company had inflated 2.25 billion RMB of sales through fake coupons, exaggerated costs by 1.2 billion RMB and profits by 908 million RMB.

Some netizens were unimpressed with the coffee company’s behaviour:

“The Ministry of Finance should give even heavier punishments to the company. It has ruined the reputation of Chinese companies.”

“This kind of behaviour shouldn’t be forgiven.”

However, others comments on social media seemed unconcerned by the revelation:

“Although they inflated their revenue, their coffee tastes better than Starbucks and it’s much cheaper than other coffee brands.” 

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