Starbucks' Chinese Rival Luckin Coffee Plans US Comeback with $2 Drinks After a Fraud Scandal That Led to the Company's Delisting from Nasdaq: Report – Starbucks (NASDAQ:SBUX), Luckin Coffee (OTC:LKNCY)

China's largest coffee chain, Luckin Coffee LKNCYis preparing to enter the US market and aims to challenge competitors including Starbucks Corp. SBUXwith its inexpensive drinks. This move follows a fraud scandal that led to Luckin being delisted from the Nasdaq exchange and being hit with a hefty fine.

What happened: Luckin Coffee, which has become China's largest coffee chain during the COVID-19 pandemic, is now looking to make its mark in the United States. The company, which was delisted from Nasdaq over a fraud scandal and fined $180 million, plans to launch in the U.S. as early as next year, the Financial Times reported, citing two people familiar with the matter.

Luckin, which opened its 20,000th store in China in July, plans to target cities with large numbers of Chinese students and tourists, such as New York. The company has been running ads at NBA games to gain exposure ahead of its planned launch.

Luckin wants to leverage its experience selling affordable coffee in China and undercut U.S. incumbents by selling drinks priced around $2 or $3. The company is also preparing for expansion in Southeast Asia.

Luckin Coffee did not immediately respond to Benzinga's request for comment.

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Why it matters: The company once considered China's answer to Starbucks has not only survived but also become a fierce competitor to the Seattle-based coffee giant. Luckin Coffee's inexpensive lattes have attracted a growing customer base and made the company the largest coffee retailer in China, overtaking Starbucks.

Starbucks, on the other hand, has faced challenges in China, including competition from local brands such as Luckin Coffee and Manner Coffee. The Seattle-based retailer's recent moves in China, such as a significant expansion of discount strategies, have raised concerns about its long-term strategy and market position in China.

Former CEO of Starbucks, Howard Schultzreportedly urged the coffee chain to admit its mistakes and transform operations after a significant drop in sales.

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This story was created with Benzinga Neuro and edited by Kaustubh Bagalkote