Close Ad

The Spoon

Daily news and analysis about the food tech revolution

Luckin

Tim Horton’s Secures Investment to Expand Its Tech-Centric Coffee Model in China

Canadian coffee chain Tim Horton’s has secured an undisclosed amount of funding from Chinese tech company Tencent, according to AgFunder News. The company originally announced the news via a post on Weibo.

Tim Horton’s China unit will use the new funds to build up its digital assets and infrastructure as well as expand its number of locations in the Chinese market. Currently, it operates about 50 stores in that country and says the investment from Tencent will let the company hit its target number of 1,500 stores sooner than originally planned, though a specific time wasn’t named. 

Tim Horton’s first entered the Chinese coffee market in February of 2019. 

Digitizing the coffee market in China is a big business right now. Tim Horton’s faces competition from Luckin, which has always pursued a digital-first model that emphasizes mobile ordering, AI-powered self-service coffee terminals, and delivery. (Side note: Luckin is currently at the center of an accounting scandal that is raising questions about future growth.)

Starbucks is also a major competitor in China, having partnered with Alibaba’s food delivery platform Ele.me to grow its delivery footprint. Starbucks has also partnered with Alibaba’s Heme supermarkets to operate its own ghost kitchens, and launched its very first to-go-centric Express store in Beijing last year. 

Tim Horton’s new investment funds come at a time when all these companies will need to double down on their tech investments to make the coffee experience as to-go-centric as possible. The COVID-19 pandemic has placed things like contactless payment, delivery, and mobile orders into the center of future restaurant operations. Major chains that want to keep growing will need to spend more on these technologies in order to meet consumer demand for both convenience and safety, not only in China but in the rest of the world, too.

Starbucks’ Chinese Competitor Luckin to Launch IoT-powered Self-service Coffee Machines

Luckin, one of China’s largest coffee chains, announced this week in a press release two new offerings aimed at getting coffee to consumers as quickly and conveniently as possible: the Luckin Coffee EXPRESS smart unmanned coffee machine and the Luckin Pop Mini smart vending machine. Both machines are part of Luckin’s push further into the world of self-service locations, what the company calls “the unmanned retail market” in an effort to reach more customers and stay competitive with its chief rival, Starbucks.

These unmanned terminals will be in office buildings, college campuses, bus terminals, gas stations, highway service stations, and residential communities, according to the press release. Though Luckin hasn’t specifically said what for, IoT and facial recognition will be used, most likely to speed up the ordering process. 

Of course finding faster, easier ways to get coffee to customers is a major priority right now for chains. Starbucks opened an Express store in Beijing last year that focuses specifically on delivery and pickup orders. It is also operating ghost kitchens in China in collaboration with Alibaba’s Heme supermarkets. 

In the U.S., both Briggo and CafeX have self-service coffee kiosks manned by robots at airports around the country (though it’s worth noting that CafeX just shuttered all three of its downtown San Francisco locations). Meanwhile, a company called Bandit operates a mobile-order-only cafe in Manhattan, where customers order ahead via the Bandit app and simply pick their drink up when it’s ready. 

Luckin, which has so far focused heavily on delivery and pickup order formats, doesn’t yet have any locations in the U.S. For now, its focus seems to be expanding further across China and in doing so competing with Starbucks. Luckin’s self-operated stores numbered 4,507 by the end of 2019, according to a press release. Starbucks, meanwhile, has tried self-service vending machines in the past, a concept that never took off and is no longer being promoted.

Whether Luckin’s new self-service offerings prompt Starbucks to double-down on its self-service efforts again remains to be seen. The Seattle-based coffee retailer has already said it plans to open more express stores in high-traffic areas in China. That probably includes airports, bus terminals, and office parks — the very same places Luckin is placing its self-service machines. 

Starbucks’ New Express Store Concept in China Focuses on Delivery, Pickup Orders

Starbucks unveiled its first-ever “express retail” concept store, located Beijing, China and aimed at further streamlining the delivery and pickup process for customers and drivers.

According to a press release, the new “Starbucks Now” retail store “seamlessly integrates Starbucks physical and digital customer touchpoints.” Its minimalist design features very limited seating and a secure in-wall pickup system with “pickup portals” associated with each order. Delivery drivers or customers who order via the Starbucks mobile app can retrieve their orders from those portals.

The store will keep one or two baristas on the floor to greet customers and assist them with ordering. The location will also serve as a central hub for fulfilling delivery orders for nearby stores within a certain radius, thereby shifting the burden of the extra orders away from those more traditional locations.

The move follows efforts earlier this year from Starbucks to expand its delivery program across China, an initiative that also included opening ghost kitchens for fulfilling more delivery orders. More important, the Starbucks Now store is also clearly aimed at competing with its newly public rival Luckin. The latter focuses on a store model that’s largely around on-the-go orders, with 91.3 percent of those locations “pick-up stores” that offer very limited seating.

Starbucks said it plans to open more of these express stores in high-traffic areas in China, especially targeting business and transit hubs. No word yet on if we’ll see similar stores hit the U.S. at any point in the near future.