Coffee buzz: Luckin Coffee plans a small-scale entry into the U.S.

Luckin Coffee (OTCPK:LKNCY) is planning to expand to the U.S., according to the Financial Times. Sources indicate the Chinese coffee chain will price drinks between $2 and $3 in a few cities with large Chinese student and tourist populations, such as New York.

Notably, the Xiamen-based company has been running advertisements during NBA games to build up recognition ahead of the U.S. launch. Looking further ahead, a large-scale expansion of Luckin Coffee (OTCPK:LKNCY) at scale could threaten established chains such as Starbucks (NASDAQ:SBUX), Dunkin’ Donuts, and Dutch Bros. (NYSE:BROS).

Luckin Coffee (OTCPK:LKNCY) was founded in Beijing in 2017 as a tech-driven coffee company aiming to challenge Starbucks (SBUX)in China. The company expanded rapidly, opening thousands of stores across China within its first two years of operation. By 2019, Luckin had surpassed Starbucks as the largest coffee chain in China.

Luckin Coffee (OTCPK:LKNCY) has more than 20,000 stores open globally.

Shares of Luckin Coffee (OTCPK:LKNCY) traded flat in the premarket session on Tuesday. The coffee chain stock has seen bouncy trading over the last six weeks amid stimulus developments in China. Meanwhile, Starbucks (SBUX) has edged 1% higher over the last six weeks.