Unicorn start-up Luckin Coffee has run out of luck.
The company, which made headlines as a (sometimes self-styled) “Starbucks-killer”, has admitted to fabricating sales figures. Chief accused is Luckin’s COO Jian Liu, who reportedly worked with others to fabricate transactions that made up nearly half the chain’s sales in 2019.
Luckin Coffee, China’s Newest Unicorn, is Challenging Starbucks’ Market Stranglehold
“The Special Committee recommended certain interim remedial measures, including the suspension of Mr. Jian Liu and such employees implicated in the misconduct and the suspension and termination of contracts and dealings with the parties involved in the identified fabricated transactions,” Luckin Coffee said in a statement.
After long speculation surrounding financial difficulties, the chain revealed on Thursday that a preliminary investigation had accounted for 2.2 billion RMB of transactions, as well as inflated costs and expenses. Shares plummeted over 84% after the announcement was made.
Digitally China Podcast: Behind the Hype of China’s Starbucks Challenger, Luckin Coffee
The company, which had worked rapidly to open over 3,000 stores across China, went public in May and held a secondary stock offering in January.
We highlight our top stories each week in an email newsletter that goes out every Monday - hot, fresh, and straight to your inbox.
Don't worry, we don't spam
Thousands of earthlings have signed up for our newsletter, and you should do the same