Key facts
- Luckin Coffee launched in Singapore with promotional deals of S$1 per cup.
- One local cafe owner reported a 15% drop in sales after Luckin's arrival.
- Luckin Coffee has over 8,000 stores in China.
- Luckin plans to open more than 10 outlets in Singapore.
- Tim Hortons plans to expand to hundreds of locations across Singapore, Malaysia, and Indonesia.
- Singapore's coffee segment is estimated to generate US$2 billion in revenue this year.
Competition is intensifying in Singapore's coffee market with the entry of Chinese giant Luckin Coffee and Canadian chain Tim Hortons. Luckin, known as the 'Starbucks of China' with over 8,000 stores, launched in Singapore with aggressive S$1 per cup promotions, causing an initial 15% drop in sales for some local independent cafes like Folk Yard. However, the owner of Folk Yard noted that regular patrons returned once the initial hype and promotions subsided.
Industry experts suggest that while new brands may find demand, Singapore's high rental and manpower costs present significant hurdles. F&B expert Alvin Sabai noted that sales must be at least four times rental costs to break even, a difficult feat given rising staff costs due to the progressive wage model and labor shortages. F&B consultant Karen Lam expressed more optimism for Luckin's business model, which focuses on minimizing manpower through digital apps and small shop sizes, contrasting it with Tim Hortons' need for larger spaces.
Luckin has opened two outlets and plans for at least eight more by the end of April, while Tim Hortons is preparing for a wider expansion. Other new entrants include Coach Cafe, Takagi Coffee, and Krispy Kreme. These new players face competition from established chains like Starbucks (149 outlets), The Coffee Bean and Tea Leaf (72 outlets), and homegrown Huggs (about 20 outlets). Singapore's coffee market is substantial, estimated to generate US$2 billion in revenue this year, with residents consuming about 2.6kg of coffee per capita annually.