Luckin’s Ex-Chairman Charles Lu Launches a New Venture: Chain Restaurants
Charles Lu, founder of the controversy-ridden Luckin Coffee, now its ousted CEO, is said to embarking on his next venture: noodles restaurants, according to the latest from 36kr.
Together with his former partners from Luckin Coffee Inc., including former Luckin CEO Qian Zhiya, Vice President Li Jun and Vice President Zhou Bin, Mr. Lu has launched the project plan in early April. The first physical store is likely to land in the Wangjing area, Beijing. There was already an entry on the popular business rating app dianping.com to indicate the brand name: Noodle Dairy. Neither picture nor opening date is shown, but user interest has already been mounting, “How to join the business?” “Would like to join the chain! Go go Mr. Lu.”
Despite having no catering experience, Mr. Lu is expected to adopt Luckin’s business model, which is to sprinkle stores all over the cities, collecting valuable consumer information from the vast market, and close down cold businesses in order to keep the hot spots for more stores, eventually growing into a nationwide network of strategically-placed stores serving customers on the go.
Serving food, however, is a much more investment-heavy business than bringing coffee to the counter, and therefore requiring more money and expertise. With Luckin’s reputation tarnished by fraud accusations in 2020, Mr. Lu will face a far more hostile environment than he used to. Even more so with restaurants closing down or losing money because of the pandemic.
According to the 2020 China Restaurant Industry Annual Report, the catering industry’s profits were expected to average at -27.09% for that year. While this seems gloomy news for small and family businesses, the outlook has potential for chain restaurants that promise better hygiene and quality control. This offers a possible explanation why Mr. Lu has chosen to venture into the catering industry.
SEE ALSO: Luckin Coffee Faces Internal Strife, CEO Guo Jinyi Urged to Step Down
Charles Lu majored in industrial electric automation at the University of Science and Technology in Beijing, and in 1994, three years after graduation, he embarked on entrepreneurship by starting a slew of businesses which subsequently made him one of the 500 richest people in China. CAR Inc., which he founded in 2007, went public on the Hong Kong Stock Exchange in 2014; in the following year, ride-hailing startup UCar was launched. Only in 2020, he resigned as both the chairman of the board and as a non-executive of the car rental businesses. Meanwhile Luckin, despite its downfalls and executive turnovers, remains the largest coffee chain brand in China.