Why Luckin Coffee Survived After Its Scandal?

Because the per capita consumption of coffee in China is far lower than that in western countries.The market potential is very large, and there is a market vacancy between high-end coffee brands and low-end coffee brands.Luckin Coffee decided to build a cost-effective intermediate coffee brand in China.At present, although it has experienced financial fraud, it has still achieved certain success.This paper uses the SWOT method to analyze the strengths, weaknesses, opportunities, and threats in the operation of Luckin Coffee since the financial fraud scandal in 2020.Based on the theory of consumer behavior and the actual situation of Luckin Coffee's operation, it also points out the factors that positively impact consumer decisions in coffee consumption, such as culture, brand credibility, product quality, advertising, and big data, etc.This paper is different from the previous academic evaluation of the initial stage of Luckin Coffee, where the initial strengths may have changed over time to become a drawback for the company's future development.With this in mind, this paper assesses the recent situation of Luckin Coffee and compares it to Starbucks, a multinational coffee giant brand with a considerable share in the Chinese coffee market.The study found that consumers are willing to continue to consume Luckin Coffee's products despite its notoriety in the capital markets, suggesting that Luckin Coffee's business model, which was rebuilt after the scandal, does maintain some appeal to consumers.However, Luckin Coffee still needs to make many efforts if it wants to fully repair its reputation and obtain more profits.