Many baristas believe that the preparation of quality coffee is a meticulous and sacred process. From the sound of the grinder to the aroma that comes out, it’s a careful, holy process. In China, however, a new generation of cafes is based on the idea that speed and efficiency are what get people going in the morning.
Lucky was founded in November 2017 and opened 500 coffee shops with funding of $150 million within five months. It’s now worth $1 billion and is a serious competitor to China’s largest coffee company, Starbucks. What’s its secret? No paper menus.
Luckin is a coffee shop that was designed to be able to accept online orders. This concept has been around for a long time, but it’s a new one. The “new retail” firm has opened locations strategically based on the data of where customers will most likely want to get a cup of coffee quickly, like near offices. This means that nearly half of their outlets are solely delivery hubs and promise a hot, fresh cup of coffee delivered within half an hour. The other Luckin branches have tables and chairs but no menus. Customers can order via their app before they arrive. This is similar to the approach taken by Alibaba’s Hema stores or Amazon’s partnership with Whole Foods. Both follow the “new retail model,” which aims to synchronize the best of both online and offline retail.
Starbucks, on the other hand, has focused more on offline experiences as China’s cafe culture shifts from tea to coffee. It opened its largest outlet in the World, the Starbucks Reserve Roastery, in Shanghai last year before unveiling the second-largest flagship this summer in Beijing. Starbucks has recently increased its digital convenience to customers under pressure from companies like Luckin. It has a large presence on WeChat, and earlier this week, it announced that it will be launching an “old retail” partnership with Alibaba in order to offer online deliveries.
Luckin may be the most well-known digital cafe, but it is not the only one. Ratio, a Shanghai-based startup, replaces baristas with a robotic arm that creates the perfect cocktail or cup of coffee after a customer scans the QR code at the cafe entrance. The QR code directs customers to an app on their phones where they can customize the strength, water content, and sweetness of their coffee. Gavin Pathross, the founder of Ratio, is a former chief digital officer at Yum China, which owns KFC, Pizza Hut, and other restaurants. He opened Ratio at K11 mall in the summer after noticing “a lot of excess interaction in cafes that is not meaningful for customers.”
China’s digital ecosystem has had a major impact on China’s dining scene. This is especially true when it comes to mobile payments. McDonald’s has introduced ordering kiosks at its Chinese and American outlets where customers can pay using WeChat Pay and Alipay. Pizza Hut and KFC also offer similar initiatives. Meng Fei is the owner of the popular Chinese reality dating show Mr Meng. The restaurant has an online menu that you can access by scanning QR codes at the table. After ordering and paying for dishes, a busser, not a server, brings the meal to customers.
A spokesperson from mobile payment giant Alipay told JWT Intelligence that businesses who want to reduce costs can benefit from mobile ordering and prices. He says that a significant portion of chain restaurants already use a QR code ordering system via mobile phones. This reduces the need for human labor in repetitive tasks. This increases their profit margin and helps them survive in China’s highly competitive restaurant industry.
Some are skeptical about the trend to replace human services with automated ones. One bar owner from Shanghai who responded to Ratio’s WeChat post said that efficiency wasn’t the only thing important in a country where food and drinks are a huge part of the culture. “I think Ratio has an incomplete understanding of hospitality and the reason bars exist,” he wrote. Our industry is a business of empathy, love, friendship, and compassion. Robots cannot provide these things.
