(Yicai) Feb. 13 -- Cotti Coffee, a budget coffee chain founded by Luckin Coffee co-founder Lu Zhengyao, plans to open convenience stores as part of its expansion strategy amid intensifying competition.

The new Cotti convenience stores will maintain a coffee-centric theme while offering typical convenience store products, including ice cream, instant noodles, bottled drinks, warm snacks, and boxed meals, Beijing Business Today reported today.

Cotti Coffee was established in October 2022, with former Luckin Coffee Chief Executive and co-founder Qian Zhiya serving as its executive director. Lu and Qian departed Luckin Coffee in 2020 following a scandal involving falsified revenues that led the listed company to get delisted from the Nasdaq. Following a similar strategy to its main competitor Luckin Coffee, Cotti sells coffee at low margins to gain market share, with prices starting at CNY9.9 (USD1.40) per cup.

The introduction of the convenience store model is designed to maximize operational efficiency, boost store revenue, and help Beijing-based Cotti reach its target of 50,000 stores by year-end, according to the report. As of last October, Cotti operated over 10,000 coffee shops, less than half the number of Luckin Coffee's locations.

Cotti has been expanding its retail strategy. In October, it announced plans to establish coffee bars in third-party supermarkets and catering outlets, forming partnerships with companies including electronics retailer Suning, convenience store chain Meiyijia, and fast-food chain Wallace Food.

Meanwhile, Luckin Coffee continues its rapid expansion. The Starbucks competitor operated more than 21,340 stores as of Sept. 30, 2024, representing a 7 percent increase from the previous quarter, according to its latest financial report.

Editor: Emmi Laine