Chinese coffee giant Luckin Coffee hit 10,000 stores in China in last year, surpassing Starbucks as the largest coffee chain brand in the country following rapid nationwide expansion this year.

Founded in 2017, Luckin Coffee burst onto the Chinese coffee scene to challenge Starbucks through affordable coffee options and mobile ordering. China is Starbucks’ second-largest market after the U.S.

Aggressive Expansion

In the quarter ended June 30, Luckin Coffee opened 1,485 new stores, averaging 16.5 new stores daily. Of the 10,829 stores in China, 7,181 are self-operated and 3,648 are partnership stores, according to the company’s earnings transcript.

The Chinese coffee chain expanded to Singapore in March in its first international foray and has opened 14 stores in the city-state so far, according to a CNBC check.

Luckin was able to expand so fast because of its operating model — which includes self-operated stores and franchises.Meanwhile, Starbucks’ stores worldwide are company-owned and the American coffee chain does not franchise operations, according to its website. Instead, it sells licenses to operate.

Franchising unlocks very fast growth because you don’t have to put that amount of capital. Otherwise you will always be limited from growth.

Mass Market Appeal

Luckin and Starbucks have different pricing strategies.A cup of coffee from Luckin costs 10 to 20 yuan, or about $1.40 to $2.75. That’s because Luckin offers heavy discounts and offers. Meanwhile, a cup of coffee from Starbucks is priced at 30 yuan or more — that’s at least $4.10.

Luckin found mass market appeal. Price wise, it is already differentiated from Starbucks. Quality wise, it’s still better, compared to many of the low end brands.

Recently, the company launched a new drink with Kweichow Moutai, a Chinese liquor maker famed for its “baijiu,” or white liquor made from rice grains.Luckin said that its sold 5.42million Moutai alcohol-infused latte on the first day of its launch.

Other localized hits with the Chinese market include brown sugar boba latte, as well as cheese latte and coconut latte.

Luckin Coffee has played an important role in deepening the coffee market in China by introducing products which would suit the Chinese customer.