Luckin Coffee has disclosed on Thursday that they made an internal investigation, and its chief operating officer fabricated their sales in 2019 by 2.2 billion yuan ($310 million).

The shares plummeted by 80% after they released the filing.

The Chief Operating Officer, Jian Liu, and other employees who were reporting to him were engaging themselves in misconduct and are now suspended. 

The company will be taking legal action for people who took part in it and are responsible for those conducts. Jian could not be found anymore for an interview.

Luckin is a two and a half-year-old company and has goals to overtake Starbucks in China, the top coffee chain currently in the country. 

The investors are not relying on their previous financial statements and earnings, which were released for nine months. They announced earlier that heir net sales for the first nine months of 2019 were 2.9 billion yuan ($413 million). 

In their statement, “As a result, investors should no longer rely upon the company’s previous financial statements and earnings releases for the nine months ended September 30, 2019, and the two quarters starting April 1, 2019, and ended September 30, 2019, including the prior guidance on net revenues from products for the fourth quarter of 2019, and other communications relating to these consolidated financial statements.

The company said that its investigation is still at its initial stage, and its independent auditor does not verify estimates of the fabrication of sales. Kirkland & Ellis will do their counseling and FTI Consulting for forensic accounting expertise.

Back in January, the Muddy Waters Research said that they found something fraudulent with their business.

On its official Twitter page, it said, MW is short $LK. We received an unattributed 89-page report alleging $LK is a fraud: “number of items per store per day was inflated by at least 69% in 2019 3Q and 88% in 2019 4Q, supported by 11,260 hours of store traffic video” We view the work as credible. 

However, Luckin replied and said that the seller’s report was false and misleading. The founder of Muddy Waters said Luckin shows precisely why we need short sellers in the market. We believed this report was credible when we read it, and that’s why we took a position. 

This is again a wake-up call for U.S. policymakers, regulators, and investors about the extreme fraud risk China-based companies pose to our markets.”

In May, Luckin started its trade on the Nasdaq, and since then, making it to the public market, it gave the company a market value of $1.3 billion. Furthermore, the company has tried a customer-based format and offering excellent discounts to the market. 

For January of this year, it already has more than 4,500 branches in China, a few hundred more than Starbucks in the country. Starbucks, on the other hand, responded to its competitiveness and opened more cafes in China for quick picks and delivery and less on seating capacities in their cafes.

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Chipotle, the fast-food chain is going to host daily Chipotle Together, a virtual lunchtime hangout at a meeting application Zoom and it features different celebrity guests that have 3,000 fans. 

The coronavirus pandemic has now created social distancing in real life. 

Its way of bringing positivity to people will help boost morale. This remote conferencing with Zoom is based in San Jose California.

Chipotle shared a tweet earlier gave the link: A lot is going on rn. If anyone wants to hang we’re going live on Zoom here:http://chip.tl/guac-zoom. 

For those wanting to join, Chipotle will be sharing all the links to the Chipotle Together Zoom. There is no conference room booking needed.

The first Chipotle Together on Monday will be held at 11 am PT and will be hosted by Colton Underwood from the Bachelor. He will be talking to his fans and will explain about a Chipotle presentation.

Chipotle is also offering free delivery on orders more than $10 through its app and website for March. 

It is now responding to the effects of the coronavirus and has included some services like delivery kitchens with dedicated teams and ingredient stations to prepare digital orders with care; new tamper-evident packaging to help ensure food is untouched during delivery, and a delivery tracker in its app to provide customers with step-by-step real-time updates from the restaurant to your location. 

Aside from that, Chipotle will also be giving away free burrito giveaways.

Due to the guidelines that no social gathering is allowed for more than 50 people, most of the restaurants and bars are closing down as of today in several states.

Furthermore, the DC restaurant group is defying the restrictions and even calling to restaurants continue with their business. 

Here is the official statement from Washingtonian Food editor Jessica Sidman:

Not everyone is following @MayorBowser‘s restrictions on restaurants and bars. Hill Restaurant Group owns Hawk ‘n’ Dove, Lola’s, Willie’s Sports bar, among other establishments. From the District Industry Facebook group: The safety and comfort of our patrons has and always will be a top concern for us at all of our Hill Restaurant Group restaurants,” the group wrote. 

“Our staff has been trained to maintain even stricter safety precautions to protect our guests. In light of recent developments, all HRG restaurants will continue to operate as normal and we encourage our fellow industry folks to do the same,” it continued. 

“We understand the gravity of effects that the Corona Virus [sic] has or will have on our community especially the hospitality industry. However, we will not bow down to pressure from the Mayor’s Office or any group for that matter who covertly is attempting to shut us down. We fully support our employees and our patrons. It is not our burden to bear nor is it our staffs’ burden to bear.”

But the mayor of Washington made its reply via Twitter on Monday morning While I recognize that all of us have been stressed beyond our immediate understanding of how coronavirus has so quickly upended our daily lives and personal and business existence — you must comply with the DC Health notice. We all must do our part to contain the spread of this global pandemic and get to the business of recovery as soon as possible. Until then, your compliance is required, and we will exercise the full force of our MPD, FEMS, DC Health and ABRA and the emergency authority to achieve it.”

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