Starbucks is losing customers in China at a rapid pace. Consumers are less interested in foreign brands, more cost conscious and enticed by local rivals.

Luckin Coffee, a Chinese brand that started seven years ago, now generates more revenue in the country than Starbucks. It has nearly 3 times as many stores, and opens a new one, on average, every hour.

Brian Nicol, the new $100-million CEO of Starbucks Corporation sounded the alarm in October, calling the competition “extreme” in the company’s second-biggest market.

“We need to figure out how we grow in the market now and into the future” Mr. Niccol told Wall Street analysts.

Businessman Howard Schultz, Starbucks’s former CEO, insisted that the coffee chain would not enter a price war. “As customers become more knowledgeable about coffee, they will want to upgrade from lower-end or discounted products” he said in a talk.