Starbucks has agreed to sell a 60 percent stake in its China retail operations to private equity firm Boyu Capital in a deal valued at about $4bn. The transaction marks a major shift for the US-based coffee chain in its second-largest market.
Under the agreement announced on Monday, Starbucks will retain a 40 percent share in the business and continue to own the brand in China. The China unit will remain headquartered in Shanghai and will continue to operate more than 8,000 stores across the country, with long-term plans to expand to as many as 20,000 locations.
Starbucks entered China in 1999 and grew rapidly as coffee culture expanded among younger consumers. But in recent years the company has faced slowing demand, tighter competition and the rise of fast-expanding domestic rivals such as Luckin Coffee, which now has more stores in China than Starbucks and attracts customers with lower prices and aggressive discounts.
The company said the partnership with Boyu Capital represents a new phase of its strategy in China, aimed at reviving growth and adapting more closely to local market conditions. Starbucks plans to roll out new menu offerings and invest in digital ordering platforms under the new ownership structure. The deal is expected to be completed next year.
Boyu Capital is a major private equity investor with stakes across consumer, finance and technology sectors in Asia, with offices in Shanghai, Hong Kong and Singapore.
Starbucks’ performance in China has come under pressure from pandemic disruptions, weaker consumer spending and ongoing pricing competition. The company has recently cut prices in the market in an effort to retain customers, affecting profit margins.
The move follows a broader pattern among global brands recalibrating their strategies in China. KFC and Pizza Hut’s China operations were spun off in 2016, while firms such as Gap and Uber have also scaled back or restructured due to market challenges.
Starbucks CEO Brian Niccol, who took over last year, has been leading changes across the company’s international business, including menu updates and hiring shifts. Starbucks currently operates more than 40,000 stores worldwide.
