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Starbucks Corp. has reached an agreement to sell a majority stake in its China business to private equity firm Boyu Capital, valuing the coffee chain’s Chinese operations at $4 billion.
The deal is intended to revitalize Starbucks’ presence in the world’s second-largest economy, where the brand has faced intensifying competition and changing consumer preferences.
Under the terms of the agreement, Boyu Capital will acquire up to a 60% interest in Starbucks’ retail operations in China through a newly formed joint venture. Starbucks will retain a 40% stake and continue to license its brand and intellectual property to the venture. The transaction concludes Starbucks’ search for a local partner to help steer its next phase of growth in China, where it operates roughly 8,000 stores, having first entered the market in Beijing in 1999.
Despite its longstanding presence, Starbucks has encountered headwinds in recent years. Rising nationalism, a growing preference for domestic brands, and reduced willingness to pay premium prices have challenged many Western companies operating in China. Starbucks’ traditional store formats, which are costly to maintain, have also faced pressure from consumers increasingly seeking value-oriented alternatives. Xiamen-based Luckin Coffee, for example, overtook Starbucks as China’s largest coffee chain two years ago by selling beverages at roughly one-third the price of Starbucks offerings.
Boyu Capital, founded in 2011 and headquartered in the Cayman Islands, has a diversified investment portfolio spanning private equity, public equities, real estate, infrastructure, and venture capital, including renewable energy. Its private equity investments focus on sectors such as technology, consumer and retail, and healthcare.
“We see a path to grow from today’s 8,000 Starbucks coffeehouses to more than 20,000 over time,” Starbucks Chief Executive Officer Brian Niccol said in a blog post, highlighting the company’s long-term expansion ambitions for China.
Starbucks’ comparable store sales in China rose 2% in the fourth quarter, marking the first positive same-store sales growth in more than a year. The company expects the total value of its China retail business, including licensing, to exceed $13 billion.
Following the announcement, Starbucks shares were up less than 1% in after-hours trading in New York at 6:17 p.m. The stock has declined approximately 11% year-to-date, trailing a nearly 17% gain for the S&P 500 Index.
Starbucks has implemented several strategies in China to regain customer traction. Earlier this year, it introduced free “study rooms” in select stores, providing a space for students and professionals.
Under the leadership of new China chief Molly Liu, the company has also expanded its menu to include more sugar-free drinks and tea options tailored to local tastes, lowered prices on numerous beverages, and increased customization options. These moves contrast with the chain’s recent U.S. strategy, where menu simplification has been prioritized to enhance operational efficiency.
