Five firms have reportedly expressed interest in acquiring a stake in Starbucks’ 7,686-store business in China, with senior executives from the US coffee giant expected to open talks within the next few weeks
A Starbucks store located in Disneytown at Shanghai Disney Resort, China | Photo Credit: Starbucks
Several international firms have reportedly expressed interest in acquiring a stake in Starbucks China, according to a Reuters report.
The Seattle-based coffee giant would prefer a franchise deal with a strategic partner as part of a stake sale plan, the news agency reported citing two sources close to the matter. Starbucks China would likely be valued at more than $1bn, although the size of the stake to be sold has yet to be agreed.
Starbucks Chief Financial Officer Rachel Ruggeri is expected to lead a group of senior executives to hold sale talks in China in the coming weeks, the sources said.
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China is Starbucks second largest market globally after the US with 7,686 stores. Unlike most of markets globally, 100% of Starbucks’ stores in China are currently company operated.
However, the coffee chain has faced fierce competition from rapidly growing domestic operators Luckin Coffee and Cotti Coffee, particularly on price. Starbucks saw like-for-like sales in China fall 8% in the 12 months ended 29 September 2024 – with first quarter like-for-like sales down 6%.
Additionally, the US coffee chain fell short of a target to reach 9,000 stores by 2025.
In a bid to revive Starbucks’ fortunes in the world’s largest branded coffee shop market, Starbucks Chairman and CEO Brian Niccol has been exploring ‘strategic partnerships’ in China since October 2024.
A stake sale could enable Starbucks to onboard local market expertise while sharing financial risks and operational costs.
Chinese firms named for a potential deal include e-commerce giant Meituan, which already has a delivery partnership with Starbucks, and state-owned conglomerate China Resources Holdings.
Hong Kong-based PAG is also said to be considering a stake acquisition. The investment firm, which has a head office in Shanghai, is the exclusive franchisee for Japanese specialty coffee group % Arabica in 10 markets. It also counts fast-growing premium Chinese tea chain Nayuki, restaurant group Gyro Holdings and Australian premium cake retailer The Cheesecake Shop among its client portfolio.
Other potential named bidders include New York-headquartered KKR, which has an office in Hong Kong, counts premium dairy brand Adopt a Cow, Australian snack brand Arnott’s and US food delivery firm DoorDash among its investments, while Fountainvest took a stake in Chinese quick-service restaurant group CFB in 2021.