Starbucks Coffee Company (Starbucks) is reportedly seeking buyers for its business in China.
According to reports from multiple media outlets such as the International Financial News and China Business News on February 26, sources revealed that global renowned private equity giants KKR, Fountainvest Partners, and PAG are interested in acquiring stakes in Starbucks’ Chinese business. Additionally, China Resources Group and Meituan have also had preliminary discussions with Starbucks as potential buyers.
The International Financial News reported that Rachel Ruggeri, Executive Vice President and Chief Financial Officer of Starbucks, is expected to visit China with other company executives in the coming weeks for negotiations on the sale of equity.
China Business News stated that Starbucks did not outright deny the rumors of selling its business in China, while several potential buyers have not responded to this news.
Financial News Society stated that the scale of the equity sale of Starbucks China business has not been determined and will depend on the negotiation situation. As part of the equity sale plan, Starbucks may lean towards reaching franchising agreements with strategic partners. If a franchising agreement is reached, the valuation of Starbucks China will exceed $1 billion.
There have been speculations in the market as to why Starbucks is selling its stake in China, with some even suggesting that Starbucks is planning to withdraw from the Chinese market. In response, China Business News cited sources close to Starbucks saying that due to the increasingly fierce competition in the Chinese market, Starbucks has long intended to find local partners to operate similarly to McDonald’s in China, aiming for a faster and more steady development.
Public data shows that China is Starbucks’ second-largest market globally, but the development of Starbucks’ business in China faces certain challenges due to the significant expansion and low-price strategies of Luckin Coffee, Coffee Box, and new tea brands.
Since May 2024, Starbucks China has been boosting sales growth through frequent promotions like 70% off coffee vouchers, buy one get one free, and a deduction of 6 yuan for every 50 yuan spent.
According to reports from the International Financial News, Starbucks currently operates only self-operated stores in China. As of December 29, 2024, the total number of Starbucks stores in China reached 7,685, ranking third in the Chinese coffee market. Meanwhile, local coffee brands in China have achieved larger store scale with lower costs through a franchising model.
Starbucks’ financial report for the first quarter of the 2025 fiscal year shows that Starbucks generated $744 million in revenue in China, a 1% year-on-year increase. Due to the impact of high-frequency promotional activities, the average selling price per order fell by 4%, with a 2% decrease in transaction volume, leading to a 6% decline in comparable store sales.