Dive Brief:
- Starbucks sold a majority stake of its China business to Boyu Capital for $4 billion as it plans to form a joint venture managing operations in the country, the company said in a Monday press release.
- Boyu will acquire a 60% stake in the business while Starbucks will retain 40% and continue to own and license the brand and intellectual property to the new entity, the companies said. The joint venture is expected to be finalized by fiscal Q2 2026.
- Starbucks has been pursuing strategic options for its China business for over a year after facing declining sales and stiff competition from the likes of Luckin’ Coffee.
Dive Insight:
Starbucks' fiscal 2025 ended with a 1% decline in comparable sales at its Chinese business, according to an earnings release. During fiscal Q4, comparable sales were up 2%, however, suggesting the business could be showing signs of improvement.
Starbucks CFO Cathy Smith said during an earnings call that the China business’ improving profitability and comparable growth during fiscal Q4 was driven by product innovation from its tea latte menu and fast-growing delivery business.
The joint venture is expected to jump-start Starbucks China with Boyu providing greater knowledge of Chinese consumers. The joint venture has aggressive growth goals, with plans to grow the chain from 8,000 units to 20,000 locations over time.
“The two companies will elevate the Starbucks customer experience, accelerating innovation in beverages and digital platforms, expanding into new cities and regions, and deepening connections with customers through meaningful local relevance,” the press release said.
Starbucks said it expects the total value of the China business to exceed $13 billion, which consists of “proceeds from the sale of a controlling interest in the joint venture to Boyu, the value of Starbucks retained interest in the joint venture, and the net present value of ongoing licensing economics payable to Starbucks over the next decade or longer.”
Starbucks China will remain headquartered in Shanghai.
