Starbucks sells major China biz stake to Boyu

Starbucks Coffee Co announced on Tuesday that it has sold a majority stake in its China business to Boyu Capital, a leading Chinese investment firm, forming a joint venture that will operate Starbucks' retail operations in the country. The move marks a major step in the coffee chain's next phase of growth in its fastest-expanding market.

Under the agreement, Boyu Capital will acquire up to a 60 percent stake in Starbucks' China retail operations based on a cash-free, debt-free enterprise value of about $4 billion, while the US coffee chain will retain a 40 percent stake. Starbucks will continue to own and license its brand and intellectual property to the new entity.

Starbucks estimates the total value of its China retail business will exceed $13 billion, reflecting proceeds from the stake sale, the retained equity interest and the net present value of ongoing licensing payments over the next decade or longer.

The JV, headquartered in Shanghai, underscores Starbucks' long-term confidence in the Chinese market, where it has operated for more than 26 years and currently runs about 8,000 stores.

The company said the partnership aims to expand that footprint to as many as 20,000 locations over time, tapping into demand from smaller cities and emerging regions.

"Boyu's deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new regions," said Brian Niccol, chairman and CEO of Starbucks Coffee Co.

According to consultancy Euromonitor International, China's specialty coffee and tea shop market reached 132.5 billion yuan ($18.6 billion) in 2024 and is forecast to rise to 273.9 billion yuan by 2029, representing a compound annual growth rate of 13.5 percent.

Despite this, Starbucks' market share has slipped in recent years, ranking second behind Luckin Coffee in 2025. Luckin's second-quarter revenue surged 47.1 percent year-on-year to 12.36 billion yuan, while its net profit grew 43.6 percent to 1.25 billion yuan. By the end of June, Luckin's total store count reached 26,206, including nearly 9,300 franchised locations.

Starbucks' performance, however, has shown signs of improvement this year. For the quarter ended Sept 28, Starbucks China reported revenue of about $831.6 million, up 5 percent year-on-year, with both the operating profit and profit margin rising for four consecutive quarters.

Reports of Starbucks' plan to sell a stake in its China business surfaced earlier this year. In July, CNBC reported that more than 30 investors, including Hillhouse Capital, Carlyle, KKR and Centurium Capital — Luckin Coffee's largest shareholder — had expressed interest. By October, the Financial Times reported that five private equity firms had submitted binding bids: Sequoia Capital, Primavera Capital, FountainVest Partners, Carlyle and Boyu Capital. Among them, Carlyle and Boyu were regarded as the frontrunners.

Boyu Capital, known for investments in technology, consumer and healthcare sectors, has backed more than 200 companies, including SKP luxury shopping centers, Mixue Group and iQiyi.

"This partnership reflects our shared belief in the enduring strength of that brand and the opportunity to bring even greater innovation and local relevance to customers across China," said Alex Wong, partner at Boyu Capital.

Industry observers say the deal mirrors McDonald's 2017 sale of its China business to CITIC Capital, which helped the fast-food giant double its restaurant count in eight years through localized decision-making, supply chain development and digital innovation.

Jason Yu, general manager of CTR Market Research, said Boyu's involvement will help Starbucks "optimize store locations, introduce localized products and enhance brand competitiveness in lower-tier markets".

The transaction is expected to close in the second quarter of Starbucks' fiscal year 2026, subject to regulatory approvals.

wangzhuoqiong@chinadaily.com.cn