Starbucks, a symbol of Western coffee culture, is relinquishing control of its operations in China. The company announced that it will sell a controlling stake to Boyu Capital. This marks a significant shift for Starbucks, which had dominated the Chinese market since opening its first store in 1999.
Starbucks’ Departure from Majority Control in China
Under the new deal, Boyu Capital will acquire up to 60% of Starbucks’ retail operations in China. This includes over 8,000 outlets across the country. Starbucks will retain a 40% stake and continue to license its brand to the new group.
Impact and Background
- Starbucks first entered China nearly three decades ago, introducing a coffee culture in a nation that traditionally favored tea.
- The brand experienced rapid growth, opening a new location every 15 hours at its peak.
However, the landscape has changed drastically. Domestic competition has surged, with local brands like Luckin Coffee outpacing Starbucks in both revenue and store count. Luckin Coffee, established in 2017, has three times as many outlets and offers significantly lower prices.
| Brand | Store Count | Price Per Cup |
|---|---|---|
| Starbucks | 8,000+ | High |
| Luckin Coffee | 25,000+ | 1/3 of Starbucks |
| Mixue | Largest Globally | 2-8 yuan ($0.30 – $1.20) |
Challenges Facing Starbucks
Starbucks faces myriad challenges in China’s evolving market. Consumer preferences are shifting towards domestic brands amid an economic downturn. Reports show that Starbucks experienced a 1% decline in same-store sales in fiscal 2025, driven by lower spending per transaction.
Experts suggest that the partnership with Boyu Capital may help Starbucks adapt to the new realities of the Chinese market. Nonetheless, adjustments in menu innovation and digital strategies are crucial for competing against strong local beverage chains.
Looking Ahead: Future Prospects
Brian Niccol, Starbucks’ CEO, has expressed confidence in the growth potential within China. He envisions the number of Starbucks locations expanding from 8,000 to over 20,000 in the future. The total value of Starbucks’ retail business in China is expected to surpass $13 billion.
While Starbucks remains a desired location for many consumers, the need for more affordable options is growing. As Chinese patrons continue to seek value, the reaction to Starbucks’ latest changes will be crucial in its fight to remain relevant in this competitive market.
