Starbucks sells 60% stake in China business in $4 billion deal
Chinese customers enjoy their drinks at a store of U.S. coffee giant Starbucks in Beijing on May 10, 2019. Credit: AP/Ng Han Guan
Starbucks said Monday it is forming a joint venture with Chinese investment firm Boyu Capital to operate Starbucks stores in China.
Under the agreement, Boyu will acquire a 60% interest in Starbucks' retail operations in China, which is valued at $4 billion. Starbucks will retain a 40% interest in the joint venture and will own and license the Starbucks brand.
Starbucks said its business in China will have a total value of more than $13 billion, including the proceeds from the sale of the controlling interest to Boyu, the value of its 40% stake and the value of its royalties.
Starbucks entered China almost 30 years ago, and has been credited with growing coffee culture in the country. China is Starbucks' second-largest market outside the U.S., with 8,000 locations.
But in recent years, the Seattle coffee giant has struggled in China with cheap, fast-growing Chinese startups like Luckin Coffee. Starbucks' same-store sales in China have fallen in both of its last two fiscal years.
As a result, Starbucks has been looking for a partner to help it grow its business in China, particularly in smaller cities. In July, Starbucks Chairman and CEO Brian Niccol said the company was evaluating around 20 offers for a stake in the company.
Niccol said Monday that Boyu shares Starbucks' commitment to providing a great experience for both customers and employees. It will also help Starbucks achieve its goal of growing to 20,000 stores in China over time, Niccol said.
A costumer exits a Starbucks store in Oakland, Calif., Thursday, Jan. 16, 2025. Credit: AP/Godofredo A. Vásquez
“Boyu’s deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new regions," Niccol said in a statement.
Boyu Capital Partner Alex Wong said Starbucks has built a deep connection with Chinese consumers over nearly three decades.
“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," Wong said in a statement.
Starbucks' China headquarters will remain in Shanghai. Boyu Capital, which was founded in 2011, has offices in Shanghai, Hong Kong, Singapore and Beijing.
A costumer exits a Starbucks store in Oakland, Calif., Thursday, Jan. 16, 2025. Credit: AP/Godofredo A. Vásquez
The companies said they expect to finalize the deal in the second quarter of Starbucks' 2026 fiscal year. Starbucks' 2026 fiscal year began on Sept. 29.
Starbucks shares were flat in after-hours trading.
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