Starbucks has agreed to sell a majority stake in its China operations to Boyu Capital, a Chinese private equity firm, ending months of speculation about its search for a domestic partner in an increasingly challenging market. The deal, announced Monday in the United States, will see Boyu take a 60% ownership of a newly formed joint venture that will oversee Starbucks’ retail operations in China, while the Seattle-based company retains 40% and continues to own and license its brand and intellectual property.
Boyu will acquire its controlling interest based on a cash- and debt-free enterprise value of $4 billion, giving the firm a dominant role in Starbucks’ second-largest global market after the United States. The coffee chain values its entire China business at over $13 billion, including its retained stake and expected royalties from licensing over the coming years. The companies expect the deal to close by March, pending regulatory approval.
Brian Niccol, Starbucks’ chairman and CEO, said the partnership would help accelerate the company’s expansion into China’s smaller cities and new regions. “Boyu’s deep local knowledge and expertise will help us grow faster in China,” Niccol said. “We’ve found a partner who shares our commitment to an exceptional partner and customer experience. Together, we will write the next chapter of Starbucks’ storied history in China.”
Alex Wong, partner at Boyu Capital, praised Starbucks’ achievements in China since it entered the market 26 years ago. “Together, we aim to combine Starbucks’ global coffee leadership with Boyu’s market insights to drive growth and create exceptional experiences for millions of customers,” Wong said. Founded in 2011, Boyu Capital operates offices in Hong Kong, Beijing, Shanghai, and Singapore, and counts Alvin Jiang, grandson of former Chinese President Jiang Zemin, among its founders.
The new partners plan to expand Starbucks’ store count in China to roughly 20,000, though no timeline has been set. The company will continue to base its China headquarters in Shanghai. As of September, Starbucks operated 8,011 stores in China, compared with 16,864 in the U.S., together accounting for 61% of its global footprint.
Despite its vast presence, Starbucks has been grappling with sluggish demand in China, where consumers have become more cautious amid economic uncertainty. Comparable store sales in the country rose by 2% in the latest quarter, but the average ticket fell by 7%, reflecting weak spending. The company is also under pressure from aggressive domestic competitors like Luckin Coffee, which have sparked a fierce price war.
Catherine Park, Starbucks’ vice president of investor relations, told analysts last week that any deal in China would require three key elements: a meaningful upfront investment from a local partner, Starbucks retaining a significant stake, and ongoing royalty payments. The agreement with Boyu appears to meet all three conditions, positioning Starbucks for a new phase in its largest growth market outside the U.S.—this time with China firmly in the driver’s seat.
