Starbucks Selling Control of China Business to Boyu Capital in $4 Billion Deal
Udumbara
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Starbucks said on Nov. 3 that it is selling a majority stake in its China retail business to Hong Kong-based private equity firm Boyu Capital for $4 billion.
The retail coffee giant, which values the China business at more than $13 billion, will form a joint venture to revitalize growth in its second-largest market.
While Boyu will hold a 60 percent stake in the business, Starbucks will retain a 40 percent interest, including brand ownership and licensing rights. The business will remain headquartered in Shanghai.
Starbucks CEO Brian Niccol says both companies envision expanding the number of locations in China to 20,000, from the current 8,000 coffeehouses.
The deal is expected to be finalized in the second quarter of 2026, following the completion of required regulatory approvals.
Challenges Brewing in China
Starbucks opened its first store in China in 1999, launching the coffee juggernaut’s second-largest market, behind the United States.In recent years, Starbucks’ market share in China has declined, sliding from 34 percent in 2019 to 14 percent last year.
The company has witnessed intensifying competition from local coffee chains Cotti and Luckin Coffee—two companies that have offered cheaper beverages and adopted a digital-first model.
Additionally, consumers have become more price-conscious amid a series of economic headwinds facing the world’s second-largest economy.
Starbucks has employed various strategies in response to changing market conditions, particularly by lowering prices this year, at a time when coffee futures have soared to all-time highs.
But Molly Liu, CEO of Starbucks China, said she believes the company can regain momentum through its new joint venture with Boyu by focusing on brand experience and leveraging local expertise.
“Building on our positive business momentum, our partnership with Boyu will enable Starbucks China to fully unlock the vast market opportunity,” Liu said in a statement.
Giving the Brand a Caffeine Boost
Niccol recently marked his first anniversary since joining Starbucks as CEO and chairman.When he arrived from Chipotle in September 2024, Niccol instituted an aggressive turnaround strategy called “Back to Starbucks.” The initiative has focused on simplifying operations, expanding a health-conscious menu, improving service quality, and restoring the brand’s emotional appeal as a community coffeehouse.
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The company also said in September that it would eliminate about 900 jobs and close underperforming stores in North America.
Despite global coffee prices surging due to droughts in key growing areas, shrinking domestic inventories, and global tariffs, Starbucks has refrained from raising prices.
Speaking to shareholders and analysts during this past week’s earnings call, Niccol said the company is pursuing offsets.
“Coffee prices have not retreated. You know, they still have stayed elevated,” he said. “And know, we’re dealing with that accordingly. We’re trying to find offsets where we can in the business. But hopefully, start to see that recede, but it hasn’t happened yet.”
Arabica coffee futures have soared 27 percent this year on the U.S. ICE Futures exchange.
So far, the results have been mixed, but Niccol suggests the company’s efforts are ahead of schedule.
U.S. same-store sales were flat for the quarter but turned positive in September. Global same-store rises increased by 1 percent.
Net sales climbed 5 percent to $9.57 billion.
Market watchers are optimistic about Starbucks’ immediate future.
