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Starbucks has received “a lot of interest” in the sale of a stake in its China business as the US coffee chain explores a partnership with an outside investor to restore growth there, its chief executive has said.
Brian Niccol said in an interview with the Financial Times that Starbucks was exploring the sale of a minority stake in its China unit, which operated 7,758 stores as of the end of March.
“The good news is we’ve got a lot of interest — a lot of interest,” he said on Tuesday. “People see the value of the Starbucks brand. They see the coffee category is growing. I think they’d love to be partnering up with us in figuring out how we take this from 8,000 to 20,000 [stores].”
Mainland China has become the Seattle-based company’s second-biggest market since it first entered the country in 1999. China has underpinned Starbucks’ global expansion, with executives betting on middle-class consumers drinking more speciality coffee. In 2022, the company set a goal of establishing 9,000 stores in the mainland by 2025.
But revenues from China have declined from a peak of $3.7bn in 2021 to $3bn in 2024, even as Starbucks has built hundreds of new stores. Lower-priced domestic competitors such as Luckin Coffee and Cotti Coffee have proliferated, while a weaker economic backdrop has raised concerns over consumer demand.
This week, Starbucks announced price cuts of on average Rmb5 (70 cents) on more than 20 iced and tea-based drinks to target what it called “China’s fast-growing non-coffee market”. Bubble and milk tea brands have also expanded dramatically in the mainland in recent years, selling beverages for as little as $1.
“The strategy in China is we want to be more competitive,” Niccol said, noting that the company needed to fix its “pricing architecture” there, especially for non-coffee drinks.
Niccol, who became chief executive in September, spoke as Starbucks rallied 14,000 employees at a three-day leadership gathering in Las Vegas this week. Starbucks China chief executive Molly Liu was among the executives at the event.
Starbucks said last year it was exploring “strategic partnerships” in China after same-store sales declined, but it has disclosed few details.
People familiar with the process said a mixture of Chinese and global private equity companies and strategic investors had looked at buying a stake, although they cautioned it was in a preliminary stage. Goldman Sachs is leading the process, according to people close to the matter.
Niccol declined to say which potential investors had shown interest, but said his company planned to “go through the exercise to see if it makes sense to have a partner”.
“We’re flexible on what that looks like. We want to have a meaningful stake in it,” he said.
He added that Starbucks was in no rush: “We’ll let the process be the process.”
Additional reporting by Arjun Neil Alim in Hong Kong and Thomas Hale in Shanghai
