Starbucks to form joint venture to run China business
A Starbucks store in Hangzhou, east China’s Zhejiang province, Thursday, Oct. 30, 2025.
Long Wei | Feature China | Future Publishing | Getty Images
Starbucks On Monday, the company announced a joint venture with Boyu Capital to operate its locations in China.
Under the terms of the deal, alternative asset management company Boyu will pay Starbucks about $4 billion for a stake of up to 60 percent in the joint venture. Starbucks will retain a 40% stake and retain the ability to license the brand and intellectual property rights to the joint venture.
The announcement comes after the coffee giant conducted a months-long review of options that included strategic partnerships. Starbucks values its business in China at more than $13 billion, the company said. The valuation includes the sale of controlling interests in the joint venture, together with the value of both the shares retained and any ongoing license fees payable to the company in the future.
The deal is expected to close in the second quarter of fiscal 2026, pending regulatory approval.
Starbucks opened its first store in China in 1999. By 2015, it had grown and become the company’s second largest market after the USA.
“Building on our positive business momentum, our partnership with Boyu will enable Starbucks China to fully unlock the vast market opportunity,” Starbucks China CEO Molly Liu said in a statement. he said.
Today, the company has approximately 8,000 locations in China, but Starbucks has big ambitions for the market. CEO Brian Niccol told CNBC’s Kate Rogers in September that the country could one day have 20,000 or even 30,000 locations nationwide.
However, in recent years, Starbucks’ sales in China have declined, first due to the pandemic and related government restrictions, and then due to increased competition. Rival Luckin Coffee now has more stores than Starbucks in China and has won customers over with lower-priced drinks than the U.S. coffee chain.
On Wednesday, the company reported that same-store sales in China rose 2% in the fourth quarter, driven by a 9% increase in traffic. However, as Starbucks turned to discounting to compete with local rivals, average ticket prices at Chinese cafes dropped, negatively impacting the company’s profits.
While Starbucks executives have consistently expressed optimism about the company’s long-term prospects in China, its poor performance in the country has weighed on Starbucks’ overall financial results.
For decades, China’s massive population and rapidly growing economy have made it an attractive market for U.S. companies. However, in recent years, the economic slowdown and increasing competition from domestic brands have caused some companies to rethink their strategies.
Earlier this year, Burger King’s parent company Restaurant Brands International bought it China business is in trouble with the aim of selling it to another operator from TFI Asia Holdings. On the other hand, McDonald’s It increased its minority stake in the China business from 20% to 48% two years ago to benefit from market growth.
