Starbucks to sell control of China business to Boyu Capital in US$4B deal

Starbucks Coffee Company has agreed to form a joint venture (JV) with private equity firm Boyu Capital to operate Starbucks’ retail outlets in China. The decision means Starbucks is selling its majority stake in the China business as part of its ongoing strategic initiative to transform various parts of the company.

The coffee chain says this JV underscores its commitment to accelerate long-term growth in China, which is one of the company’s most important and fastest-growing markets globally.

The agreement is one of the biggest deals involving the Chinese operations of a global consumer company. It comes after a period of sales decline, with Starbucks seeing a drop since the COVID-19 pandemic. Since then, sales have fallen due to slower consumer spending and competition from other coffee brands. 

Under the agreement, Boyu and Starbucks will operate a joint venture, with Boyu holding up to a 60% interest in Starbucks’ retail operations in China. Starbucks will retain a 40% interest in the JV and continue to own and license the Starbucks brand and intellectual property to the new entity. 

Boyu will acquire its interest based on a cash-free, debt-free enterprise value of approximately US$4 billion.

Starbucks — which has been operating in China for 26 years — has put a US$13 billion valuation on its retail operations in the country. 

Expanding into new areas

Under the JV, the two companies will elevate the Starbucks customer experience, accelerate innovation in beverages and digital platforms, and expand into new cities and regions. 

The business will continue to be headquartered in Shanghai, and own and operate the 8,000 Starbucks coffeehouses across the market. It plans to grow to 20,000 locations over time.

“Building on our positive business momentum, our partnership with Boyu will enable Starbucks China to fully unlock the vast market opportunity,” says Molly Liu, executive VP and CEO at Starbucks China.

“Together, we will deliver exceptional coffee experiences to more Chinese consumers than ever before, create greater career opportunities for our green apron partners, and drive the future of China’s specialty coffee industry. This collaboration is a powerful commitment to our next chapter of growth.” 

Alex Wong, partner at Boyu Capital, adds: “Starbucks has built an iconic brand and a deep connection with Chinese consumers over the past 26 years. 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.”

“Together, we aim to combine Starbucks’ global coffee leadership with Boyu’s deep market insights and expertise to accelerate growth and create exceptional experiences for millions of customers.”

The deal is expected to be finalized next year.