Starbucks is actively evaluating the future of its massive China operations, including the possibility of selling a stake, and has begun soliciting interest from potential investors, according to people familiar with the matter.
The coffee giant, working through a financial adviser, reached out this week to several private equity firms and technology companies seeking their perspectives on the China business and strategic options for its development, said the sources, who requested anonymity as the discussions are private. Any potential transaction could be valued in the billions of dollars.
This strategic review comes as Starbucks faces heightened competition in its second-largest market, where local players like Luckin Coffee and Cotti Coffee have rapidly gained significant market share. As of March, Starbucks operated over 7,750 stores in China. However, its net revenue in the country for the quarter ending March was approximately $740 million, notably surpassed by Luckin’s $1.2 billion in total net revenue during the same period.
Potential bidders are expected to provide preliminary feedback in the coming weeks, the sources indicated, while cautioning that Starbucks may ultimately decide against pursuing any deal.
A Starbucks spokesperson declined to comment beyond the company’s public statements, referencing CEO Laxman Narasimhan’s remarks during the late-April earnings call. Narasimhan pointed to signs of progress in China following product and pricing adjustments, stating, “Long term, we remain very committed to China. We see a significant opportunity for our business there over the coming years.”
Investor sentiment appears cautious; Starbucks shares have fallen 25% since their peak on February 28th, reflecting concerns about global performance and the competitive pressures in China.
