Starbucks Eyes China Expansion with Potential Sale of 20% Stake

Starbucks CEO Brian Niccol has revealed that the company is exploring the possibility of selling a portion of its China business, a move that has garnered significant interest from potential investors. The coffee chain, which currently operates around 8,000 stores in China, is seeking partners who can help expand its footprint to 20,000 stores while maintaining a meaningful stake in the business. Niccol emphasized that Starbucks is not rushing into a deal and is focused on finding the right partners with industry experience.

Multiple private equity firms and strategic investors, both domestic and international, have expressed interest in acquiring a stake in Starbucks' China operations. The process, which is still in its early stages, is being led by Goldman Sachs. The potential transaction is part of Starbucks' strategy to navigate the competitive landscape in China, where local rivals have been aggressively expanding their market share with lower pricing strategies.

Starbucks' high-end positioning in the market, with an average cup of coffee priced at 27 yuan, has made it vulnerable to price competition. The company aims to leverage local resources for expansion while maintaining brand consistency, potentially through a franchise model similar to Yum China. This strategic shift underscores Starbucks' commitment to long-term growth in China, despite the current competitive pressures and economic challenges.

Starbucks' Chief Financial Officer Rachel Ruggeri is scheduled to visit China soon to advance negotiations, with the goal of reaching an agreement by the end of the year. The company's optimism about the long-term potential of the Chinese market remains unchanged, as it continues to seek partnerships that can drive growth and innovation in the region.