Starbucks Corp. has reached out to private equity firms, tech companies and others as it explores options for its China arm – possibly even selling a stake – according to people familiar with the situation, Bloomberg reported.
The coffee giant sent letters through a financial adviser to several potential investors this week, asking for their thoughts on the business and ideas for future growth, the sources said. A deal could value the assets at several billion dollars, they added.
Bloomberg News had earlier reported that Starbucks was reviewing its operations in China – its second-largest market. The company has highlighted growing economic challenges and rising competition in the country, where local brands like Luckin Coffee Inc. and Cotti Coffee have become key players.
As of the end of March, Starbucks was operating over 7,750 stores in China, bringing in around $740 million in net revenue for the quarter. In comparison, Luckin earned $1.2 billion over the same period.
Prospective bidders are expected to provide initial feedback in the coming weeks – though Starbucks may ultimately choose not to proceed with any deal, the above-mentioned sources said.
A Starbucks spokesperson declined to comment further – pointing instead to remarks made during an earnings call in late April. At the time, Chief Executive Officer Brian Niccol said there were signs of progress in China following adjustments to pricing and product offerings.
‘We remain committed to China for the long term’, Niccol said at the time. ‘We see great potential for our business there in the years ahead and remain open to how we achieve that growth.”
Niccol also mentioned back in October that Starbucks was looking into partnerships to support long-term growth – though he didn’t go into detail.
Other major US brands have taken similar steps. McDonald’s Corp. and Yum! Brands Inc. – which owns KFC – both sold stakes in their China operations to private equity firms in a bid to fuel growth and better appeal to local consumers. In 2023, McDonald’s agreed to buy back Carlyle Group Inc.’s minority stake in the partnership that runs its operations in China, Hong Kong and Macau.