A Starbucks operating within a traditional-style Chinese building. (Photo by Cheng Xin/Getty Images)
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Seattle-based Starbucks has agreed to sell a controlling stake in its Chinese business, marking a significant shift in strategy for the world’s largest coffee chain in its most important growth market outside the U.S.
The company announced that it would form a $4 billion joint venture with Boyu Capital, a Hong Kong-based private equity firm, to run its retail operations in China.
Under the terms of the deal, Boyu will hold up to 60% of the venture and take operational control of Starbucks’ nearly 8,000 stores in the country. Starbucks will retain a 40% stake and continue to own and license its brand and intellectual property to the new entity.
“This approach allows us to combine the strength of the Starbucks brand, our coffee expertise, the third place and our unique partner culture with Boyu’s deep knowledge of the China market and local expertise,” said Brian Niccol, Starbucks’ chief executive.
The company said it expected the total value of its Chinese retail business to exceed $13 billion, including the sale proceeds, its remaining equity stake, and anticipated licensing fees over the next decade. The transaction, which remains subject to regulatory approval, is expected to close in the second quarter of fiscal 2026.
Starbucks Facing China Challenge
Starbucks has faced mounting pressure in China, where it has long viewed expansion as central to its global growth strategy. Domestic rival Luckin Coffee has rapidly gained market share through aggressive pricing and swift expansion, operating more than 20,000 outlets nationwide and surpassing Starbucks’ store count. Starbucks has said it still sees potential to reach that same number of locations in the long term.
Starbucks is pursuing a sweeping turnaround plan aimed at reviving growth and profitability after a period of weakening sales and rising costs in key markets.
Starbucks is on a transformation journey to focus on profitable growth. (Photo by Smith Collection/Gado/Getty Images)
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CEO Niccol has pledged to simplify operations, improve store efficiency and restore the brand’s focus on quality and consistency. The company is targeting faster service, a sharper digital strategy, and a renewed emphasis on its employees as it seeks to reassert its dominance in the global coffee market.
In China and the U.S rivals such as coffee specialists and fast-food chains have eroded its market share. The company has also struggled with uneven demand and operational complexity following years of rapid expansion.
In response, Starbucks has been investing in automation, supply chain modernization, and new store designs designed to drive traffic and increase average spending.
Starbucks Plan Profitable Growth
Niccol has stressed in his transformation plan that the company will take a more disciplined approach to growth, focusing on profitability rather than store count. Starbucks hopes the strategy will deliver sustainable earnings expansion and cement profitable growth.
As a result, the partnership with Boyu in China marks what Niccol described as “a new chapter” in the company’s 26-year history in China. He said Boyu’s local expertise would help accelerate growth, particularly in smaller cities and emerging regions.
The Chinese business will continue to be headquartered in Shanghai and will own and operate the 8,000 Starbucks coffeehouses across the market today, with a “shared vision” to grow to as many as 20,000 locations over time, Starbucks said.
Founded in 2011, Boyu Capital is one of China’s leading private investment firms, with offices in Hong Kong, Beijing, Shanghai and Singapore, and more than 200 portfolio companies across sectors from consumer goods to technology – soon to include Starbucks.