Starbucks China has sold, but not all of it. Starbucks sold 60% of its China business to local private equity giant Boyu Capital for approximately US$4 billion. It retains 40% and will continue to be the owner and licensor of the Starbucks brand and intellectual property. Starbucks, which once implanted "coffee culture" in China, is now being hunted by local brands 26 years after entering China, and its brand halo is becoming increasingly dim.
Launching sugar-free coffee, building an intangible cultural heritage concept store and a "self-study room"...the past year's "self-rescue" has begun to bear fruit. The latest financial report shows that Starbucks China's same-store sales and transaction volume have increased for four consecutive quarters, and profit margins have maintained double-digit increases.
However, whether this growth can be sustained remains a question. Starbucks is standing at a crossroads of re-choosing its path: it wants to expand while maintaining its brand premium; it wants to attract new price-sensitive customer groups, but it is also afraid that the value symbol of the "third space" will collapse due to price cuts.
The "third space" model that relied on shopping malls in core business districts for success in the past has shown signs of fatigue today as the tide of entrepreneurship recedes and consumption becomes more rational.
Finding Chinese partners has become a top priority for Starbucks.
Boyu Capital is a shrewd financial operator. From its acquisition of SKP to its bet on Mixue Bingcheng, the supply chain and commercial real estate resources it holds are exactly the most urgently needed ammunition for Starbucks to sink.
The two parties have set a flag to open 20,000 stores, but problems arise one after another: Will the brand premium still be effective in the sinking market? How to balance profits with high-cost expansion? Can the myth of the third space be replicated in the county?
Starbucks is not an isolated case. In the long process of foreign brands accepting Chinese partners, looking forward there are KFC and McDonald's, and looking back there is Burger King waiting to be sold.
Recently, at the performance meeting of RBI Group, the parent company of the Burger King brand, CEO Josh Kobza revealed that he, the CFO and the president of international business visited Shanghai in September and met with several potential partners.
After the era of "foreign monks who like to chant sutras" is over, whether they can find "rich and capable" Chinese partners will determine how far foreign brands can go in the Chinese market.
Starbucks is not withdrawing from the Chinese market completely, but establishing a joint venture with Boyu Capital. The joint venture company is still headquartered in Shanghai and continues to manage more than 8,000 Starbucks stores in mainland China.
The true value of Starbucks' China business was also revealed in this transaction. This transaction is based on an enterprise value of approximately US$4 billion. Starbucks Global estimates in its financial calculations that if the proceeds from this equity transfer, the value of retained equity and future licensing income are added together, the overall value of China's retail business will exceed US$13 billion.
This valuation includes Boyu’s investment, the equity value retained by Starbucks, and future long-term brand licensing income.
For a long time, China has been Starbucks' second largest market in the world. Starbucks, which has been in the Chinese market for 26 years, has successfully brought "coffee culture" into the Chinese market and has also received generous market returns.
But now, Starbucks’ advantages are being eroded by its Chinese counterparts. According to data from the Financial Times, Starbucks' market share in China has fallen from a peak of 42% in 2017 to 14% in 2024.
Today, rivals are still expanding rapidly. Luckin's latest financial report shows that as of the end of the second quarter of 2025, its total number of stores reached 26,206, a month-on-month increase of 8.8%, including 16,968 self-operated stores and 923 franchise stores; Kudi achieved more than 15,000 stores at the end of September and has reached its profit target.
In contrast, Starbucks currently has only about 8,000 stores in China, significantly lagging behind its competitors. Accelerating expansion has become the proper meaning of Starbucks' introduction of Chinese partners. The two parties plan to gradually expand the number of Starbucks stores in China to 20,000 in the future, focusing on small and medium-sized cities and emerging areas.
Brian Niccol, global chairman and CEO of Starbucks, said that Boyu’s experience and expertise in the local market will effectively accelerate Starbucks’ expansion in the Chinese market, especially in small and medium-sized cities and emerging regions.
As an acquirer, Boyu Capital is not an ordinary buyer. This private equity company founded in 2010 manages nearly 10 billion US dollars in funds, and its investment portfolio includes well-known companies such as Jitu Express, Xiaohongshu, iQiyi, Kuaishou, and SHEIN.
Before Starbucks, Boyu had just bought Beijing SKP, a high-end business representative in China. In addition, when “Snow King” Mixue Bingcheng landed on the Hong Kong Stock Exchange, Boyu was also present in the investment camp.
Boyu Capital’s Chinese background and rich investment experience in the consumer sector are obviously what Starbucks values most.
As a private equity institution, Boyu Capital’s acquisition of Starbucks China is obviously to increase the value of its assets to obtain financial returns.For both parties, reducing costs, increasing efficiency and restarting growth are top priorities.
Store expansion is one of the core goals of this joint venture. Currently, Starbucks has about 8,000 stores in China. Expanding to 20,000 means that the number of stores will need to increase by 1.5 times in the future.
This is obviously not a small goal, but for Boyu Capital, which invested in Mixue Bingcheng, it has already proven its ability to launch and operate large-scale stores. This is one of the reasons why Boyu finally broke through.
But no matter in terms of brand positioning or customer base, Starbucks and Mixue Ice City are obviously different.More importantly, the cost of opening a Starbucks store is getting higher and higher.
In the past decade, Starbucks, which has its own traffic effect, has become the "darling" of many commercial real estate projects. It enjoys long-term rent-free periods, decoration subsidies, and other privileges such as replacing fixed rents and exclusive agreements with turnover points, forming a positive cycle of "more stores - stronger brand - lower rents."
But now the Starbucks brand potential has declined, its bargaining power has weakened, and there have even been reports of "Starbucks being withdrawn from shopping malls."
In the face of a sinking market, it has become significantly more difficult for Starbucks to continue to rely on its brand value to obtain low rents and good locations. This requires Boyu Capital as a partner to assist in conquering the city.
However, with the ultimate pursuit of profits by investment institutions, it is still unclear whether the joint venture will open up franchises and whether it will bring management challenges and further dilute Starbucks' brand value.
After store expansion, there is also a question mark as to whether consumers in lower-tier markets are willing to continue paying for brand premiums. Whether Starbucks will reduce prices in exchange for user scale, and how to accelerate expansion while maintaining the value of the "third space" have become difficult problems for Starbucks and Boyu Capital.
In fact, Starbucks has made frequent moves in the past year in order to sell its products at a good price.
Regarding the core concept of "third space", Starbucks has successively built intangible cultural heritage concept stores, launched "self-study rooms", and cooperated with Xiaohongshu to transform more than 1,800 stores into "interest social spaces" for pets, crafts, cycling, running, etc., to strengthen the uniqueness of the third space.
In terms of products, Starbucks has launched a sugar-free series to capture people with health needs, while also enriching "non-coffee" products and expanding consumption periods into the afternoon, afternoon and even evening. At the same time, the price of non-coffee products has been adjusted, bringing the price into the 20 yuan range to attract new customer groups.
Judging from the financial results, Starbucks' "self-rescue" was immediate.
According to Starbucks’ latest financial report released on October 30, China has maintained growth momentum for four consecutive quarters. Of particular note is the year-on-year growth in same-store sales and same-store transaction volume. Store operating profit margins remained in double digits, achieving quarter-on-quarter increases for four consecutive quarters.
The simultaneous growth in transaction volume and profit margin means that Starbucks can retain customers without resorting to low-price wars.
Starbucks' most valuable asset is its "third space" culture, which brings brand premium. Once the price of coffee drops to 9.9 yuan, the symbolic value established over the years will also collapse.
Today, Starbucks China has reached a turning point in history.If Starbucks wants to win in the fierce domestic coffee war, it must not only put down its posture and learn from its Chinese counterparts, but also come up with practical methods.
In the long process of foreign brands accepting Chinese partners, Starbucks is just one of them. Looking forward, there are KFC, McDonald's and Subway; looking backward, there are Burger King and Haagen-Dazs waiting for a price.
For Starbucks, selling its Chinese business can not only obtain large amounts of funds to ease the pressure for expansion, but also better achieve localization.
This is also the solution KFC and McDonald's found in the Chinese market. Faced with declining performance in the Chinese market, both McDonald's and Yum Brands have divested part of their Chinese business to private equity firms. The transaction consideration when McDonald's sold its Chinese store franchise rights was US$2.08 billion; Parkson Group received US$460 million from Primavera Capital and Ant Financial.
After the spin-off, the two companies achieved remarkable results in terms of performance growth and store expansion. After the spin-off, Yum China was not only listed on the New York Stock Exchange and became one of the largest catering companies in China. As of the end of 2024, Yum China had 16,395 restaurants in more than 2,200 cities in China. As of the end of 2024, McDonald's China has a total of 6,820 restaurants. McDonald's also plans to open about 1,000 new restaurants in China in 2025 to accelerate its layout in the Chinese market.
Now, the baton of looking for “partners who better understand China” has been passed to Burger King. "Burger King" was born in 1954. Although it was later than KFC, it was earlier than McDonald's. In 2005, Burger King officially entered the Chinese market. Under the direct operation model, it only opened 68 stores in China in the first seven years.
It was not until KFC and McDonald's crossed the river and started the franchise model that Burger King began to expand aggressively in China. However, by the end of 2024, the actual number of "Burger King China" stores was only 1,474. By the end of 2024, the number of KFC stores in China has exceeded 11,600, and the number of McDonald's stores in China has reached 6,820.
Especially among the top ten markets in the world of its parent company RBI, Burger King China has the largest number of stores under the Burger King brand, but its annual average sales per store ranks at the bottom among the top ten markets in the world.
In this case, RBI Group claimed to be looking for partners who “understand China better”.
The "Chinese partner" model of these foreign brands is evolving from property rights transfer 1.0 to value co-creation 2.0. They are not only capital suppliers, but also need to have local insights, digital capabilities and supply chain advantages.
Can Starbucks and Boyu conquer the sinking market while adhering to their brand identity? Who will Burger King buy, and how will it use local capital to reshape its market position?In the future, the ability to find Chinese partners who are “both wealthy and capable” will become the key to the survival of foreign brands in the Chinese market.