Starbucks Courts Buyers as It Weighs Sale of China Business
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As of June 20, Starbucks’ price-to-earnings (P/E) ratio stood at 33.82, despite the company’s Hong Kong-listed shares shedding nearly 20% since Marc
Starbucks Corp. is considering selling its China operations, signaling a strategic shift as the American coffee giant grapples with declining market share and mounting pressure from low-cost domestic rivals.
According to people familiar with the matter, the Seattle-based company has recently held preliminary talks with more than a dozen potential acquirers, including private equity firms Hillhouse Capital Group, FountainVest Partners Co. Ltd. and Trustar Capital.
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- Starbucks is considering selling its China operations amid a declining market share (from 5.6% in 2022 to 4.2% in 2024) and strong competition from local brands like Luckin and Cotti Coffee.
- Valuation disagreements hinder the sale, with Starbucks China potentially worth over $9 billion, about 9% of global revenue; many buyers view the price as too high.
- Starbucks continues expanding in China (7,758 stores as of March 2025) but faces stagnant same-store sales and heightened price competition.
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Who’s Who
- Starbucks Corp.
- Starbucks Corp. is considering selling its China operations due to shrinking market share and intense competition from local rivals like Luckin Coffee. The company's market share in China fell from 5.6% in 2022 to 4.2% in 2024. Starbucks is seeking to revitalize its business, as its China branch generated only 9% of global revenue.
- Hillhouse Capital Group
- Hillhouse Capital Group is a private equity firm that has been in preliminary talks with Starbucks Corp. regarding a potential full sale of its China operations. Hillhouse is one of more than a dozen potential acquirers Starbucks is considering.
- FountainVest Partners Co. Ltd.
- FountainVest Partners Co. Ltd. is a private equity firm that has held preliminary talks with Starbucks regarding a potential acquisition of its China operations. The firm was among the more than a dozen potential acquirers, including other private equity firms like Hillhouse Capital Group and Trustar Capital, and was also mentioned in earlier reports as having met with Starbucks.
- Trustar Capital
- Trustar Capital is a private equity firm that has been in preliminary talks with Starbucks Corp. regarding a potential full sale of its China operations. Trustar Capital is one of more than a dozen potential acquirers Starbucks has engaged with.
- Luckin Coffee Inc.
- Luckin Coffee Inc. is a dominant player in China's coffee market, holding an 11% market share. It surpassed Starbucks in both store count and quarterly revenue by mid-2023. In Q1 2025, Luckin's China revenue was 1.6 times that of Starbucks, and its P/E ratio is around 22.58.
- Cotti Coffee
- Cotti Coffee is a Chinese coffee chain that has significantly impacted the competitive coffee market. It has overtaken Starbucks to become the second-largest player in China, contributing to Starbucks' declining market share. This local upstart is part of a trend of aggressive domestic rivals challenging established foreign brands in China.
- China Resources Holdings
- China Resources Holdings, also known as CRH, was mentioned as a potential investor that Starbucks met with in February 2024. Starbucks initially sought partners for joint ventures and strategic collaborations rather than a full sale of its China operations.
- KKR
- KKR had a meeting with Starbucks in February regarding potential investment in Starbucks' China operations. Starbucks initially sought partners rather than a full sale of its China business.
- JD.com
- JD.com is an e-commerce giant that Starbucks China partnered with in April. This collaboration involved Starbucks joining JD.com's food delivery platform and linking its loyalty program with the e-commerce company for the first time. Starbucks also participates in JD.com's discount initiatives to counter rivals in a "heated price war."
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What Happened When
- 2022：
- Starbucks’ market share in China was 5.6%.
- By mid-2023：
- Luckin Coffee surpassed Starbucks in both store count and quarterly revenue in China.
- Early 2024：
- Then-CEO Laxman Narasimhan mentioned on an earnings call that Starbucks was exploring joint ventures and strategic collaborations for its China operations.
- 2024：
- Starbucks’ market share in China declined to 4.2%, dropping from the second to the third-largest player in the market.
- September 2024：
- Laxman Narasimhan was succeeded as CEO by Brian Niccol.
- By February 2025：
- Reports emerged that Starbucks had met with investors, including China Resources Holdings, KKR, and FountainVest, about investment in its China operations.
- March 2025：
- Starbucks’ Hong Kong-listed shares had lost nearly 20% since March 2025.
- Ending March 2025：
- Starbucks had added 665 stores over the previous 12 months, reaching a total of 7,758 outlets in China.
- First quarter of 2025：
- Luckin Coffee’s revenue in China was 1.6 times that of Starbucks; Starbucks China posted flat same-store sales despite a 5% revenue increase.
- April 2025：
- Starbucks joined JD.com’s food delivery platform, linking its loyalty program with the e-commerce giant for the first time.
- June 2025：
- Starbucks cut prices by an average of 5 yuan ($0.70) on dozens of drinks in China.
- As of June 20, 2025：
- Starbucks’ P/E ratio stood at 33.82; Luckin Coffee’s P/E ratio was 22.58.
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