In Depth: Starbucks, Burger King Overhaul China Strategies

Starbucks Corp. and Burger King Corp. are actively adjusting their strategies to navigate the increasingly saturated and competitive Chinese food and beverage market. Both companies are revisiting their business models and partnerships in response to recent challenges and shifting consumer trends. [para. 1]

For Starbucks, the year 2024 began with a plan to seek new strategic investors for its China operations after two consecutive quarters of declining revenues and same-store sales. However, progress was interrupted when then-CEO Laxman Narasimhan was replaced by Brian Niccol, who prioritized the U.S. market and temporarily paused China expansion to better understand local dynamics. By February of the following year, Starbucks reignited talks with potential investors, such as China Resources Holdings, KKR, and FountainVest Partners, and in June, launched a full roadshow involving over 20 potential partners, including Hillhouse Capital, Carlyle Group, and an investment arm of Meituan. [para. 2][para. 3]

By September, Starbucks had shortlisted four bidders for a stake in its China business, namely Boyu Capital, Carlyle, HongShan Capital Group, and a consortium comprising Primavera Capital and EQT Partners. A decision was anticipated as early as October. CEO Niccol underscored that this move is not just about raising capital but about enhancing operational efficiency while retaining a significant ownership stake. Although stake details have not been disclosed, experts expect Starbucks to maintain control, using the partnership mainly to advance localization efforts in China. [para. 4][para. 5][para. 6][para. 7]

Previously, Starbucks took full control of its China business in 2017, signaling its commitment to the market, which by 2018 was its largest outside the U.S. Despite operating nearly 8,000 stores and generating $790 million in Q2 2024 revenue (nearly 40% of international revenue), Starbucks’ market share in China reduced from 5.6% in 2022 to 4.2% in 2024, dropping from the second- to the third-largest coffee player behind local rivals Luckin Coffee and Cotti Coffee. Luckin led with an 11% market share and had over 26,000 stores, reporting $1.72 billion in Q2 2024 revenue. The success of local competitors mainly comes from aggressive low-pricing and highly appealing co-branded products, prompting Starbucks to adapt its own China offerings for greater relevance. [para. 8][para. 10][para. 11][para. 12][para. 13][para. 14][para. 15]

Burger King, managed in China by parent company Restaurant Brands International (RBI), also altered its structure. In early 2024, RBI acquired significant stakes from franchisees TFI Asia Holdings and Pangaea Two for $158 million to regain strategic control, aiming to form new partnerships rooted in local know-how. Burger King, present in China since 2005, grew to 1,474 stores by the end of 2024—below initial targets and far fewer than competitors KFC and McDonald’s—despite being the chain’s largest international market by outlet count. However, it generated only $700 million in 2024, ranking eighth globally in revenue with the lowest per-store sales among its top 10 markets. [para. 8][para. 9][para. 16][para. 17][para. 18]

Burger King faced operational issues, ranging from poor store management and food safety to supplier problems, resulting in prolonged franchisee losses. The chain’s historic “grilled, healthier” product differentiation against McDonald’s has eroded, now being seen merely as another beef burger brand by Chinese consumers. [para. 19][para. 20][para. 21][para. 22][para. 23]