BUSINESS

Analysis: Starbucks’ Discounted China Sale Shows Its Struggles in Crowded Market

Published: Nov. 6, 2025 8:39 p.m. GMT+8

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The sale of a majority stake highlights how Starbucks has been losing ground in China to more nimble local rivals like Luckin and Cotti Coffee.

Starbucks Corp. is selling control of its China business at a discount, highlighting the challenges the U.S. coffeehouse chain has faced in an increasingly crowded and competitive market.

Starbucks and private equity firm Boyu Capital will form a joint venture to operate the coffee chain’s business in China, according to a deal announced Monday. Boyu, which has invested widely in consumer brands and was a cornerstone investor in bubble tea giant Mixue Group’s Hong Kong IPO, will acquire up to a 60% stake in the venture. Starbucks will retain 40% and license its brand and intellectual property to the new entity.

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Starbucks is selling a 60% stake in its China business to Boyu Capital at a $4 billion valuation, significantly below previous estimates.
Starbucks’ China market share dropped from 5.6% (2022) to 4.2% (2024), trailing Luckin Coffee’s 11%, amid declining sales and intense competition.
The new joint venture aims to expand Starbucks’ China store count from 8,011 to 20,000, though franchising may be challenging due to low profitability for operators.

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Who’s Who

Starbucks Corp.: Starbucks Corp. is selling a controlling stake in its China operations to Boyu Capital, forming a joint venture where Starbucks retains 40%. The deal values Starbucks' China business at $4 billion, despite initial market estimations up to $10 billion. This reflects challenges like declining market share (4.2% in 2024 from 5.6% in 2022) and revenue, placing it behind competitors like Luckin Coffee. The new venture aims for ambitious expansion to 20,000 stores.

Boyu Capital: Boyu Capital is a private equity firm that has invested in various consumer brands, including Mixue Group. It is forming a joint venture with Starbucks to operate Starbucks' China business, acquiring up to a 60% stake.

Mixue Group: Mixue Group (蜜雪冰城) is a bubble tea giant. Private equity firm Boyu Capital was a cornerstone investor in Mixue Group's Hong Kong IPO. Mixue has expanded rapidly through franchise partnerships, operating over 48,000 stores across China as of June 30. Its extensive presence demonstrates the effectiveness of franchising for rapid growth in the competitive Chinese market.

Luckin Coffee Inc.: Luckin Coffee Inc. is the market leader in China's coffee industry, holding an 11% market share in 2024. The company's rapid expansion, primarily through franchise partnerships, has led to over 26,000 stores across China. This strong presence has allowed Luckin to surpass Starbucks in market share.

Cotti Coffee: Cotti Coffee has emerged as a significant player in China's coffee market. It holds a 4.4% market share, surpassing Starbucks' 4.2% and positioning itself as a strong competitor to market leader Luckin Coffee Inc. This upstart's rapid growth highlights the intense competition within the Chinese coffee industry.

McDonald’s Corp.: McDonald's Corp. successfully restructured its Asian operations, including mainland China, by selling 20-year franchise rights for around 2,700 restaurants to a consortium led by Citic Capital Holdings Ltd. in 2017. This model has proven successful, with over 7,200 McDonald's restaurants now operating in China.

Yum Brands Inc.: Yum Brands Inc. spun off its China business in 2016. This spin-off, Yum China, became the exclusive franchisee for KFC, Pizza Hut, and Taco Bell restaurants on the Chinese mainland. Primavera Capital Ltd. and Ant Group Co. Ltd. invested in Yum China after the spin-off.

Primavera Capital Ltd.: Primavera Capital Ltd. partnered with Ant Group Co. Ltd. to invest in Yum Brands Inc.'s spun-off China business in 2016. This allowed Yum China to become the exclusive franchisee for KFC, Pizza Hut, and Taco Bell on the Chinese mainland, contributing to considerable success for these American chains in the region.

Ant Group Co. Ltd.: Ant Group Co. Ltd. invested in Yum Brands Inc.'s China business spin-off in 2016. This partnership allowed Yum China to operate as a franchisee, holding exclusive operating rights for KFC, Pizza Hut, and Taco Bell restaurants on the Chinese mainland.

Citic Capital Holdings Ltd.: Citic Capital Holdings Ltd. led a consortium that acquired the 20-year franchise rights for approximately 2,700 McDonald's restaurants in mainland China and Hong Kong in January 2017. This move followed McDonald's proposal for a restructuring plan for its Asian operations, which had been troubled by losses from directly operated stores.

AI generated, for reference only

What Happened When

2016：: Yum Brands spun off its China business, bringing in Primavera Capital Ltd. and Ant Group Co. Ltd. as investors.

March 2016：: McDonald's proposed a restructuring plan for its Asian operations, including the Chinese mainland.

January 2017：: McDonald's sold the 20-year franchise rights for approximately 2,700 restaurants on the Chinese mainland and in Hong Kong to a consortium led by Citic Capital Holdings Ltd.

2022：: Starbucks' market share in China was 5.6%.

2024：: Rumors circulated about a $10 billion valuation for Starbucks China at the end of 2024.

2024：: Starbucks' market share in China dropped to 4.2%.

first half of 2024：: Starbucks began signaling it was looking to make a deal for its China business.

first three quarters of 2024：: Starbucks’ China revenue suffered three straight year-on-year declines.

June 2025：: Starbucks met with over 10 institutional investors during a roadshow; at least three were not interested in buying a piece of Starbucks’ China unit.