Boyu Capital Is Buying 60% of Starbucks China Business

Starbucks’ China business is getting a big jolt with a new majority owner.

The Seattle-based coffee chain announced on Monday that it would sell a large part of its China business to private equity firm Boyu Capital.

In a deal valued at $4 billion, Boyu is acquiring 60% of Starbucks China’s business, with plans to close in the first three months of the year, per a press release.

The release said that the Boyu partnership would help elevate Starbucks’ customer experience in China and speed expansion into new cities.

In an open letter on Monday, Starbucks CEO Brian Niccol said that through the Boyu partnership, he aims for Starbucks to grow from 8,000 stores in China to over 20,000.

Starbucks’ stock was flat in after-hours trading, and it’s down more than 16% in the last year.

Boyu, which has offices in Shanghai, Beijing, Hong Kong, and Singapore, oversees a portfolio of retail heavyweights, including Alibaba Group and Chinese retail tech company Meituan. It also has a stake in battery manufacturer CATL, which makes batteries for electric vehicles like Tesla.

One of the firm’s cofounders, Alvin Jiang, is the grandson of China’s former leader, Jiang Zemin.

In response to a request for comment, a representative of Starbucks China directed Business Insider to Niccol’s open letter about the sale.

Representatives for Boyu Capital did not respond to a request for comment from Business Insider.

Starbucks’ struggles in China

The Boyu sale comes at a critical point for Starbucks China. The country is Starbucks’ second-largest market after the US. In the latest quarter, China’s $831 million in sales made up about 8.7% of the chain’s total sales globally.

But it has posted several quarters of weak sales in the country. Starbucks’ same-store sales in China fell 11% in the second quarter of 2024 and only turned positive in the latest quarter, with a 2% increase.

The chain’s problems in China include increasingly price-sensitive customers and the emergence of budget coffee chains like Luckin Coffee and Cotti Coffee.

Niccol spoke about Starbucks’ challenges in China during an October 2024 earnings call, shortly after he became the company’s CEO.

“All indications show me the competitive environment is extreme, the macro environment is tough, and we need to figure out how we grow in the market now and into the future,” he said.

Jason Yu, the managing director of China-based CTR Market Research, told Business Insider in September that the partial sale of Starbucks’ China business would inject capital and aid the chain with resources like real estate and local supply chain partners.

“I think it is quite encouraging to see that they are actually turning around their business,” Yu said in September.