Strategic Reversal: Starbucks Sells Majority China Stake in $4 Billion Boyu Capital Deal

Starbucks Corporation has announced a significant realignment of its China operations—its second-largest market worldwide—by transferring a majority ownership stake in its retail division to Boyu Capital, a private equity firm based in China. The agreement forms a new joint venture that places an estimated $4 billion valuation on Starbucks’ China business.

Under the terms of the arrangement, Boyu Capital will hold up to 60% of the new venture, while Starbucks will retain a 40% share. The coffee chain will continue to own its brand and intellectual property, which it will license to the joint venture. Starbucks estimates that, over the next decade, the combination of sale proceeds, ongoing equity value, and licensing income will generate more than $13 billion. Completion of the transaction is expected in the next fiscal quarter.

This development represents a return to a partnership-based model. It contrasts with Starbucks’ 2017 decision to acquire the remaining 50% of its East China business for $1.3 billion, which had consolidated full ownership of its local operations. The new direction comes amid rising competition and shifting consumer preferences in China. Since opening its first Beijing store in 1999, Starbucks has faced growing pressure from domestic rivals such as Luckin Coffee, which overtook it as the country’s largest coffee chain roughly two years ago by offering drinks at significantly lower prices. According to Euromonitor International, Starbucks’ market share has fallen from about 34% in 2019 to 14% last year, reflecting the impact of economic headwinds and stronger local brand loyalty.

Through its partnership with Boyu Capital, Starbucks aims to harness local expertise and financial backing to reignite expansion. The company currently operates just over 8,000 stores in China and plans to grow that network to more than 20,000 locations in the future. CEO Brian Niccol stated that the new structure will enable faster progress toward this long-term goal. Boyu Capital—founded in 2011 and known for investments in the technology, consumer, and healthcare sectors—emphasized its confidence in the enduring appeal of the Starbucks brand and its potential for greater local relevance and innovation.

Operationally, Starbucks’ latest quarterly results showed early signs of recovery. Global comparable store sales rose by 1%, marking the first positive increase in nearly two years, while same-store sales in China climbed 2%. The improvement was driven by a 9% rise in customer transactions, offset partly by a 7% decline in the average ticket size.

On the stock market, Starbucks shares had dropped more than 10% since the beginning of the year, underperforming the S&P 500 Index, which advanced by about 17%. However, following the announcement of the new partnership, Starbucks stock rose roughly 0.5% in after-hours trading.