Starbucks, the world’s largest coffee chain, has announced a sweeping new chapter for its business in China, agreeing to sell a majority stake in its Chinese retail operations to Boyu Capital in a deal valued at $4 billion. The move, unveiled on November 3, 2025, marks one of the most significant pivots by a global consumer brand in China in recent years, as Starbucks seeks to reinvigorate its fortunes in what has long been its most promising international market.
Under the terms of the agreement, Boyu Capital, a prominent private equity firm with deep roots in Asia, will acquire up to 60% of Starbucks’ China retail business. Starbucks will retain a 40% stake and, crucially, will continue to own and license the Starbucks brand and intellectual property to the new joint venture. The business will remain headquartered in Shanghai, operating approximately 8,000 outlets across the country, with bold ambitions to eventually reach as many as 20,000 locations. The deal is expected to close in the second quarter of fiscal 2026, pending regulatory approval, according to CNBC.
Starbucks first entered China in 1999, and by 2015 the country had become its second-largest market after the United States. The company’s rapid expansion and iconic green-and-white branding made it a symbol of Western coffee culture in China’s fast-modernizing cities. But as China’s economy has matured, Starbucks has faced mounting challenges from nimble homegrown rivals, most notably Luckin Coffee, which now operates more stores in China than Starbucks and has captured a loyal customer base with its lower prices and frequent discounts. The competition has been fierce, and Starbucks has responded by cutting prices in China, a move that has helped boost foot traffic but also squeezed profits.
In a statement, Starbucks described the partnership with Boyu Capital as a "significant milestone" that signals its intent to remain a major force in the world’s second-largest economy. The company put the valuation of its China retail operations at $13 billion, factoring in both its retained stake and anticipated licensing fees over the next decade or more. "Combining Starbucks’ globally recognized brand, coffee expertise, and partner (employee)-centered culture with Boyu’s depth of understanding of Chinese consumers," the company explained, "will enable Starbucks China to fully unlock the vast market opportunity."
Molly Liu, CEO of Starbucks China, echoed this optimism, saying, "Building on our positive business momentum, our partnership with Boyu will enable Starbucks China to fully unlock the vast market opportunity." Starbucks CEO Brian Niccol, who took the helm last year after a successful run at Chipotle, has been candid about the pressures the company faces in China. He has led efforts to revamp the menu, hire more baristas, and scale back automation in an attempt to re-energize the brand and reconnect with Chinese consumers. In a September interview with CNBC, Niccol outlined his vision: China could one day support 20,000 or even 30,000 Starbucks locations—an audacious goal that underscores the company’s enduring belief in the market’s potential.
Despite these long-term ambitions, the reality on the ground has been more sobering. Starbucks’ sales in China have slumped in recent years, first as a result of the Covid-19 pandemic and stringent government restrictions, and more recently due to a slowing economy and relentless competition from domestic brands. In the fiscal fourth quarter reported on November 3, 2025, Starbucks saw same-store sales in China rise by 2%, driven by a 9% increase in customer traffic. But this growth came at a cost: the company’s aggressive discounting strategy helped lure in more customers but led to a drop in average ticket prices, putting a dent in overall profits.
Starbucks is not alone in grappling with China’s shifting consumer landscape. Other major U.S. brands have also been forced to rethink their strategies. KFC and Pizza Hut’s parent company, Yum! Brands, spun off its Chinese operations in 2016 after years of underperformance. Burger King's parent, Restaurant Brands International, recently bought back its struggling China business with the goal of selling it to another operator. Even McDonald’s has tweaked its approach, increasing its minority stake in its China business from 20% to 48% two years ago, betting that a larger share would allow it to better capitalize on the market’s growth.
Boyu Capital, the new majority partner in Starbucks’ China venture, is no stranger to the country’s retail landscape. With offices in Shanghai, Hong Kong, and Singapore, the private equity firm has investments across retail, financial services, and technology. Starbucks said the collaboration is designed to blend its global coffee expertise and brand cachet with Boyu’s local market knowledge and operational savvy. The hope is that this combination will allow Starbucks to introduce new drinks and digital platforms tailored to Chinese tastes, and position the brand for a new era of growth.
Starbucks’ future in China had been the subject of speculation for months, especially after former CEO Laxman Narasimhan acknowledged last year that the company was exploring “strategic partnerships” to stay competitive. The agreement with Boyu now stands as one of the biggest deals involving the Chinese operations of a Western consumer company in recent memory. For Starbucks, it represents both a concession to the realities of the market and a doubling down on the country’s long-term promise.
As of September 28, 2025, Starbucks operated 8,011 stores in China, and the joint venture aims to accelerate expansion to as many as 20,000 locations. That’s an eye-popping number, but one that reflects the scale and complexity of the Chinese market, where urbanization, rising incomes, and shifting consumer preferences continue to reshape the competitive landscape.
Starbucks executives remain upbeat about the company’s prospects. They point to the enduring appeal of the Starbucks brand and the company’s track record of adaptation and innovation. Yet they also acknowledge the need for local insight and flexibility. By bringing in Boyu as a majority partner, Starbucks is betting that a more localized approach—one that is attuned to the unique rhythms and tastes of Chinese consumers—will help it regain its footing and chart a new course in the world’s most dynamic coffee market.
With more than 40,000 outlets worldwide, Starbucks’ global footprint is unmatched. But as this deal shows, even the biggest brands must sometimes cede control to thrive in unfamiliar terrain. The coming years will reveal whether this new partnership can deliver on its promise and restore Starbucks’ luster in China’s fast-evolving café culture.
