Starbucks is selling up to 60% of its China business to local private equity firm Boyu Capital, a strategic move that could reshape its presence in one of the world’s most competitive coffee markets. The deal, announced on Monday, comes as the U.S. coffee giant struggles to maintain dominance against fast-growing local rivals such as Luckin Coffee and Mixue Group.
Why Starbucks Is Partnering with Boyu Capital
According to analysts, the decision to bring Boyu Capital on board injects much-needed local capital and operational expertise into Starbucks’ China operations.
Starbucks plans to triple its footprint to 20,000 stores, and Boyu’s deep market knowledge could accelerate that goal.
Boyu, which already backs Mixue Group and Lucky Cup, has a strong foothold in both low-cost beverage segments and mass-market retail, giving Starbucks an insider advantage in navigating Chinese consumer dynamics.
“Boyu’s hands-on experience in these markets matches Starbucks’ strategy,” said food and beverage analyst Zhu Danpeng. “Their involvement will make that push more resolute.”
Starbucks Faces Stiff Competition from Local Brands
Despite its premium image, Starbucks’ market share in China has plunged from 34% in 2019 to 14% in 2024, according to Euromonitor International.
Meanwhile, local competitor Luckin Coffee has soared in popularity, driven by affordable pricing, digital convenience, and aggressive store expansion.
Boyu’s dual investment strategy — in both Starbucks and Mixue Group — positions it to capture consumers at all income levels, from budget-conscious buyers to premium coffee enthusiasts.
The Real Estate and Market Expansion Challenge
Starbucks’ China expansion has faced hurdles beyond competition — particularly in real estate selection.
In smaller Chinese cities, overbuilt malls and inconsistent traffic have made it difficult for Starbucks to sustain profitable locations.
However, analysts believe Boyu’s local real estate connections could secure the company better spots in high-growth urban areas.
“Boyu’s deep network can help Starbucks secure some of the most premier real estate assets in China,” noted Bernstein analysts in a recent investor report.
Strategic Benefits for Starbucks’ Global Focus
The partnership also enables Starbucks to refocus on its U.S. recovery strategy, where CEO Brian Niccol is leading a major overhaul of store operations.
His predecessor, Laxman Narasimhan, heavily prioritized China, expanding the store count to over 7,600 in just two years.
Analysts say the China divestment will give Starbucks more financial flexibility and allow it to reinvest in its struggling U.S. operations, which have seen declining sales and a 20% stock drop over the past year.
Expert Insights
Former Starbucks China executive Jessica Gleeson described the move as a potential “turning point” for the company.
“The injection of capital and China expertise from Boyu is exactly the catalyst Starbucks China needs to shift from defense back to offense,” she said.
However, Ben Cavender, managing director of China Market Research Group, noted that Starbucks remains “caught in an awkward position” — squeezed between budget coffee chains and boutique cafés appealing to younger, trendier consumers.
Conclusion
Starbucks’ partial sale to Boyu Capital marks a strategic recalibration in its China ambitions.
While the deal offers financial and operational advantages, the U.S. brand must still redefine its value proposition to stay relevant in China’s evolving coffee culture — one increasingly shaped by local tastes, digital convenience, and price sensitivity.
In other news also read about Starbucks’ Big Recovery Has a Bitter Aftertaste
