Core Viewpoint - The bidding process for Starbucks' China business has narrowed down to four private equity firms: Boyu Capital, Carlyle Group, EQT, and Sequoia China, with a valuation of approximately $5 billion based on projected EBITDA of $400 to $500 million for 2025 [3][11]. Group 1: Bidding Participants - Carlyle Group is a notable contender due to its previous investment experience in McDonald's China, where it held a 28% stake and achieved a net gain of approximately $1.2 billion from a $1.8 billion exit [4][5]. - Boyu Capital has shifted its focus towards larger acquisitions, recently participating in significant deals, indicating its growing capacity in the M&A space [5][6]. - EQT, while less known in China, has a strong background in private equity and has successfully executed high-value exits, including a $15.1 billion exit in the first half of the year [6][7]. - Sequoia China has been active in M&A, recently acquiring a majority stake in Marshall Group for €1.1 billion (approximately ¥8.4 billion) and has a significant fundraising capability, which may drive its participation in the Starbucks deal [8][10]. Group 2: Starbucks' Sale Process - Starbucks has been in the spotlight for nearly a year regarding its strategic options in China, initially indicating it was not considering a full sale but rather seeking external funding while retaining significant ownership [10][11]. - The valuation of Starbucks' China business has fluctuated, with estimates ranging from $5 billion to as high as $10 billion, reflecting market perceptions of its growth potential amid competition from local brands [11][12]. - Starbucks has requested non-binding offers from potential investors, signaling a desire to expedite the selection process while maintaining negotiation leverage by retaining core assets and some equity [12][13].

Core Viewpoint - The bidding for Starbucks' China business has narrowed down to four private equity firms: Boyu Capital, Carlyle Group, EQT, and Sequoia China, with a final buyer expected to be determined by the end of October [2][3]. Group 1: Bidding Process and Valuation - The overall valuation of Starbucks China is approximately $5 billion, corresponding to an estimated EBITDA of $400 million to $500 million for 2025, resulting in a valuation multiple of around 10 times [3]. - The bidding process has attracted over ten institutions since the announcement of the potential sale in late 2024, with various rumors circulating about the final buyer and price [3][15]. - Starbucks has indicated it will not sell the entire business but will retain core assets and a certain equity stake, which may affect the bidding prices due to the lack of complete control for the buyers [16]. Group 2: Profiles of Bidding Firms - Carlyle Group is a notable contender due to its previous investment experience in McDonald's China, where it achieved a significant return on investment [4][5]. - Boyu Capital has been a key player in mergers and acquisitions, with recent high-profile transactions indicating its growing capacity for large-scale deals [6][8]. - EQT, while less known in China, has a strong track record of exits through mergers rather than traditional IPOs, suggesting a strategic approach to acquisitions [9][10]. - Sequoia China has been increasingly active in M&A, with substantial fundraising efforts indicating its readiness to engage in significant transactions [11][12]. Group 3: Market Context and Strategic Implications - The past year has seen Starbucks China under intense scrutiny as a major case in the M&A landscape, with various private equity firms vying for a stake [13][14]. - The fluctuating market valuation of Starbucks China reflects differing opinions on its long-term growth potential amid competition from local brands [15]. - The strategic decision to maintain a portion of ownership suggests that Starbucks aims to retain influence over its brand while still attracting investment [16][17].

Core Viewpoint - Starbucks is in the final negotiation stage for the sale of its China business, with private equity firms as the main candidates, aiming to retain a 30% stake for operational influence while selling 70% to multiple buyers [1][2]. Group 1: Sale Process and Candidates - The final candidates for the sale of Starbucks' China business include Boyu Capital, Carlyle Group, EQT, Sequoia China, and Primavera Capital, with the deal expected to be finalized by the end of October [1]. - Unlike previous rumors of involvement from corporate venture capital (CVC) firms like Tencent and JD.com, the final candidates are all private equity (PE) firms, which typically focus on enhancing operational efficiency and financial returns [1][2]. Group 2: Strategic Implications - Starbucks CEO Brian Niccol has indicated a desire to retain a significant equity stake, with plans to keep 30% of the shares, allowing for operational control while distributing the remaining 70% among several buyers [1][2]. - This structure enables Starbucks to maintain influence over its China operations and provides flexibility for future equity adjustments, such as potential buybacks when market conditions improve [2]. Group 3: Comparison with McDonald's - The case of McDonald's serves as a successful model for Starbucks, as McDonald's sold approximately 80% of its China business for $2.08 billion in 2017, leading to rapid expansion and improved profitability under local management [3]. - Following the introduction of local capital, McDonald's China opened 1,000 new stores in 2023 alone, demonstrating the potential benefits of local partnerships [3]. Group 4: PE Firms' Track Record - The private equity candidates have strong investment histories in the restaurant sector, such as Primavera Capital's previous investments in Yum China, which yielded significant returns [4]. - These firms are expected to help Starbucks adapt to market changes and enhance its digital capabilities while maintaining operational independence [5].

Group 1 - The core issue involves allegations from a part-time employee claiming they were pressured to purchase mooncakes, totaling 15 boxes and nearly 3000 yuan, due to sales targets [1] - Starbucks China has stated that it will verify the claims made by the employee and emphasized that the practice of self-purchasing to meet sales targets is not allowed [1] - The company highlighted that its mooncakes are popular due to unique flavors and designs, and encouraged customers to purchase from official channels to protect their consumer rights [1]

Core Viewpoint - Starbucks employees are reportedly facing significant pressure to sell mooncakes, with some resorting to purchasing them themselves to meet sales targets, indicating a systemic issue within the company's sales practices [1][2] Group 1: Sales Pressure and Employee Experience - Employees in multiple Starbucks locations in Shandong are subjected to varying degrees of sales pressure, with some required to meet hourly sales targets and others facing consequences for not achieving their goals [1] - A detailed grading system for sales targets has been revealed, with specific quotas assigned to different roles: store managers are expected to sell 60 boxes, full-time employees 25 boxes, and part-time employees 15 boxes [1] - Employees report a stressful work environment, with constant reminders to meet sales targets leading to significant mental strain [1] Group 2: Consequences of Not Meeting Targets - Failure to meet sales targets results in formal reprimands, including the need for managers to write analyses or reflections in the company system [2] - Employees often have to use their personal benefits, such as "partner vouchers," to incentivize sales, with some giving away multiple vouchers to sell a single mooncake [2] - There are reports of disciplinary actions, such as warnings, for employees who do not actively promote products to customers [2]

Core Viewpoint - Recent reports from multiple individuals claiming to be Starbucks employees indicate significant pressure during the sale of mooncakes, with some employees reportedly purchasing mooncakes out of their own pockets due to sales targets [1] Group 1: Employee Experiences - Several employees, including part-time university students, have expressed that they were pressured to purchase mooncakes themselves, with one individual stating they had to buy 15 boxes, totaling nearly 3000 yuan, which strained their finances [1] - Another employee, who had just joined the company two months prior, was tasked with selling 20 sets of mooncakes but faced criticism for not meeting the sales target, leading to personal financial losses [1] Group 2: Company Response - Starbucks China has stated that they are verifying the claims made by the employees and emphasized that the company does not permit employees to purchase products on their own behalf as a principle [1] - The company urged customers to buy mooncakes through official channels to protect their rights, highlighting the popularity of their mooncakes each year [1]

Core Viewpoint - Starbucks is preparing to sell control of its China business, with several major investment firms, including Carlyle Group and EQT, expected to submit final bids by early October [1][4]. Group 1: Sale Process - Major investment firms, including Carlyle Group, EQT, HongShan Capital Group, and Boyu Capital, are preparing final bids for Starbucks' China business [1]. - Starbucks has requested binding bids from interested parties by early October, with a potential agreement by the end of next month [1]. - Previous reports indicated that Starbucks invited around 10 potential buyers to submit non-binding bids, with valuations for the China business reaching up to $5 billion [1]. Group 2: Control and Operations - Starbucks aims to retain control over its coffee roasting facilities in China for quality control reasons [2]. - The terms of the transaction, including the scale of equity to be sold, remain negotiable [3]. - Starbucks has stated it will maintain a significant stake in its China operations following the sale [4]. Group 3: Market Challenges - Starbucks faces declining market share in China, dropping from 34% in 2019 to 14% last year, attributed to increased local competition [4]. - In response to market challenges, Starbucks has implemented strategies such as lowering prices on certain non-coffee beverages and accelerating the launch of localized products [4]. Group 4: Financial Performance - As of June 29, Starbucks China reported a surprising same-store sales growth of 2%, compared to zero growth in the previous quarter [5]. - Under CEO Brian Niccol's leadership, Starbucks is making significant operational changes to improve sales, including menu updates and staff increases [6]. Group 5: Valuation and Analyst Sentiment - Analysts project Starbucks' price-to-earnings ratio to be around 32 times for fiscal year 2026, indicating a cautious outlook despite signs of recovery [7]. - Citigroup has lowered its target price for Starbucks from $100 to $99, maintaining a "neutral" rating due to the high costs associated with the company's turnaround efforts [7].

Core Viewpoint - Recent reports from self-identified Starbucks employees on social media indicate significant pressure related to the sale of mooncakes, with some employees reportedly purchasing mooncakes out of pocket due to sales targets [1] Group 1: Employee Experiences - Multiple employees from regions such as Hunan, Zhejiang, and Jiangsu have shared experiences of being pressured to meet sales targets, with one claiming to have purchased 15 boxes of mooncakes, totaling nearly 3000 yuan, which strained their living expenses [1] - Another employee, who recently joined the company, reported being required to sell 20 sets of mooncakes and faced criticism for not meeting the target, leading to personal financial losses [1] Group 2: Company Response - Starbucks China has stated that they are verifying the claims made by the employees and emphasized that the company does not permit employees to purchase products out of pocket as it is a matter of principle [1] - The company urged customers to purchase mooncakes through official channels to protect their rights, highlighting the popularity of their mooncakes each year [1]

Core Viewpoint - Starbucks is in the final stages of selling its stake in the Chinese business, with potential buyers including Boyu Capital, Carlyle Group, EQT, and Sequoia China, aiming to finalize the deal by the end of October [2][10]. Group 1: Stake Sale Details - The key issue in the stake sale is the percentage of ownership that Starbucks will retain, with reports suggesting that Starbucks may keep around 30% of the equity while distributing the remaining shares among several buyers [4]. - Starbucks CEO, Brian Niccol, emphasized the company's commitment to maintaining a significant stake in the Chinese market, stating that any transaction must align with Starbucks' interests [2][4]. Group 2: Operational Flexibility - Starbucks China has gained more operational flexibility, as evidenced by its recent partnership with Xiaohongshu (Little Red Book) to enhance community engagement in over 1,800 stores [7]. - The company has also adjusted prices for key products, leading to significant sales growth, with Q2 revenue in China increasing by 8% to $790 million (approximately 5.625 billion RMB) [7]. Group 3: Competitive Landscape - The competitive environment in China's coffee market is intensifying, with Luckin Coffee reporting a 47.1% year-on-year revenue increase to 12.36 billion RMB in Q2, significantly outpacing Starbucks [9]. - As of the end of Q2, Luckin Coffee had 26,206 stores, highlighting a growing gap in store count compared to Starbucks, which opened 70 new stores in the same period, bringing its total to 7,828 [9]. Group 4: Strategic Importance of Local Partnerships - Finding a partner that understands the Chinese market is crucial for Starbucks' expansion strategy, as local insights can enhance operational efficiency and decision-making [10].

Group 1 - Global investment firms Carlyle Group and EQT are preparing final offers for a controlling stake in Starbucks' China operations [1] - Regional players HongShan Capital Group and Boyu Capital are also involved in the bidding process [1]