Starbucks sells 60% of China unit to Boyu at $4 billion value

Core Viewpoint - Starbucks Corp. has agreed to sell a majority stake in its China business to Boyu Capital at a $4 billion enterprise value to improve its performance in the country [1][2]. Group 1: Partnership and Investment - Boyu Capital will acquire up to a 60% interest in Starbucks' retail operations in China through a new joint venture, while Starbucks retains 40% and continues to license the brand [1]. - The deal concludes Starbucks' search for a partner to navigate its future in China, where it operates approximately 8,000 stores [2]. - Boyu Capital is negotiating a loan of around $1.4 billion to support its investment in Starbucks' China business [5]. Group 2: Market Challenges - Starbucks has faced challenges in China, losing market share to local competitors like Luckin Coffee, which offers significantly lower prices [3][4]. - The coffee chain's expansion has been limited due to intense competition and changing consumer preferences, particularly post-COVID [4]. Group 3: Strategic Changes - Starbucks is implementing strategies to attract customers, including opening free "study rooms," expanding its drink menu, and reducing prices [10]. - Recent efforts have led to a return to growth in comparable sales over the past two quarters [11]. Group 4: Future Outlook - Starbucks CEO Brian Niccol expressed a vision to grow the number of Starbucks locations in China from 8,000 to over 20,000 [9]. - The total value of Starbucks' China retail business is expected to exceed $13 billion, including licensing value [12].