3 6 Ke·2025-11-05 01:42Core Insights - Starbucks China has reached a strategic partnership with Boyu Capital to form a joint venture for its retail operations in China, marking a significant shift in its business strategy [1][2] - The deal values Starbucks China's operations at approximately $4 billion, with Boyu acquiring up to 60% of the joint venture for $2.4 billion, while Starbucks retains 40% and continues to own the brand and intellectual property [2][4] - The total value of Starbucks' retail business in China is projected to exceed $13 billion, indicating a substantial difference between the joint venture's valuation and the overall business value [2][4] Financial Overview - Boyu Capital will hold a 60% stake in the joint venture, allowing it to share in 60% of the operating profits, while Starbucks expects to receive ongoing royalty payments for brand licensing [2][4] - Starbucks China's revenue for fiscal year 2025 is estimated at $3.105 billion, with an EBITDA forecast of $400 million to $500 million, suggesting a potential return on investment for Boyu over a longer period [7][8] - The valuation of Starbucks China is relatively low compared to its global operations, which are valued at 20.6 times the past 12 months' EBITDA, while Starbucks China's valuation is closer to 10 times its projected EBITDA [3][4] Market Context - The coffee market in China has become increasingly competitive, with local players like Luckin Coffee gaining significant market share, prompting Starbucks to adapt its strategy [9][11] - Starbucks has faced challenges in maintaining its market share, which has declined from a peak of 42% in 2017 to an estimated 14% by 2024, highlighting the need for a more localized approach [10][11] - The introduction of Boyu Capital as a partner is seen as a strategic move to leverage local expertise and resources to enhance Starbucks' growth potential in China, particularly in lower-tier cities [19][20] Strategic Implications - The partnership with Boyu Capital is viewed as a "strategic reduction of burden" for Starbucks, allowing it to maintain a stake in the business while reducing operational risks and investment pressures [8][19] - Starbucks aims to transform its operational model from direct ownership to a joint venture, which may provide more predictable cash flows and reduce volatility [4][8] - The collaboration is expected to facilitate Starbucks' expansion into new markets and improve operational efficiency, aligning with the evolving consumer landscape in China [19][20]