Starbucks Steps Up China Strategy, CEO Says ‘We’ve Got a Lot of Interest’

Coffee king Starbucks (SBUX) is exploring ways to ramp-up its dwindling business in China, and selling a minority stake in its Chinese unit is one of the strategic options under consideration. CEO Brian Niccol stated in an interview with the Financial Times yesterday, “The good news is we’ve got a lot of interest,” referring to talks held with multiple potential partners.  

On June 9, Starbucks also announced that it was reducing prices on dozens of its Chinese drinks to make them more “accessible.” On average, the company cut prices by $0.70 (Rmb5) on more than 20 iced and tea-based drinks. This step was taken to target China’s fast-growing non-coffee market.

China Sales Slow Amid Market Headwinds

China is the coffee maker’s second-largest market after the U.S. As of March 31, 2025, Starbucks operated 7,758 stores on the Mainland. The company had set a goal of opening 9,000 stores by the end of this year, but that goal looks like a distant dream now.

Same-store sales in China are constantly declining, while total revenues slumped to $3 billion in fiscal 2024 from a peak of $3.7 billion recorded in FY21. Intense competition from more economical domestic players, including Luckin Coffee (LKNCY) and Cotti Coffee, has eaten into Starbucks’ market share in the country. Meanwhile, cheaper alternatives such as bubble tea and milk tea companies have drawn customers to their stores. Additionally, an uncertain macroeconomic environment coupled with weaker consumer demand has worsened Starbucks’ woes.

Starbucks Seeks Partnerships to Boost China Growth

At this difficult juncture, Niccol has sought to explore partnerships with external investors to propel Starbucks’ growth. At the same time, he is committed to keeping a “meaningful stake” in the Chinese business. The company seems to be in no hurry to sell its stake, planning to go through the entire exercise process formally to evaluate if having a partner even makes sense. Reports suggest that investors from all realms, including Chinese and foreign private equity companies, as well as strategic investors have shown interest in partnering with Starbucks.

In February this year, a Reuters report stated that U.S.-based KKR & Co. (KKR) was also interested in acquiring a stake in Starbucks China. Niccol is confident that investors see high value in the Starbucks brand amid a growing coffee market and are thus excited to partner with the company.

Is SBUX a Good Stock to Buy?

Analysts remain divided on Starbucks’ long-term stock trajectory. On TipRanks, SBUX stock has a Moderate Buy consensus rating based on nine Buys versus nine Hold ratings. The average Starbucks price target of $94 implies 2.8% upside potential from current levels. Year-to-date, SBUX stock has gained 1.5%.

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