Starbucks is exploring a potential partial sale of its China operations, with offers from global and Asia-based private equity firms valuing the business at up to $10 billion, CNBC reported Wednesday, citing people familiar with the matter.
The move comes as the US coffee giant struggles to retain its footing in China’s rapidly evolving and price-sensitive café market.
Private equity groups including Centurium Capital, Hillhouse Capital, Carlyle Group, and KKR & Co are among those competing for a stake in the China unit.
According to sources, Starbucks may retain up to 30% of the business, while distributing the remainder among several buyers, each with stakes below 30%.
Growing competition forces strategic rethink
Starbucks kicked off a formal sale process in May, inviting interested parties to respond to a detailed questionnaire.
Nearly 30 domestic and international private equity players have submitted non-binding offers, with bids now under evaluation.
While a shortlist of contenders could emerge within two months, CNBC said a completed transaction is unlikely before year-end.
The company has denied any plans for a full exit from China.
Still, the decision to sell a majority stake underscores how mounting competition and pricing pressures have forced a reassessment of its strategy.
Starbucks’ market share in China has plunged from 34% in 2019 to just 14% in 2024, according to Euromonitor International, as lower-cost competitors like Luckin Coffee and Cotti Coffee rapidly gained ground.
Amidst rising inflation and tighter consumer budgets, Starbucks’ premium pricing has come under scrutiny.
Many Chinese consumers now pay less than 5 yuan (approximately $0.70) per cup of coffee, driven by aggressive discounts offered by rivals and food delivery platforms.
In response, Starbucks initiated its first-ever price cut in China last month, reducing prices of some iced drinks by 5 yuan.
Future expansion faces pressure from local dynamics
China has long been described by Starbucks as its “second home market,” with plans to expand to 9,000 stores by 2029.
However, the recent stall in comparable sales in Q2 2025 and intensifying local competition have cast doubt over that ambition.
Unlike Starbucks’ global positioning, Chinese rivals are now using AI to optimize menus, personalize offerings, and accelerate service—areas where Starbucks is still catching up.
Partnership with local investors could inject much-needed agility.
Analysts at AInvest suggest that aligning with stakeholders familiar with regional tastes may help Starbucks recover market share by accelerating digitization, menu innovation, and store-level efficiency.
However, the risk of brand dilution remains if new partners prioritize aggressive expansion over preserving Starbucks’ premium identity.
What to do with SBUX stock?
For shareholders, the outcome of the proposed stake sale is critical.
GuruFocus estimates a fair value of $105.12 for Starbucks stock, but with the current price-to-earnings ratio at 34.69, expectations remain high.
For investors, a cautious but strategic approach may be warranted.
Analysts at AInvest suggest holding SBUX stock until after its earnings release on July 28, when management is expected to provide more clarity on the terms, valuation, and potential margin recovery tied to the proposed China stake sale.
With the average analyst price target hovering at $92.43, skepticism around the success of the transaction persists.
For those looking to accumulate, a more attractive entry point may emerge if shares dip below $85, particularly near or under the 200-day moving average of $95.71.
Such a pullback, especially if driven by market reaction to earnings or updates on the deal structure, could offer a buying opportunity—provided the company’s operational fundamentals show signs of stabilizing.
However, investors should avoid overpaying for growth.
While domestic competitors like Luckin Coffee offer higher short-term growth potential, they come with significantly greater volatility and less brand stability.
Starbucks still commands a premium globally due to its established identity and loyal customer base, but that premium is only justifiable if its pivot in China succeeds and long-term strategic execution is robust.
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