Starbucks explores stake sale for its China business

Starbucks Corp. is exploring strategic options for its China business, including a possible stake sale, Bloomberg reported.

The coffee giant, which is facing mounting pressure from local competitors such as Luckin Coffee and Cotti Coffee, has reached out to private equity firms, technology companies, and other potential investors to gauge interest in its operations in the country.

The move comes as Starbucks grapples with increased competition and macroeconomic challenges in its second-largest market. Despite having more than 7,750 stores in China, the company's revenue in the region has faltered, generating nearly $740 million in the first quarter of 2025. This is well below the $1.2 billion net revenue posted by Luckin Coffee, which has rapidly expanded its footprint in the Chinese coffee market.

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The Bloomberg report suggests the company is considering a transaction that could value its China assets in the billions of dollars. Potential investors are expected to submit initial feedback soon, although it remains unclear whether Starbucks will move forward with a deal.

During a recent earnings call, Starbucks CEO Brian Niccol reaffirmed the company's long-term commitment to China. Niccol also mentioned that the company has made changes to its product offerings and pricing to improve performance.

Starbucks' move to explore a potential stake sale follows a similar path taken by other global chains such as McDonald's and Yum! Brands, which both sold stakes in their China operations to private equity firms to better cater to local tastes and tap into growth opportunities.

More challenges on the plate

In a separate development, Starbucks faces labour unrest in the United States as employees at around 100 unionised locations have walked off the job since Sunday. The strikes are in response to a new dress code policy, which requires baristas to wear solid black tops, replacing the previous policy that allowed employees to wear shirts in any colour. The new policy also introduces stricter guidelines on the bottoms workers can wear.

Workers United, the union representing baristas at over 570 US Starbucks locations, claims the dress code changes are an attempt by the company to undermine union negotiations. The union filed a complaint with the US National Labor Relations Board, alleging that the changes are unlawful and demonstrate that the company is not negotiating fairly.

While Starbucks insists that less than 1 per cent of its US workers are participating in the strikes and that most stores have remained open, the labour group maintains that the protests highlight growing dissatisfaction among workers. Starbucks responded by saying that it continues to bargain in good faith and urged the union to return to the negotiating table, emphasising that differences in store policies will be addressed lawfully and fairly.

As the company faces pressure both from internal labour disputes and external market challenges, the decisions it makes over the next few months will have significant implications for its operations both in the US and abroad.