Rumours about Starbucks selling its operations in China and exiting the market have been circulating since last year. However, with more details about potential bidders emerging, the rumour is becoming increasingly real. On 23 June, it was reported that Hillhouse Investment Group is one of the potential buyers, along with the Carlyle Group and Citic Capital. Starbucks is valued at around 5-6 billion USD, and the transaction will likely continue into 2026.
The following day, Starbucks China responded that it is not planning on selling its China operations entirely but is evaluating “the best way to seize future growth opportunities”. The statement denies the rumour of the brand exiting the market completely, but also does not rule out a partial sale.
The coffee market in China is in a state of flux as local chains such as Luckin and Cotti continue to be engaged in a fierce price war. In early June, Starbucks reduced the prices of dozens of its products to keep up with the competition. With Goodme, a tea chain, also entering the coffee market, Luckin and Starbucks have both invested in non-coffee products to diversify.
However, Starbucks’s revenue dropped 1.4% to 2.96 billion USD in FY2024. Despite a 5% increase in Q1 FY2025, it had the same sales per branch and a 4% lower value-per-customer. Luckin Coffee, on the other hand, had a 41.2% growth in revenue in Q1 2025 to 8.87 billion RMB (1.24 billion USD). However, pundits believe that Starbucks, rather than trying to sell off its China operation, is in fact looking to gain more investment to expand in the market, much like how McDonald’s quickly grew from 2,400 restaurants to 7,000 in 2017, or possibly shift to a fully franchised business model. How it turns out is worth continued monitoring.