Starbucks China changes ownership, putting pressure on Luckin Coffee

Author | Xie Yunzi

Editor | Zhang Fan

Cover Image Source | Visual China

The equity transfer of Starbucks China has finally come to an end.

Today, Starbucks officially announced a strategic cooperation with Boyu Capital. The two parties will establish a joint venture to jointly operate Starbucks' retail business in the Chinese market.

According to the agreement, Boyu will hold up to 60% of the equity in the joint venture, based on an enterprise value of approximately $4 billion (excluding cash and debt). Meanwhile, Starbucks will retain 40% of the equity.

Boyu Capital was co - founded by Zhang Zixin, the former general manager of Ping An Group, and Ma Xuezheng, a former senior executive of TPG Capital in China. It manages funds worth tens of billions of dollars. In the first half of this year, well - known companies such as Mixue Bingcheng, CATL, Hengrui Medicine, and Haitian Flavoring went public in the Hong Kong stock market one after another. Boyu's name can be seen on the list of cornerstone investors of these companies.

As the joint - venture company is finalized, Starbucks' performance has also started to improve.

Starbucks' recently released financial report for the fiscal year 2025 (ending on September 28, 2025) and the fourth quarter shows that Starbucks' overall global revenue increased by 5% year - on - year, and the same - store sales in the global market increased by 1% in the fourth quarter. This is the first positive growth in seven quarters, and the overall performance is better than market expectations.

Looking at different regions specifically, as Starbucks' largest market, the same - store sales in the United States remained flat compared with the previous quarter. The company explained that this was because the increase in coffee raw material costs led to price hikes, resulting in a decrease in transaction volume.

Compared with the US market, Starbucks' international business segment performed brightly. In the fourth quarter, the same - store sales in Starbucks' international markets increased by 3%. Brian Niccol, the global chairman and CEO of Starbucks, said that this was due to the strong performance of markets including Japan, the UK, and Mexico.

Of course, China is also regarded as an important driver of overall performance growth.

The picture is taken from Starbucks' financial report

Starbucks' revenue situation, compiled by 36Kr based on financial report data

Benefiting from the "Food Delivery War"

In fiscal year 2025, Starbucks China's total revenue was $3.105 billion, a year - on - year increase of 5%.

Looking only at the fourth quarter (ending on September 28, 2025), Starbucks China's revenue reached $831.6 million, a year - on - year increase of 6%; the same - store sales increased by 2% year - on - year, and the same - store transaction volume increased by 9% year - on - year.

Liu Wenjuan, the CEO of Starbucks China, said that the growth of Starbucks' performance in China was due to continuous product innovation, the growth of the food delivery business, the optimization of the pricing system, and store expansion.

In terms of product innovation, in addition to seasonal products, Starbucks China mainly upgraded its non - coffee tea and latte series and launched a variety of food and snacks that suit the taste of Chinese consumers, which boosted consumption during breakfast and lunch hours.

Moreover, like many new tea brands, Starbucks has also benefited from the "food delivery war."

Since April this year, JD.com, Ele.me under Alibaba, and Meituan have all launched huge subsidies. Amid the intense competition among these giants, brands have also stepped up their game.

In June, Starbucks China took the initiative to adjust prices. For dozens of products in the three non - coffee series of "Frappuccino, Iced Shaken Tea, and Tea Latte," the average price per cup was reduced by $0.73 (equivalent to 5 yuan), and the minimum price dropped to $3.37 (equivalent to 23 yuan). This was also the largest - scale price cut since Starbucks entered the Chinese market. In September, Guming launched a 45 - day event called "Carnival in Ten Thousand Stores, with the first cup of coffee starting from $0.72 (equivalent to 4.9 yuan)." Subsequently, chain coffee brands such as Luckin and Cotti also joined the price war.

36Kr checked the Meituan APP and found that the price of a cup of Luckin coffee for food delivery was even as low as $0.57 (equivalent to 3.9 yuan). The ultra - low prices attracted consumers to place orders, and also brought short - term growth to the entire catering industry.

Starbucks' financial report data shows that in the fourth quarter of fiscal year 2025, the sales of its food delivery service "Starbucks Now" in the Chinese market reached record highs on a daily, weekly, monthly, and quarterly basis. In terms of the average customer spend, although it decreased by 7% year - on - year, the "Starbucks Now" business still achieved a healthy profit level, maintaining a double - digit operating profit margin for four consecutive quarters.

The picture is taken from Starbucks' financial report

However, there has always been an opinion in the industry that the price war will significantly lower Chinese consumers' price expectations and involve international brands including Starbucks in "low - price competition."

All along, Starbucks has always been committed to providing consumers with an offline "third - space" service. Whether it is the store rental cost or the brand image, it has kept the price of its coffee products at around $4.39 (equivalent to 30 yuan). However, the competition for traffic on food delivery platforms, such as JD's recent "10 - billion subsidy" campaign, has also forced Starbucks to lower its prices, which has to some extent impacted its high - end positioning.

Comparison of product prices on Meituan, JD, and the Starbucks APP

Soaring Coffee Bean Prices and Declining Net Profit

Judging from the current financial report data, although Starbucks' global market is recovering, some still believe that its recovery period will be longer than expected. The focus of market attention is the decline in operating profit.

In the fourth quarter of fiscal year 2025, Starbucks' operating profit margin dropped to 2.9%, compared with 14.4% in the same period last year.

In the financial report, Starbucks' senior management also clearly stated that considering the high price of coffee beans, this cost issue is expected to be a negative factor for at least the next two quarters.

According to reports in more public media, affected by factors such as the tariff policy implemented by the Trump administration and climate issues in Brazil, the futures price of Arabica coffee beans has continuously hit new highs, which has also raised concerns in the industry about a possible long - term shortage of global coffee supply.

Previously, Starbucks had experienced a decline in sales for several quarters. After Brian Niccol took over in August last year, he launched a brand - reshaping plan called "Back to Starbucks." This included closing hundreds of underperforming stores globally, simplifying the menu, and striving to speed up service.

Looking at the equity transfer in the Chinese market, while allowing the headquarters to replenish its funds, Starbucks also hopes to localize itself by continuously delegating power.

A comparable case is that since 2017, CITIC led the acquisition of 80% of the equity in McDonald's China. It was from this period that "Golden Arches" began to develop rapidly in China. In October last year, CITIC Capital acquired another 19.23% of the equity in McDonald's China held by CITIC Limited, further strengthening its controlling position.

According to Starbucks' disclosure, the new joint venture with Boyu will aim to expand the number of stores in the Chinese market to 20,000.

However, the coffee market in first - and second - tier cities in China has already reached saturation. This means that Starbucks needs to open more stores in the sinking market and will directly compete with brands such as Luckin, Cotti, and Xingyunkafei.

Data from Euromonitor shows that Starbucks' market share in China has dropped from 34% in 2019 to 14% in 2024. To attract more people in lower - tier cities, Starbucks still needs to make further compromises on product prices.

As of the end of fiscal year 2025, Starbucks had entered 1,091 county - level markets in China, with a total of 8,011 stores. Due to continuous scale expansion and increased price subsidies, the comparable - store sales in Starbucks China decreased by 1%, mainly due to a 5% year - on - year decrease in the average customer spend.

The picture is from Everbright Securities

In the future, when the subsidy fever of Internet giants for food delivery subsides, the problem of slowing growth in the Chinese coffee market may resurface. Previously, some media reported that more than 45,000 coffee stores closed in China in 2024.

As of the time of publication on November XX, Starbucks' stock price was $80.96 per share, and the Royal Bank of Canada lowered its target stock price to $100 per share.

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The content of this article only represents the author's views.

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This article is from the WeChat official account "36Kr Finance." Authors: Xie Yunzi, Zhang Fan. Republished by 36Kr with permission.