Recently, according to reports from China Caixin, Caixin Online, and 21st Century Business Herald, Starbucks China held a “reverse management team roadshow” with potential buyers, sparking rumors of a possible partial sale of its business shares. However, Starbucks has denied the selling rumors, emphasizing its focus on market competition.
It was revealed by sources that well-known investment firm Hillhouse Capital participated in the event, expressing interest in acquiring Starbucks China’s business. Additionally, other investment institutions such as Carlyle Group and Trustbridge Partners also attended the event and conveyed their intentions.
The concept of a “reverse roadshow” involves companies inviting investors to visit the management or production sites to listen to business presentations. This model aims to enhance two-way communication between the company’s management and investors to strengthen investor confidence.
Regarding the speculation of potential buyers for Starbucks China, Hillhouse Capital declined to comment, while Carlyle Group and Trustbridge Partners did not respond.
China is Starbucks’ second-largest market globally, generating a net income of 3 billion USD in 2024 with 7685 stores.
However, Starbucks has been facing tough challenges in the Chinese market recently. In the first quarter up to March this year, Starbucks’ net revenue in China was approximately 740 million USD, a 7% decrease compared to the same period last year, marking the third consecutive quarter of revenue decline for Starbucks China. This decline is mainly attributed to the rise of local Chinese coffee and beverage brands like Luckin Coffee, Heytea, and BeiBingGe, which have significantly impacted Starbucks with their rapid expansion and low-price strategies.
A report from the business observation platform Yi Lan Business indicated that in the first quarter of the 2025 fiscal year, Starbucks China’s same-store sales decreased by 6%, marking the fourth consecutive quarter of decline. In the 2024 fiscal year, Starbucks China’s average customer price dropped by 8%, order quantity decreased by 6%, and revenue declined by 1.4%. Although there was a slight recovery in the second quarter of the 2025 fiscal year, the average customer price continued to decline, albeit at a slower rate.
The report mentioned that local brands like Luckin Coffee stand out with their flexible operation, competitive pricing, and rapid product innovation. By the end of 2024, Luckin Coffee’s store ratio was at 35.1%, surpassing Starbucks China’s store ratio of 13.58%, pushing it to the second spot in the market.
Bloomberg reported last month that Starbucks is considering selling its business in China. Starbucks’ newly appointed CEO admitted that the Chinese market is “extremely competitive,” and the company will re-examine its operational strategy in China. Despite denying the selling rumors, Starbucks China has recently made a series of adjustments in pricing, product innovation speed, distribution channels, and marketing strategies to retain consumers.
Economic professor Xie Tian from the University of South Carolina Aiken School of Business believes that Starbucks continues to face challenging operating environment in China, primarily due to the economic downturn and the double impact of local brands like Luckin Coffee engaging in price wars. He suggests that to maintain brand value, Starbucks’ best strategy could involve closing some stores or selling its business in China to other companies, or even considering rebranding to adapt to the local market. However, Xie also points out that in the current deteriorating consumption environment in China, it is difficult to determine the timing and price of selling the business, as a too low price may harm the brand’s interests, which makes Starbucks’ decision perplexing to him. He emphasizes that the fundamental reason for Starbucks making this decision is the deterioration of the overall consumption environment in China.
Economic scholar Li Hengqing, currently residing in the United States, believes that the current competitive model in the Chinese market, especially in the service and catering industries, generally exhibits a characteristic of “internal roll-up,” which is the feature of vicious price wars. He points out that Starbucks’ biggest competitor in China, Luckin Coffee, primarily competes by lowering prices by about 30%. He concludes that this method of squeezing out and even defeating competitors through price reductions is a common competitive tactic adopted in China at present.