Starbucks shortlists top private equity, tech firms for China expansion

WEB DESK: Starbucks Corp has shortlisted about a dozen parties including private equity firms and technology companies into the second round of a process to invest in its China business, people familiar with the situation said.

Boyu Capital, Carlyle Group Inc, EQT AB, FountainVest Partners, KKR & Co., HIllhouse Investment and Primavera Capital are among the private equity firms invited to participate, along with tech giants JD.com Inc. and Tencent Holdins Ltd.

The shortlisted firms will be given access to the coffee chain’s China financials so they can evaluate and prepare bids in the coming months.

Fresh backing and more local expertise could help Starbucks expand its store count and further develop its supply chain in China, as well as enhance mobile platforms and brand strategies for Chinese consumers.

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The search for a partner in China is “not about capital,” Starbucks CEO Brian Niccol said on a July 29 earnnings call with analysts. “What this is about is how do we ensure that the Starbucks brand is in a much better place in the future.”

Niccol has previously said the China business could grow to 20,000 stores from roughly 7,800.

China is the Seattle-based chain’s second biggest market, but Starbucks has fallen behind local rivals such as Luckin Coffee Inc., which have boomed with much cheaper alternatives and frequent product launches.

Starbucks has started to follow suit by incorporating lower-priced and tailored offerings such as fruit teas and sugar-free alternatives to its China menus. And there are signs of some improvements, with same-store sales rising in the latest quarter for the first time since the end of 2023, the company said this week.

The process to introduce new backers in China attracted more than 20 potential investors in total, Niccol said. Starbucks wants to retain a ‘meaningful’ stake in the business.