Starbucks China accelerates business transformation, with a light-asset model supporting expansion

China Business News: The joint venture transaction between Starbucks and Boyu Investment is expected to be completed by spring 2026. After completion, the Chinese operations will transition to a franchising model, with Starbucks planning to accelerate store expansion in China.

Recent Events

The transaction for Starbucks and Boyu Investment to establish a joint venture to operate retail business in China is expected to be fully completed by spring 2026, currently awaiting regulatory approval. Upon completion, Boyu will hold a 60% stake in the joint venture, while Starbucks will retain 40%. Chinese operations will no longer be consolidated into Starbucks’ financial statements. This shift aims to improve profitability through an asset-light model, with Starbucks projecting international operating profit margins to gradually increase from 13% to 16-19%.

Business Progress

After the transaction, all 8,011 Starbucks directly operated stores in China will be converted to a franchising model, marking a formal shift to asset-light expansion in the Chinese market. Starbucks will continue to participate in China’s business through brand licensing fees and supply chain income, rather than direct operation.

Company Project Development

Starbucks plans to increase the number of stores in China from approximately 8,000 to 15,000-20,000 in the future, with a goal of opening over 1,000 new stores annually. The expansion will focus on lower-tier markets, with the first quarter of fiscal year 2026 seeing entry into 13 county-level cities. The company is also enhancing competitiveness through product adjustments (such as price reductions and healthier options) and scene innovations (such as breakfast series).

Performance and Operations

In the first quarter of fiscal year 2026 (ended December 28, 2025), Starbucks’ global revenue grew by 5% year-over-year, with China revenue achieving double-digit growth of 11%. Same-store sales have increased positively for three consecutive quarters. The company is strengthening global cost control to address coffee bean prices and tariff pressures, expecting total management expenses for fiscal year 2026 to be lower than those in fiscal year 2023.

Future Development

In November 2025, Starbucks faced shareholder litigation over allegations of concealing declines in sales in the US and China markets. The ongoing developments of this case depend on judicial proceedings updates.

The above information is compiled from public sources and does not constitute investment advice.