Private Equity Giants KKR, Fountainvest, PAG Explore Stake in Starbucks China Amid Strategic Revamp

• China Resources, Meituan Also Approached as Potential Partners; Franchise Deal Could Value Unit Over $1 Billion

Global private equity giants KKR & Co, Fountainvest Partners, and PAG are among firms exploring bids for a stake in Starbucks’ China operations, four sources told Reuters, as the U.S. coffee chain seeks to reignite growth in its second-largest market amid mounting challenges.

Chinese state-owned conglomerate China Resources Holdings and food delivery leader Meituan have also been approached as potential strategic partners, one source familiar with the discussions said.

Starbucks CFO Rachel Ruggeri and other top executives plan to visit China in the coming weeks to advance sale talks, two sources added. The size of the stake remains undetermined and hinges on negotiations, though a franchise agreement could value Starbucks China at over $1 billion, two sources noted.

All parties spoke anonymously due to the confidential nature of the discussions. KKR, PAG, and China Resources declined to comment, while Fountainvest and Meituan did not respond to requests. Starbucks deferred to CEO Brian Niccol’s January remarks about exploring partnerships in China.

The move comes as Niccol, who became CEO in August, navigates sluggish U.S. and Chinese demand, a slumping stock price, and fierce competition in China from local rival Luckin Coffee. On Monday, Starbucks announced 1,100 corporate job cuts as part of its “Back to Starbucks” overhaul.

China, home to over 6,000 Starbucks stores (20% of its global footprint), has seen sales falter due to economic headwinds and Luckin’s aggressive expansion into lower-tier cities with cheaper offerings. Starbucks began informal talks with potential investors in late 2022, sources said.

Niccol, after visiting China in January, hinted at “near-term changes” to stabilize the business while pursuing partnerships. In November, Starbucks confirmed it was evaluating options for its China unit following reports of a potential stake sale.

A franchise deal would mark a strategic pivot for Starbucks, which has long operated company-owned stores in China. Such a partnership could unlock capital and local expertise to counter domestic rivals.

Analysts caution that balancing control with local collaboration will be critical. “The right partner could accelerate growth, but Starbucks must protect its brand equity,” said Shanghai-based retail analyst Ming Lu.