On Thursday, Starbucks clarified that the company is currently exploring strategic partnerships for its operation in China. The announcement came following a media report suggesting the company is contemplating selling a portion of its business to a local partner.
The coffeehouse chain is facing a slump in demand from major markets such as the United States and China. CEO Brian Niccol said to investors last month that the company’s goal is to overhaul its U.S. branches and gain insight into its Chinese operations.
With China being a highly competitive environment, Starbucks needs to learn how to grow in such a market and seek out a strategic partnership that could help the company grow in China in the long term, Niccol added.
As per a Bloomberg’s report on Thursday, Starbucks is looking for options to expand its Chinese branches, including potentially selling a part of its business. The coffee giant has also reportedly shown interest in potential investors, including domestic private equity firms.
In response to the report, the company commented that it is still evaluating the best growth path for the business, with strategic partnerships being one of the options.
Starbucks, in its second-largest market, China, has been wrestling with weak consumer spending and tense competition from local chains like Luckin Coffee, which last year edged out the American coffee giant and topped annual sales in the Chinese market for the first time.
Despite operating around 7,600 stores in China, Starbucks reported a sales downturn in the country for three consecutive quarters, with a 14% plummet in the last quarter.
Last month, the company put its next year’s fiscal forecast on hold as its CEO began to formulate a recovery strategy for the business.
