Starbucks isn't giving up on its China dream
CEO Brian Niccol said in an earnings call on Tuesday that the Seattle-based coffee chain is looking for a local partner to manage its stores in China. The country is Starbucks' second-largest market after the US, and has seen sales stagnate in recent quarters.
He said Starbucks is evaluating a pool of 20 interested parties who wish to partner with it.
"What this is about is how do we ensure that the Starbucks brand is in a much better place in the future because I do believe there's going to be thousands of more Starbucks in China," Niccol said. "And I think there's no reason why this can't be one of the best businesses in China."
"And so we're looking for a partner that shares that passion and shares that belief that there's this opportunity to grow one of the special brands in China," he added.
Starbucks released its third-quarter 2025 earnings on Tuesday, reporting its sixth straight quarter of sales declines. Global same-store sales were down 2% compared to a year ago.
However, it reported an 8% net revenue increase in China in the third quarter compared to the same period last year and a 2% increase in same-store sales.
Starbucks' results in China showed signs of improvement compared to past quarters. Same-store sales were flat in the second quarter and dropped 6% in the first quarter.
The chain also opened 522 new stores in China in the past year, which represents a 7% increase in its retail footprint in the country.
This is a welcome sign for the chain, which has been struggling with a challenging market in China. Weakened local consumer spending power and strong competition from local players have resulted in declining sales.
Chinese brands like Luckin Coffee have eaten into Starbucks' market share, offering similar products at lower prices and drawing customers in with aggressive discounts.
Despite recent weak performance, Niccol has repeatedly expressed confidence in the Chinese market. In a February interview with Bloomberg, he talked about a large-scale expansion in China, saying the market "is going to continue to grow for us."
While China's Starbucks stores are company-owned, most of its other international stores are run by domestic partners, like the Alshaya group in the Middle East.
The company's stock was up nearly 5% in after-hours trading on Tuesday.
A representative for Starbucks China declined a request for comment from BI.
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