Boyu promises to be instrumental in helping Starbucks open stores in cities beyond Shanghai, Beijing, and China’s other megalopolises, while keeping costs in check. “Boyu’s deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new regions,” Starbucks CEO Brian Niccol said in a statement announcing the deal on Monday.
Though Starbucks will continue to earn revenue in China from its 40% share of profits and royalty fees, the deal represents a big pivot away from the market, and a signal that it has given up on the bonanza it once hoped to reap there. Only eight years ago, Starbucks was buying out its joint venture partners in some parts of China.
The Boyu deal should allow Starbucks to concentrate on its turnaround stateside, say some analysts. “Partnering in China absolves management of some operational complexity and geopolitical exposure while freeing resources to focus on a nascent turn in the North American business,” said John Zolidis, president and founder of Quo Vadis Capital.
