Can't Handle It?! Starbucks Considers Selling Its Largest European Market

On July 16, according to a report by The Times, Starbucks is considering selling its UK business due to ongoing competition from chain coffee shops including Pret A Manger, Tim Hortons, and Costa.

The report indicated that sources familiar with the matter revealed Starbucks has asked investment bank Houlihan Lokey to assess external interest in its UK operations. While no formal sale process has been initiated yet, the investment bank will continue to evaluate strategic options for the company's international business operations.

The UK is currently Starbucks' largest market in Europe, the Middle East, and Africa. According to financial reports as of October 2021, Starbucks operates 1,000 stores in the UK, of which 297 are company-owned and the remaining 703 are licensed stores.

Due to the pandemic, Starbucks' financial performance in the UK remains sluggish. Although the British government has relaxed COVID-19 control policies and Starbucks' performance in the region has shown some recovery, it has still not returned to pre-pandemic levels. The main reason is that most office workers continue to work from home and there are fewer tourists.

Market analysts also stated earlier this year that chain coffee brand stores in the UK will need at least 4 years to recover from the pandemic downturn.

In addition to the UK market, China, as Starbucks' second-largest market globally, has also failed to meet Wall Street's growth targets due to the country's strict pandemic control measures. Starbucks has also suspended its guidance for quarterly earnings announced in May for the remainder of the fiscal year.

In the United States, employees in the region have been continuously unionizing due to dissatisfaction with the company's current benefits policies and work pressure, leading Starbucks to recall Howard Schultz as interim CEO to handle various matters affecting brand operations in the region. However, this has still not prevented employees from continuing to join unions.

Howard Schultz also stated on the 11th of this month that he would reshape Starbucks' corporate culture, indicating that he would redefine the relationship between the company and employees, improve store partner benefits, and provide new store experiences for customers. Although Starbucks stated in its first-quarter financial report that sales in the US market showed an upward trend, these plans subtly suggest that unsatisfactory working conditions for employees have affected overall recovery and sales growth speed.

This is not the first time Starbucks has considered selling regional operations. During the 2021 fiscal year, Starbucks had already planned to sell its business in South Korea. In early January of this year, South Korea's JoongAng Daily reported that Starbucks Korea was officially acquired by Emart, South Korea's largest retailer, and Starbucks Korea would be renamed SCK. According to public information, South Korea was Starbucks' fifth-largest market globally at that time.

In July 2021, Emart South Korea, already holding 50% of the shares, acquired an additional 17.5% of Starbucks' remaining stake, becoming the largest shareholder of Starbucks Korea. The remaining 32.5% of Starbucks' shares were taken over by Singapore's sovereign wealth fund GIC.

Affected by the pandemic, recent factors such as continuously rising coffee bean futures prices and intensifying inflation headwinds have far exceeded Starbucks' expectations.

Image source: Internet

For professional coffee knowledge exchange and more coffee bean information, please follow Coffee Workshop (WeChat public account: cafe_style)

For more specialty coffee beans, please add FrontStreet Coffee on private WeChat, WeChat ID: qjcoffeex

Important Notice :

前街咖啡 FrontStreet Coffee has moved to new addredd:

FrontStreet Coffee Address: 315,Donghua East Road,GuangZhou

Tel:020 38364473