Starbucks now runs over 7,750 locations in China, but its grip on the world’s fastest-growing coffee market is slipping. Despite expanding to more than 1,000 county-level regions and 250 cities, its market share collapsed from 34% in 2019 to 14% in 2024. Local rivals like Luckin Coffee and Cotti Coffee now dominate with cheaper prices and tech-savvy strategies.
Yet Starbucks remains China’s intermediate-largest market, hitting $739.7 million in Q2 2025 revenue—a 5% yearly increase—even as same-store sales stagnate. The company’s efforts to revitalize its menu include innovations like the Chai Tea Latte, which could attract health-conscious consumers seeking comfort beverages with spices.
Starbucks China posted $739.7M Q2 2025 revenue—a 5% yearly rise—even as same-store sales flatline.
Market adaptation has become critical. While Starbucks cuts prices and rolls out sugar-free drinks to compete, local brands innovate faster. Luckin’s $1.50 lattes and digital discounts undercut Starbucks’ premium image. Analysts note the chain still holds strong brand loyalty in wealthy cities like Shanghai, but younger consumers increasingly favor affordable alternatives. Declines accelerated in 2024, with Starbucks losing 8 percentage points of market share in a single year.
The company insists it’s staying. Executives dismiss exit rumors, doubling down on a “Return to Starbucks” strategy to refresh its appeal. They’re exploring partnerships with Chinese firms like Meituan and eyeing franchising to enhance growth. This parallels moves by 74% of US firms that recently announced plans to increase China investments through at least 2025 during earnings calls.
Investors remain cautious—Starbucks China’s estimated $9 billion value trails hopeful $10 billion projections, and its high price-to-earnings ratio (34.6) signals doubts. Nearly 30 PE firms have reportedly shown acquisition interest, though analysts warn fundamental challenges could justify a sub-$9 billion valuation.
Operational hurdles persist. Same-store sales haven’t grown for five quarters, and global job cuts hint at pressure to streamline costs. Rivals’ rapid store expansions—Cotti opened 6,000 shops in under two years—outpace Starbucks’ 2025 China footprint. The chain also faces a fragmented market where new players emerge weekly.
Starbucks bets blending premium status with local tweaks will revive its standing. It’s testing regional drinks and store designs while chasing partnerships to unveil new cities.
Success depends on balancing tradition with trends, like China’s booming demand for budget-friendly, grab-and-go options. For now, its 7,758 stores signal commitment. But analysts warn maintaining relevance in this sprint requires more than loyalty—it needs reinvention.
