Starbucks examines sale of its UK enterprise


Starbucks is inspecting a attainable sale of its UK enterprise because the world’s largest espresso chain faces altering shopper habits after the pandemic and elevated competitors.

The group employed advisers Houlihan Lokey this yr to take a look at potential choices for the enterprise, based on an individual accustomed to the matter, who mentioned it may appeal to curiosity from a specialist franchising group or a personal fairness firm.

The chain oversees about 1,000 shops within the UK of which about 70 per cent are franchises and the remaining firm owned. Along with different espresso and food-to-go chains, Starbucks was hit onerous by the pandemic lockdowns and is wrestling with how hybrid working has modified shopper habits.

Starbucks mentioned it was “not in a formal sale process for the company’s UK business” however that it continued to “evaluate strategic options” for these of its worldwide companies which can be owned by the corporate. Houlihan Lokey declined to remark.

The information that Starbucks was inspecting choices for its UK enterprise was first reported by the Sunday Times.

In the UK, Starbucks is “contending with operating cost increases at the same time that competition intensifies, with takeaway food chains and restaurants focusing on coffee as a secondary discounted offer”, based on its UK arm’s accounts for the yr to October 2021.

Its UK arm, which employs about 4,000 individuals, returned to revenue within the 12 months to October 2021, producing a pre-tax revenue of £13.3mn on gross sales £328mn, after reporting a lack of £40.9mn a yr earlier.

The chain has mentioned that footfall at workplace, journey and inner-city websites had been slower to get better than suburban and retail park areas.

“It’s quite a capital-intensive estate. It’s pretty urban-focused,” mentioned an individual accustomed to the matter. “It got hammered quite hard in Covid [and] it hasn’t come back to the same level.”

In 2021, Starbucks exited a three way partnership value $2bn in South Korea, its fifth-largest market, promoting its stake to its native accomplice and the Singaporean sovereign wealth group GIC, although it continues to obtain royalties from the operation.

The US retailer, whose former chief government Howard Schultz returned to steer the corporate in April, has had rising success with retail gross sales below its model following a 2018 cope with the world’s largest meals producer, Nestlé.