Starbucks and Burger King, along with other large Western companies, are offloading large shares of their China operations to private equity groups based in China, according to CNBC.
Starbucks agreed to sell 60% of its China operations to Boyu Capital for $4 billion. CPE Capital is acquiring an 83% stake in Burger King's China business for $350 million. IDG Capital purchased a controlling share of Yoplait's operations in China, valued at around $250 million.
Reports also indicate that General Mills may sell its Häagen-Dazs locations in China, and Oatly, the oat milk brand from Sweden, may offload its China arm.
This pattern marks a departure from how Western brands once operated in the country. Foreign food companies previously succeeded without changing their menus much to suit local tastes, but homegrown competitors now dominate by offering lower prices and products made for Chinese consumers.
These partnerships could lead to shorter supply chains. Local management works with nearby vendors and distribution networks, reducing transportation distances.
When menus feature locally sourced ingredients instead of imported goods, the carbon cost of transporting food drops. If you care about how far your food travels before it reaches your plate, this trend is worth watching.
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Local partners may adapt faster. They can launch products and reach smaller cities that Western companies couldn't serve from overseas headquarters. This speed could reduce waste from slow-moving inventory and outdated offerings.
The change comes as foreign brands struggle to keep up with domestic competitors, per CNBC. In 2023, Luckin Coffee surpassed Starbucks in revenue and number of locations by catering to what local coffee drinkers wanted. Chinese consumers have gravitated toward local options that offer competitive pricing and menus designed around their tastes.
"Their involvement enables the business to operate at 'China speed,'" said Kei Hasegawa, partner at consulting firm YCP, per CNBC.
Hao Zhou, partner at Bain & Company, noted, per CNBC: "Even before the deal is closed, they will go into the company, all ready to start focusing on a few key initiatives."
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