Starbucks, the world's largest coffee chain, is exploring a sale of its UK operations in the face of rising costs and stiff competition from new operators, reports the Sunday Times.
The British newspaper says the US group has appointed adviser Houlihan Lokey to sound out potential buyers for its UK business, which oversees more than 1,000 coffee shops and employs 4,000 people. The paper reports that about 300 of the stores are operated by Starbucks, with the remainder owned and run by franchisees who pay royalties to the parent company.
Founded in Seattle in 1971, the group has more than 33,000 locations across the world, including licensed stores.
It is facing massive competition in the UK where the market has grown dramatically in recent years to more than 25,000 coffee shops. It has also been hit by the COVID pandemic and in particular office workers staying away from city centres during lockdowns.
It has already sold whole country operations to groups of buyers. This year it completed a sale of its South Korea operations, where it has 1,600 stores.
Starbucks told the Sunday Times that while it had not initiated a “formal sales process” of its UK business, it continued to “evaluate strategic options” for its company-owned international operations.
In a May 3 earnings call, chief executive Howard Schultz described "dramatic" shifts in customer behaviour that had put the company on its back foot, including steep increases in mobile and drive-through ordering in the US.
In response, along with a push to open as many as 500 new US stores in 2022, up from just 113 the year before, Schultz said Starbucks would "reengineer" its retail property to maximise efficiency — a pivot for a brand that became synonymous with the "third space", where customers were encouraged to linger.
For a review of its emerging strategy in the US click here.