Starbucks explores UK business sale, reports say

A barista serves beverages in single-use cups inside a Starbucks in London.Image source, Getty Images

Starbucks is reportedly exploring a potential sale of its UK business as it faces increasingly tough competition and changing customer habits.

The world’s biggest coffee chain has been hit hard by lockdown measures around the world.

Starbucks said it was “not in a formal sale process for the UK business”.

The firm will continue to “evaluate strategic options” for its company-owned international operations, according to the Times.

The newspaper said Starbucks had taken on advisers Houlihan Lokey to explore possible options for the business. New York-based Houlihan Lokey declined to comment.

Starbucks has been in the UK since 1998 and has about 1,000 outlets, of which about 70% are franchises while the remainder are owned by the firm.

Like much of the food and drinks takeaway industry, the chain was hit hard by measures to slow the spread of Covid-19.

Along with its rivals, it is also dealing with rising costs as well as having to adapt to customers’ changing habits as many people shift to hybrid work from home schedules.

The company is also facing increased competition in the UK from rival coffee chains including Costa, Pret A Manger and Tim Hortons.

However, the BBC understands Starbucks is committed to the UK for the long-term, and continues to invest in new store openings, staff, new formats and digital sales channels.

Last year, while it closed five company-operated stores, it opened 14 new ones, targeted at drive-through locations. It says its company-operated openings will focus on key city and drive-through outlets.

Internationally the group is in the process of searching for a new permanent chief executive, following the retirement of Kevin Johnson earlier this year. Since April the role has been filled on a temporary basis by former chief executive Howard Schultz.

In the US, the company has also been dealing with recent efforts by some of its workers to unionise.

In May, Starbucks said it would leave Russia after 15 years in the country due to the war in Ukraine.

The firm said that it would retreat entirely from the Russian market, after suspending trading there in March.

Starbucks entered Russia in 2007 and had grown to include 130 coffee shops, owned and operated by a licensee.

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