Is Starbucks to sell its British branch?

Starbucks is reportedly considering selling its British operations. The coffee chain denies that a sale process has been initiated, but it is facing increasing competition in the United Kingdom.

Covid effect lingers

American coffee giant Starbucks may want to sell its thousand British shops and has hired consultancy firm Houlihan Lokey to look at the options, the Sunday Times reports. It is possible that a franchise group or private equity firm could take over the outlets.

Of the thousand British Starbucks shops, about three quarters are franchised; the rest are operated by the chain itself. However, the pandemic hit the company hard: in 2020 the British branch strayed in the red figures, last year the chain finished just above zero. At the moment Starbucks has about 4,000 British employees.

Competition increases

Competition is increasing, the company admits: takeaway chains and restaurants are increasingly offering coffee – and at discounts. Meanwhile, operating costs are rising, the 2021 accounts show, while footfall in inner cities – where most branches are located – is recovering only very slowly.

Starbucks still denies that a formal sale process has been initiated, FT reports. Still, it is continuing to evaluate strategic options for all its international properties. Last year, the chain also exited a joint venture in South Korea, where it sold its stake to the local partner and the Singapore government vehicle but still receives royalties.