Strong competition, changing customer habits, and lockdowns damaged Starbucks UK business. More people are now working from home, and Government actions have increased costs.
Government lockdowns hit coffee shops hard and many still struggle. Clearly, Starbucks does not see a soft landing coming any time soon.
Starbucks UK Entry
Starbucks first entered the UK in 1998. The UK business now covers more than 1000 shops, with 4000 staff. Franchisees operate around 700 of those, with the owners paying royalties to Starbucks.
As expected, Starbucks denied an upcoming sale. A spokesman said there was no “formal sale process for the UK business.”
Houlihan Lokey is canvassing interest in the business, according to The Times. But the NY-based advisory firm refused to comment.
The firm will review “strategic options” for company-owned international operations, The Times said.
Rival coffee chains Costa, Pret A Manger, and Tim Hortons are also in the once lucrative market.
A BBC story suggests Starbucks is in the UK for the long-run. In fact, the company may open new stores, trial new formats, and use digital sales channels.
In the previous year, Starbucks closed five company-operated stores, opening 14 new ones. The new operations are drive-through locations. These were so successful the company says new openings will be drive-through outlets.
Starbucks previously announced it would leave Russia after 15 years due to the war in Ukraine. Trading for the 130-shop Russian market ended in March 2022. Their licensee, Alshaya Group, owned and operated those stores. There were around 2, 000 employees.
Russian Restaurateur Anton Pinskiy partnered with rapper Timati and the Sindika holding company to buy Starbucks Russia coffee shops.
Earlier this week, Forbes reported the deal was closing. Pinskiy did not disclose the deal’s terms. He did say he first approached Starbucks in March after they made the announcement.