Starbucks will license Thai operations to focus on China

Starbucks Corp. agreed to license its Thailand operations to a partner, in the latest sign that the coffee behemoth is sharpening its focus on its key markets of China and the U.S.

The company entered into an agreement with Coffee Concepts Thailand, a joint venture between Maxim’s Caterers Ltd. and Thai partner F&N Retail Connection Co., to fully license its retail business in Thailand. The deal is expected to close by the end of the month, the Seattle- based company said in a statement, without giving any financial details.

A transaction could value Starbucks’s operations in the country at more than USD500 million, according to people with knowledge of the matter, asking not to be identified because the information is private.

The shift comes as Starbucks tries to remove distractions from Chief Executive Officer Kevin Johnson as he focuses on boosting performance in its two most important markets. Starbucks is betting on a massive expansion in China to drive growth amid concerns it’s already saturated the U.S. But China presents its own hurdles, with increased competition from local startups and an economic slowdown that’s curbed the company’s previous breakneck sales pace.

The company has made similar moves to cede control of its businesses in less important markets. Starbucks last year agreed to license its operations in France and other European countries, and before that in markets including Taiwan and Hong Kong.

Starbucks opened its first store in Thailand in 1998 and has since grown to 372 locations in the market. The Thailand licensee will “focus on accelerating new store development” in an important market, Starbucks said. MDT/Bloomberg