BEIJING: Starbucks China posted a strong performance in the first quarter of fiscal year 2026, reporting a 7 percent rise in comparable store sales and an 11 percent year-on-year increase in total revenue, which reached $823.4 million.
According to Starbucks Chief Financial Officer Cathy Smith, the solid results were driven by continued product innovation, effective marketing strategies and the steady expansion of delivery services. She shared these insights during the company’s earnings call on Wednesday.
The quarter marked Starbucks China’s third consecutive period of positive comparable sales growth, underscoring the brand’s improving competitive position in one of its largest and fastest-evolving markets.“The Chinese market continues to stand out as we strengthen our position as the leading premium coffee brand in the region,” said Starbucks Chairman and CEO Brian Niccol during the call.
Comparable transactions in China rose 5 percent during the quarter, while the average ticket size increased by 2 percent. Growth was fueled by strong demand in business districts, increased breakfast-hour traffic, and the company’s expanding presence in lower-tier cities.
“This simultaneous growth in transactions and average spending shows that consumer demand remains resilient,” said Jason Yu, general manager of CTR Market Research. He added that flavor innovation and successful intellectual property collaborations have further boosted Starbucks’ appeal.
Seasonal offerings also played a key role. The relaunch of the Toffee Nut beverage lineup, the introduction of sugar-free options, and a series of brand collaborations helped keep the menu relevant, particularly during the winter festival period. A major highlight was Starbucks’ collaboration with the Harry Potter franchise.
As part of the campaign, 38 stores were transformed into themed “Hogwarts Starbucks Branches,” featuring limited-edition drinks, exclusive merchandise and immersive in-store experiences. The promotion attracted large crowds, with 194,000 magic wands distributed within a week. Starbucks also expanded customer engagement through joint membership programs with partners including Hilton Group, China Eastern Airlines and Atour Group.
These initiatives provide members with cross-brand benefits that extend beyond coffee purchases. Store expansion remains central to Starbucks’ China strategy.
During the quarter, the company entered 13 new county-level cities, bringing its total to 8,011 stores across 1,103 county-level cities nationwide—up 4 percent from a year earlier. More than half of the new outlets are located in lower-tier cities or specialized business districts, where performance has exceeded expectations. Competition in China’s on-premise coffee market is intensifying. Rival Luckin Coffee continues to scale rapidly and recently signed a strategic agreement with Ccoop Group, a retailer with a strong foothold in lower-tier markets.
The partnership aims to expand Luckin’s reach into county-level and rural areas by combining its operational strengths with Ccoop’s retail network.
In November, Starbucks announced a joint venture with Boyu Capital to accelerate its expansion in China. Under the deal, Boyu will acquire a 60 percent stake in Starbucks’ China retail operations, while Starbucks will retain a 40 percent interest. The transaction, pending regulatory approval, is expected to close in spring 2026. Following the deal, Starbucks plans to convert its 8,011 company-operated stores into licensed outlets under its international segment.
“This partnership with Boyu will help us reach more cities, deliver exceptional coffee experiences, create new career opportunities, and strengthen our long-term leadership position,” Niccol said.Meanwhile, domestic brands such as Nowwa Coffee are also gaining momentum.
After raising billions of yuan in Series C funding, Nowwa is expanding aggressively across China with a focus on “healthy coffee” and a self-built supply chain, while also setting its sights on international markets including Australia and Southeast Asia.
