Burger King Follows Familiar Game Plan for China Expansion: Find a Partner

Burger King has about 1,250 restaurants in China. (Eva Marie Uzcategui/Bloomberg)

Key Points

• Restaurant Brands International’s Burger King entered a joint venture with CPE to expand in China, aiming to double its 1,250 restaurants within five years.
• CPE will invest $350 million and hold an 83% stake in the Burger King China venture, with Restaurant Brands retaining 17% and a board seat.
• Starbucks also sold a 60% stake in its China retail operations to Boyu Capital, which plans to increase store count from 8,000 to over 20,000.

Although many companies doing business in China have struggled because of soft consumer demand and fierce competition, the latest deals from Restaurant Brands International’s Burger King and Starbucks are a sign that food and beverage giants aren’t giving up.

Burger King’s parent company said Monday that it has entered a joint venture with Chinese investment firm CPE to expand Burger King in the world’s second-largest economy. The stock rose 1.7% on Monday.

As part of the deal, CPE will gain about 83% of the venture, while Restaurant Brands retains a 17% minority stake and a seat on the board. CPE will inject about $350 million of new capital into the business to support expansion, marketing, menu innovation and operations.

“China remains one of the most exciting long-term opportunities for Burger King globally. Our recent investments and this joint venture underscore our confidence in the Chinese market,” Joshua Kobza, CEO of Restaurant Brands, said in a statement.

In a bid to reset strategy, Restaurant Brands bought stakes in Burger King China from its former joint venture partners in February for about $158 million, taking nearly full control of the business.

The new partnership with CPE combines Burger King’s global brand strength with Chinese capital and local market expertise, which is helpful given China’s fast-changing consumer tastes and competitive environment.

The transaction marks an important step in Restaurant Brands’ plan to “return to a more simplified, highly franchised business,” the company said. Under the partnership, the company could focus more on royalties and brand building while its local partner handles execution.

Burger King has about 1,250 restaurants in China. The aim is to double its store count within the next five years and reach over 4,000 units by 2035. The deal is expected to close in the first quarter of 2026, subject to regulatory approvals.

Burger King’s new partnership comes days after Starbucks announced the sale of 60% stake in its China retail operations to investment firm Boyu Capital. Starbucks will retain 40% of the stake and continue to own the brand and intellectual property.

Boyu aims to boost Starbucks stores in China from around 8,000 to more than 20,000, particularly tapping into the less-saturated lower-tier cities currently dominated by local rivalry brands like Luckin Coffee.

The partnership with Boyu “underscores Starbucks’ commitment to accelerating long-term growth in China, one of the company’s most important and fastest-growing markets globally,” the coffee chain said in a statement.

Such partnerships aren’t new for U.S. quick-service companies that want to scale quickly internationally while keeping their own capital investment minimal.

Yum! Brands, which owns KFC, Pizza Hut and Taco Bell, spun off its Chinese business in 2016 to an independent, publicly traded company Yum China Holdings . The firm has the exclusive rights to operate and sub-franchise the brands in China, while paying Yum! Brands royalties, franchise fees, and other charges in return.

In 2017, McDonald’s sold 80% of its China operations, including those in Hong Kong, to a group of investors led by CITIC Capital for $2 billion—although McDonald’s has bought back some of its stake since then to capture more of China’s growth opportunity.

Write to Evie Liu at evie.liu@barrons.com