Starbucks Partners with Sequoia Capital to Invest in Tech Businesses


Apr. 27 2020, Published 11:14 a.m. ET

Starbucks (NASDAQ:SBUX) continues to expand its presence in China—its second-largest market. Today, CNBC reported that the company will partner with Sequoia Capital China to invest in developing next-generation technologies for the food and retail business. Starbucks looks for opportunities to digitize all of the aspects of its retail business. Also, the company wants to capture data, which could help when making decisions. Starbucks hopes that the technologies help it manage the expansion of its retail operations in the country and optimize its supply chain and inventory management.

As reported by CNBC, the chairman and CEO of Starbucks China, Belinda Wong, said, “The partnership enables Starbucks to tap into the most dynamic Chinese technology entrepreneurs in order to delight our customers with meaningful innovations created in China, for China.”

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Starbucks’s earlier partnerships in China

Starbucks has made other moves to expand its digital presence in China. In August 2018, the company partnered with Alibaba to expand its digital presence and delivery service in the country. Initially, the company provided a delivery service from 150 restaurants located in Shanghai and Beijing. Later, the service expanded to other restaurants.

Stock performance

Today, Starbucks was trading 1.6% higher in the pre-market trading hours. The company’s announcement and stronger broader equity markets led to a rise in the stock price. Broader equity markets are strong due to optimism about reopening the economy. COVID-19 continues to haunt businesses across the world. The company has made a significant move towards digitizing its retail business, which had a positive impact on investors.

So far in 2020, Starbucks has lost 14.0% of its stock value as of April 24. However, the company has underperformed the broader equity markets. The S&P 500 Index has fallen by 12.2%. McDonald’s (NYSE:MCD) and Dunkin’ Brands (NASDAQ:DNKN) have fallen by 6.9% and 24.0%, respectively. Meanwhile, Starbucks will report its second-quarter earnings on Tuesday after the market closes. To learn more, read Why Starbucks Is a ‘Hold’ before Its Q2 Earnings.


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