Benzinga | Jan 18, 2022 01:48AM EST

Starbucks Strikes Partnership With Meituan To Expand Delivery Services In China: What You Need To Know

Starbucks Corp. (NASDAQ:SBUX) is expanding its delivery services in China by entering into a new partnership with food delivery giant Meituan (OTC:MPNGY).

What Happened Under the new partnership, Starbucks said it will offer its coffee delivery services on the Meituan platform market-wide.

Meituan users will also be able to make private bookings for coffee experiences at Starbucks stores by utilizing the "1971 Salon" service that is exclusive to the Meituan platform.

In addition, customers will be able to explore Starbucks stores in a digital environment with the 'Super Store' virtual pages powered by Meituan.

See Also: How To Buy Starbucks (SBUX) Stock

Why It Matters: The deal with Meituan will enable Starbucks to further expand its delivery footprint in China.

The Seattle-based coffee chain has utilized Chinese e-commerce giant Alibaba Group Holding Limited's (NYSE:BABA) Ele.me as its exclusive delivery partner since 2018.

Starbucks has more than 5,000 stores in over 200 Chinese cities, making it its second largest market after the United States.

In October, Starbucks reported lower-than-expected revenue for the fourth quarter. A decline in China-based store sales was a drag on the company's global performance.

Baird analyst David Tarantino downgraded Starbucks from an Outperform rating to a Neutral rating last month, saying he is concerned about the company's shorter-term prospects as a result of the uncertainty surrounding China.

Price Action Starbucks' shares closed 2.2% lower in Friday's regular trading session at $100.12, while Meituan shares closed 0.7% higher at $56.45.

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