According to UK newspaper The Times, the company is working with advisers to determine whether it could or should sell its UK business.
Asked for comment, Starbucks shared with CNN Business an email it sent to its UK employees over the weekend, barring the company from participating in a “formal sale process” and reaffirming its desire to remain in the region.
The report comes at a time when the UK economy is struggling, making it difficult for businesses to operate and residents to make ends meet. UK inflation hit 9.1% in May, the highest level in 40 years and the highest among the leading G7 countries. And there’s no relief in sight: inflation is forecast to rise above 11% this year.
Food prices in particular have skyrocketed, causing a cost of living crisis for many in the UK. According to the Bank of England, disposable income is on course for the second biggest drop since records began in 1964.
The outlook for the UK economy as a whole is poor, according to the Bank of England’s financial stability report released earlier this month, which said the outlook for the country’s economy had “deteriorated significantly”. The Paris-based Organization for Economic Co-operation and Development predicted in June that the UK economy would stagnate, with zero GDP growth predicted for 2023.
This is a poor environment for businesses, especially those still recovering from difficult pandemic years.
For Starbucks (SBUX), coffee sales took a hit when customers started working from home. As workers begin to return to offices, the trend has reversed. Starbucks’ U.K. sales improved significantly in the quarter ended April 3, group president of international and channel development Michael Conway said during an analyst call in May.
“Traffic will continue to come into the metro areas of central London and we will significantly increase mileage in this market,” he said.
As of October 2021, Starbucks had approximately 300 company-operated stores and a further approximately 800 licensed locations in the UK. The coffee chain started operating in the UK in 1998.
— CNN Business’s David Goldman and Mark Thompson contributed to this report.
