Starbucks to let Mexico's Alsea operate stores in four European markets

FILE PHOTO: A pedestrian walks past a Starbucks cafe in central Wellington, New Zealand September 3, 2018. REUTERS/Charlotte Greenfield

(Reuters) - Starbucks Corp SBUX.O said on Thursday it would give its longtime partner Mexico's Alsea SAB ALSEA.MX the rights to operate its cafes in France, the Netherlands, Belgium and Luxembourg as the coffee chain tries to streamline its operations in markets where sales have struggled.

Starbucks said it will sell 83 company-owned stores in the Netherlands and France to Mexican restaurant operator Alsea, while taking control of 177 franchised stores in the four countries, a company spokeswoman told Reuters.

U.S. restaurant chains typically seek to cut overhead costs by franchising their store operations to third parties instead of operating them themselves.

But for Starbucks, the move comes as it struggles to see growth in Europe, Middle East and Africa, where same-stores sales have failed to show strong growth in the past year.

Starbucks said the move to license out would help it “unlock untapped potential” for growth, adding it would close a support center in Amsterdam and consolidate its European headquarters in London. The Amsterdam closure will impact about 186 employees, the spokeswoman said.

For Alsea, which already franchises more than 900 Starbucks stores in Latin America, the new deal expands its ties with Starbucks outside of Latin America and brings its partnership with the chain to nine markets globally.

Both Starbucks and Alsea’s shares were down 1.2 percent in noon trading.

Reporting by Siddharth Cavale and Aishwarya Venugopal in Bengaluru; Editing by Arun Koyyur