Starbucks Closes Beijing Flagship Store Amid High Rents

When the original Starbucks in Beijing’s Guomao closed on June 21, it wasn’t just another retail closure. This was the very first Starbucks location on the Chinese mainland—opened in January 1999, right in the heart of Beijing’s busiest commercial district. For over two decades, it served as both a caffeine hub and a landmark for office workers and visitors. But rising rents finally made it unviable.

Yes, the flagship Guomao store is gone. The main reason: the rent and staffing costs exceeded 7 million RMB per year. Industry sources say monthly rent per square meter in Guomao Phase I surpassed 1,000 RMB—far too high for most food and beverage businesses.

Why Did Starbucks Leave Its Original Beijing Location?

The official word from Starbucks China is that the closure is part of a strategic relocation. Employees were moved to nearby stores, and the brand highlighted its new, larger space in Guomao Phase III. That new location, they said, offers more room and updated facilities. But there’s no avoiding the fact: Guomao Phase III simply doesn’t draw the foot traffic of the original flagship site.

High Rents Are Hurting Even Strong Brands

This isn’t just about Starbucks. The closure mirrors broader trends in China’s commercial property market. Before this, other global retailers like Tesco and Walmart shut stores in Shanghai due to unsustainable rents. Now, even a globally powerful brand like Starbucks—known for strong sales and operational resilience—is moving out of prime real estate because the numbers don’t add up. In a slowing economy with weaker consumer spending, high rents have become a major barrier to business viability.

Is Starbucks Tightening Its Belt Globally—and in China?

Starbucks’ current cost-control strategy isn’t new. It echoes the major restructuring the company underwent back in 2008. Back then, after years of over-expansion and neglecting core values, the brand was struggling. Howard Schultz returned as CEO to refocus the company. He shut down underperforming stores, cut non-core products, and temporarily closed all 7,100 U.S. company-owned stores for a three-hour espresso training session to reinforce quality. In 2008 alone, Starbucks closed 600 U.S. locations—three times more than initially planned. Most of those were newer stores opened during the rapid expansion phase. The decision wasn’t popular, but it helped stabilize the business.

Now, that same cost-conscious approach appears to be influencing decisions in China—including the exit from Beijing’s most iconic retail location. The Guomao Phase I store may have been symbolic, but its closure signals that even Starbucks has limits when rents outweigh returns.

Frequently Asked Questions

Why did Starbucks close its original store in Beijing’s Guomao?

The store closed primarily due to unsustainable rental costs. Reports indicate the annual rent and labor expenses exceeded 7 million RMB, and the monthly rent per square meter in Guomao Phase I surpassed 1,000 RMB—too high for sustained profitability, even for a major brand like Starbucks.

Where did the Guomao Starbucks employees go?

Employees from the closed Guomao Phase I store were reassigned to nearby Starbucks locations, including the new outlet in Guomao Phase III, which offers more space and modernized facilities.

Was the Guomao closure part of a larger strategy?

Yes. While Starbucks cited a better location in Guomao Phase III, the closure reflects a broader cost-control approach. This mirrors the brand’s 2008 global restructuring, when it shut down underperforming stores and refocused on core operations to stabilize finances.

How much did the original Guomao Starbucks cost to run each year?

Media reports stated that the annual rent and staffing costs for the Guomao Phase I Starbucks exceeded 7 million RMB, making it financially unsustainable in the long term.

Does Starbucks still have stores in Beijing’s Guomao area?

Yes. Although the original store in Guomao Phase I closed, Starbucks maintains a presence in the area with a new location in Guomao Phase III, which the company describes as having more space and improved facilities.

Is this the first time Starbucks has closed flagship stores?

No. Similar moves have happened in other cities, such as when Starbucks shut underperforming U.S. stores in 2008. The Guomao closure continues that trend of prioritizing financial sustainability over symbolic or high-traffic flagship locations when costs are too high.

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