Starbucks and Sam’s Club Begin to Say No to Free-Riding

导读（咖啡网 coffeeyo.com）：Both Starbucks China and Sam's Club have recently redrawn the lines for consumers — one by charging for seating, the other by tightening family-card rules — reclaiming perks once …

Editor’s Note (Coffeeyo.com): Starbucks China has completed its largest business-model transformation since entering the market over two decades ago — roughly 8,000 directly operated stores have been converted to a franchise model under a joint venture controlled by Boyu Capital; squeezed by local brands like Luckin, Starbucks is using price cuts, new product launches and an expanded delivery push to win back transaction volume, though a recovery in its brand premium remains to be seen.

Starbucks and Sam’s Club have both recently begun drawing new boundaries for consumers.

Starting October 22, Starbucks China formally implemented a “pay-to-sit” policy, in principle requiring customers to make a purchase before using in-store seating. The day before, Starbucks China also announced two other moves: the release of its “Third Place Initiative” and an additional investment of over RMB 300 million in fiscal year 2027 to add peak-hour staff, upgrade systems and equipment, and refresh about 1,000 stores.

In the past, one could sit in a Starbucks for an entire afternoon without buying a coffee; now this long-standing lenient practice is beginning to change.

On October 16, Sam’s Club’s revised membership charter also took effect. Under the amendment announced on October 9, a single verified identity may activate family-card privileges for at most two primary members within any 365-day period, and may be linked to only one at a time. Previously, as long as the old card was unbound, the same person could re-link indefinitely — precisely the channel scalpers used to resell secondary cards.

One regulates seating, the other membership cards. What both companies are reclaiming are things they once tacitly let consumers enjoy for free.

During the expansion phase, open seating and lax secondary-card rules were both customer-acquisition investments in China: the former underwrote the brand premium of Starbucks’ “third place,” while the latter lowered the threshold for consumers to walk into Sam’s Club. Today the two companies are at different stages — Starbucks China has a new majority shareholder, and the joint venture must pay for the brand license and therefore raise per-store efficiency. Sam’s Club, with paid membership exceeding 10 million, has shifted its focus from acquisition to member quality and renewal.

Two companies in very different operating situations have both entered an era of careful calculation in China.

01 Two Companies, Two Different Tests

For Starbucks, a seat is more than just a chair.

The concept of the “third place” was popularized by former Starbucks chairman Howard Schultz; it refers to a place to linger beyond home and office. A meaningful part of the price of a Starbucks coffee — RMB 30 to 40 a cup — pays for that space. It is also one of Starbucks’ core brand assets.

Open space has a cost, yet Starbucks was relatively relaxed and for years implicitly welcomed everyone. In China, public opinion went through a reversal: in May 2024, consumers in Xi’an and elsewhere said they were reminded to order or even asked to leave after sitting without purchasing, and the topic trended. At the time, opinion leaned toward the non-paying customer; more recently, the public’s complaints shifted to people occupying seats for long periods without buying, playing music aloud, or bringing their own drinks, while paying customers couldn’t find a seat.

Public opinion changed, and so did Starbucks’ situation.

In the past few years the competitive rules of China’s coffee market were completely rewritten. Luckin used lower prices and a denser store network to win consumers, surpassing Starbucks China in store count for the first time at the end of 2019. In 2023, Cotti sparked a ¥9.9 price war that Luckin followed, and low-price competition spread further. That year, Luckin’s revenue in China also surpassed Starbucks for the first time.

The shift in the competitive landscape directly hit Starbucks’ brand premium. Citing Euromonitor data, Reuters reported that Starbucks’ share of China’s coffee market fell from 34% in 2019 to 14% in 2024. By the end of June 2026, Luckin had 36,087 stores in China (including Hong Kong), roughly 4.5 times Starbucks China’s store count.

Starbucks began to adjust proactively. Price cuts, new products and a delivery push restored transaction volume but kept average ticket size under pressure. In Q4 fiscal 2025, Starbucks China’s same-store transaction volume rose 9% YoY while same-store sales grew just 2% and average ticket fell about 7%. More people are buying coffee, but each order brings in less.

A turning point came at the start of fiscal 2026. In Q1, Starbucks China posted revenue of US$823 million, up 11% YoY; same-store sales rose 7%, with transaction volume up 5% and average ticket also recovering 2%. That is a positive signal, but whether the brand premium can sustainably recover remains to be seen.

It was amid this round of operational adjustment and earnings recovery that Starbucks completed its largest business-model shift since entering China more than two decades ago.

In November 2025, Starbucks announced an agreement with Boyu Capital to form a joint venture to operate its China business. The deal closed in April 2026: a Boyu Capital fund holds 60% of the JV, Starbucks keeps 40% and continues to own the brand and IP, licensing them to the JV, while roughly 8,000 directly operated stores converted to franchises.

This means Starbucks globally has turned its China business into an asset-light model that collects licensing fees. Bearing the licensing fee and the operating results is the Boyu-led JV. For the new owner, the core goal is to lift per-store profitability.

In the last quarter before the handover, the recovery had already visibly slowed. In Q2 fiscal 2026 (ended March 29, 2026), Starbucks China’s revenue was about US$800 million, up 8% YoY; same-store sales edged up just 0.5%, with transaction volume up 2.1% but average ticket down 1.6%.

This was also the last Starbucks China scorecard visible to the outside world. After the deal closed, Starbucks stopped disclosing China-market revenue and same-store sales separately.

Therefore, the JV’s operating moves became the main window into Starbucks China. The pay-to-sit policy plus the over-RMB-300-million store investment is the first major action by the new owner half a year after taking over.

On October 29, Starbucks released Q4 and full-year fiscal 2026 results. On the earnings call, CEO Brian Niccol said China’s fiscal 2026 performance exceeded set targets. Management also disclosed that the international segment is expected to add about 1,100 net new stores, roughly half of them in China. Long term, Starbucks believes China’s store footprint still has room to double.

This means that, despite fierce competition from local coffee brands, Starbucks still sees growth potential in China.

Compared with Starbucks, Sam’s Club faces a different question: after growing too fast, how to defend the value of membership.

Sam’s Club is Walmart China’s fastest-growing business. In Q2 fiscal 2027, Walmart China’s net sales reached about US$7 billion, up 20.7% YoY at constant exchange rates, with comparable sales up 9.7%. The filing said operating-profit growth in the international segment was driven mainly by China and India, and China’s engine is Sam’s Club. Over the past 12 months Sam’s Club added 11 stores in China, four of them in the quarter. In fiscal 2026, Sam’s Club China’s omnichannel sales surpassed RMB 140 billion, contributing over 80% of Walmart China’s revenue.

Membership growth is also accelerating. According to reports, Walmart China CEO Juliet Zhu once disclosed that Sam’s Club China took 21 years to go from zero to its first 1 million paying members, but only nine months to add its third million. By the first half of 2026, Sam’s Club China’s paying members had surpassed 10.7 million.

The larger the scale, the wider the impact once the secondary-card rules have a loophole. A Sam’s Club individual membership costs RMB 260 a year and the premium “Excellent” membership RMB 680, each with one complimentary family card. By the rules, the family card may only be given to relatives or friends. But in the past, unbinding the old card let the same person repeatedly activate secondary cards on different primary accounts, spawning a mature resale chain on second-hand platforms: annual family cards, monthly rentals, one-day passes, even per-visit store entry.

Sam’s Club’s membership value is also being eroded in another way. Members pay hundreds of yuan a year for the trust that Sam’s Club selects products on their behalf, yet that trust has been tested several times amid rapid expansion. For example, in August 2025, scallions sold at a Chengdu Sam’s Club were reported for excessive pesticide residues; that December, consumers reported a live mouse inside the packaging of mochi bought via Sam’s Club’s instant-delivery service. This March, high-mountain screw peppers on sale at Sam’s Club were reported for excessive pesticide residues, and its private-label freeze-dried strawberries were also found non-compliant on related indicators.

External competition is also intensifying. On one side, membership retailers like Costco compete for similar middle- and high-income household customers; on the other, retail brands like Hema (Freshippo) and ALDI divert everyday grocery demand through private labels, curated assortments and pricing. The rise of instant retail also gives consumers more channels to buy fresh food and daily necessities.

In such an environment, Sam’s Club needs not only to attract new members but to keep paying members feeling the card is worth it. Tightening the family-card rules is essentially about defending the gold content of the membership fee.

One is re-examining store space under growth pressure; the other is tightening membership eligibility amid rapid expansion. Starbucks and Sam’s Club, in different operating situations, are now also putting the free perks once used to attract consumers and trade for growth onto the cost ledger.

02 After the Careful Math, Can It Translate into Better Performance?

Look at Starbucks first. China is not the first market where Starbucks implemented a pay-to-sit policy.

From January 27, 2025, Starbucks implemented a new customer code of conduct at its company-operated North American stores, requiring customers using seats and other facilities to make a purchase, ending a near-seven-year open policy.

In the early phase, North America’s performance did not improve immediately. In Q2–Q4 fiscal 2025, Starbucks North America’s same-store sales fell 1%, fell 2% and were flat YoY. Only in fiscal 2026 did North America recover, with same-store sales up 4%, 7.1% and 8.1% in the first three quarters — three consecutive quarters of growth.

During that period Starbucks was also adding store staff, optimizing products and improving service efficiency, so it is hard to isolate how much the pay-to-sit policy contributed to the recovery.

Moreover, Starbucks did not abandon the third place by tightening seating rules. Management disclosed on the latest earnings call that in fiscal 2026 North America completed environmental upgrades at over 1,700 stores, restoring comfortable seating and improving the spatial experience. Upgraded stores saw higher transaction volume across different dayparts and channels.

Starbucks China this time has almost replicated the same playbook: implementing pay-to-sit on one side while investing over RMB 300 million to add peak-hour staff, upgrade equipment and refresh about 1,000 stores.

Why spend on upgrading space while tightening seating? The answer is best understood against the backdrop of delivery.

Starbucks’ product sales have long ceased to depend entirely on customers lingering in stores.

From Q4 fiscal 2019 to Q2 fiscal 2022, Starbucks China’s digital orders (including delivery and mobile order-and-pickup) rose from 10% to 47% of sales. In Q3 fiscal 2023, “Starbucks Delivery” (Zhuanxing Song) sales grew 63% YoY, accounting for 25% of Starbucks China’s total sales.

A Beijing Starbucks store employee told Dingjiao One that after the new rule, store traffic and sales showed no obvious change and the impact on operations was limited. She explained, however, that her store is small and delivery-dominated — “80% are delivery orders” — with relatively few dine-in customers.

For stores with high delivery share and limited dine-in space, the consumption-to-sit policy can only affect a fairly limited set of scenarios. And in stores with weak traffic and empty seats, restricting non-paying occupancy will not magically sell more coffee.

So the operating value of pay-to-sit is to turn space back from a free public resource into part of a paid experience. Give seating priority to paying customers, and spend to make that seat worth paying for. Managing seats is only the first step; getting consumers to keep paying a premium for the space is the key to whether the math works.

Now look at Sam’s Club: tightening the family card is about the membership ledger.

Previously, reselling family cards fell into two cases: one was card-sharing. A second-hand-platform vendor told Dingjiao One that sharing splits into a primary and a secondary card, both valid for a year, and the new rule does little to limit this model; the other was short-term access, where vendors mainly sell temporary shopping rights by providing accounts directly or temporarily binding family cards — relying precisely on repeated re-linking.

Sam’s Club’s adjustment this time limits the “person” rather than the “card.” One identity may bind a family card at most twice a year, but the primary member can still choose who gets the family card at any time. The new rule barely affects users who share membership long-term with family or friends, but clearly raises the barrier for consumers who relied on repeated re-linking to buy short-term access.

Compared with peers, this rule is not strict. Under Costco’s mainland China membership charter, each primary member may have one free household card, but the holder must be a family member aged 18 or older living at the same address as the primary, with proof of cohabitation required at sign-up. Once issued, the household card’s holder can only be changed in the next membership year.

So how much will this actually help Sam’s Club’s results?

Sam’s Club China does not disclose profit separately, so we can use Costco as a reference. In fiscal 2025, Costco’s membership-fee revenue was US$5.32 billion and operating profit about US$10.4 billion, with fees at roughly half of operating profit. Although membership fees were only about 1.9% of total revenue, because warehouse clubs run a low-margin, high-turnover model, fees are crucial to profitability. Costco’s operating margin that year was just 3.77%.

By the first half of 2026, Sam’s Club China’s paying members had surpassed 10.7 million, with annual membership-fee revenue alone near RMB 3 billion — small as a share of total revenue (in fiscal 2026 Sam’s Club China’s omnichannel sales surpassed RMB 140 billion), but referencing Costco’s roughly 4% operating margin, RMB 140 billion in sales implies over RMB 5 billion in operating profit, and membership fees equal more than half of that hypothetical profit.

In this model, every resold secondary card may mean a lost fee. The ideal outcome of the new rule is to convert short-term-access consumers into full members, raising fee revenue. But if consumers merely shift to long-term card-sharing and keep using family cards stably, Sam’s Club may not gain extra fees.

The new rule also risks collateral damage to paying members. Around its launch, media reported consumer complaints (via the Black Cat Complaints app) that membership cards were ruled non-compliant and could only be refunded. The foundation of a membership system is trust; if the cost of fighting scalpers is making ordinary members feel wrongly accused, the math may backfire.

Therefore, the more certain value of the new rule is to raise the barrier to frequent membership churn, so paying members are willing to renew for the privilege. But defending the privilege is not the same as defending loyalty; the ultimate reason members renew is still assortment and quality.

From Starbucks’ seats to Sam’s Club’s family cards, tightening the rules can reduce waste but cannot conjure demand out of thin air. For Starbucks, the real test is making space worth paying for again; for Sam’s Club, it is keeping the membership fee continuously worth the money.

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