Starbucks Corp said on Friday it would launch a new all-day dining cafe in China which will serve a brunch menu and cocktails, as the world's largest coffee chain seeks to expand its retail offering in the increasingly competitive market.

The opening of the cafe in the city of Shanghai comes as Starbucks has been facing slowing sales growth in its second-largest market amid pressure from a growing number of independent coffee shops and Chinese startups such as Luckin Coffee which offer cheap delivery and big discounts.

"Today marks yet another significant milestone as we take everything we have learned around coffee and our relentless pursuit for food innovation, to create a new exciting all-day cafe dining and Italian aperitivo experience," Starbucks China CEO Belinda Wong said in a statement.

The Starbucks Reserve Bakery Cafe, which opens this weekend, is the firm's first such store in China and will offer its premium coffees, freshly prepared food from its Princi Italian bakery and alcoholic drinks from a "mixology bar".

The company also has similar cafes in the U.S., where it has been pursuing an upscale strategy.

Starbucks has benefited from a growing cafe culture in China but the trend has also given rise to a host of ambitious local competitors, including Luckin Coffee, which has said that it wants to open 2,500 new stores this year and overtake Starbucks as China's largest coffee chain.

Analysts say, however, that there are signs that the efforts from Starbucks to improve sales are gaining steam, with quarterly sales in China beating estimates last month, driven by new store openings and a delivery program that it launched with Internet giant Alibaba last year.