Starbucks Reportedly Explores Takeover of Chipotle

Starbucks has explored a takeover of Chipotle Mexican Grill, the Financial Times reported on Thursday. A deal would bring chief executive Brian Niccol back together with the burrito chain he ran before moving to the coffee company two years ago.

Citing people familiar with the matter, the FT said Starbucks has worked with advisers in recent months on a takeover proposal. Neither company responded immediately to Reuters requests for comment.

Market reaction

On Thursday Chipotle shares rose about 6%, while Starbucks shares fell roughly 3%. Chipotle has a market capitalization of nearly $39bn, and Starbucks is valued at about $107bn, according to LSEG data.

Analyst views

Analysts say an acquisition would probably be costly for Starbucks, which is still investing heavily in its turnaround. Lale Akoner of eToro said a deal could require heavy borrowing or share issuance, and that without a compelling financial case investors might see it as an expensive distraction. Brian Jacobsen of Annex Wealth Management said the timing looks odd because Starbucks has not yet delivered the margin improvement investors want.

Since Niccol arrived in September 2024, Starbucks has committed at least $500m to labor investment. Adjusted operating margin in the fiscal third quarter was 14.4%, compared with 16.7% in the same quarter two years earlier. Starbucks has posted four straight quarters of comparable sales growth.

Chipotle's position

Chipotle has faced softer traffic as consumers cut discretionary spending, while higher food and labor costs have squeezed margins across the industry. Its shares have nearly halved since Niccol left. Jim Sanderson of Northcoast Research said a deal could speed up Chipotle's international expansion by using Starbucks' licensed partnerships in Europe.

At the end of last year, Chipotle had nearly 4,000 restaurants in the United States and about 100 abroad. Starbucks has around 40,000 stores worldwide, including about 18,000 in North America.