Chipotle Mexican Grill Inc. (CMG) shares rose as much as 8.6% on Thursday following a report from the Financial Times that Starbucks Corp. has explored a takeover of the fast-casual restaurant chain. The report, citing people familiar with the matter, stated that Starbucks has worked with advisers in recent months on a potential proposal. Starbucks shares fell as much as 6.7% during intraday trading on Thursday, their largest drop in over a year, before recovering to end the day largely flat.
The reported interest comes shortly after Brian Niccol transitioned from his role as chief executive of Chipotle to become the CEO of Starbucks in August 2024. During Niccol's six-year tenure at Chipotle, the company’s stock significantly increased, but it has declined approximately 50% since his departure. At Starbucks, Niccol launched a "Back to Starbucks" marketing campaign in September 2024 intended to improve customer service and restore a coffeehouse atmosphere.
Neither Starbucks nor Chipotle responded to requests for comment regarding the report. Industry analysts noted that a merger of this scale would be one of the largest in restaurant history, rivaling Burger King’s $11.4 billion acquisition of Tim Hortons in 2014. However, analysts from TD Cowen described the deal as a "low-probability outcome," suggesting that a $40 billion acquisition might conflict with Niccol's current focus on turning around Starbucks' U.S. operations.
This potential transaction involves two large food service entities in the United States. If a deal were to proceed, it would impact Chipotle, currently valued at approximately $41 billion. Analysts noted that Starbucks' U.S. operating margins are under pressure and a shift in capital allocation away from the current "Back to Starbucks" turnaround strategy could result from such an acquisition.
At this stage, it is not yet known if Starbucks has made a formal offer to acquire Chipotle or if the discussions will lead to a definitive agreement. The Financial Times noted that a deal of this magnitude may never materialize. There are currently no scheduled court dates, shareholder votes, or regulatory deadlines, as the companies have not confirmed that active negotiations are taking place. Investors and industry observers will likely monitor upcoming quarterly earnings reports from both companies for further information on their strategic directions.