Starbucks Reportedly Explored Acquisition of Chipotle
The coffee giant reportedly considered a takeover of the burrito chain, which would reunite CEO Brian Niccol with his former employer.
Starbucks explored a potential takeover of Chipotle Mexican Grill, the Financial Times reported Thursday, citing individuals familiar with the matter. This move would reunite Starbucks Chief Executive Brian Niccol with the burrito chain he led before joining the coffee giant.
Starbucks has consulted with advisers in recent months regarding a takeover proposal for Chipotle. The companies did not immediately respond to requests for comment.
Chipotle, with a market capitalization approaching $39 billion, saw its shares rise approximately 6% on Thursday. Starbucks' shares, conversely, declined about 3%. Starbucks holds a market value of around $107 billion, according to LSEG data.
The burrito chain has faced challenges including softer customer traffic amid reduced discretionary spending, and increased food and labor costs have impacted margins across the industry. Chipotle's stock has fallen about 17% year-to-date.
Analysts suggest a potential deal could accelerate Chipotle's international expansion. "What I like about this potential is the opportunity CEO Brian Niccol would have to leverage Starbucks’ licensed partnerships in Europe to expand Chipotle more aggressively," said Jim Sanderson, an analyst at Northcoast Research.
As of the end of last year, Chipotle operated nearly 4,000 restaurants in the U.S. and about 100 international locations. Starbucks operates roughly 40,000 stores globally, with approximately 18,000 in North America.
Niccol joined Starbucks in 2024, having previously spent six years at Chipotle. During his tenure there, he is credited with leading a turnaround following food-safety issues and expanding the company's digital presence, which contributed to years of strong sales growth.
He was brought to Starbucks to revitalize the business. In the past two years, Niccol has focused on enhancing the customer experience through menu simplification and reduced wait times, leading to four consecutive quarters of comparable sales growth. "We have more work to do," Niccol stated in July after the company raised its annual sales and profit forecasts.
"The timing of this would be a little weird, given that Starbucks is in the middle of their transformation and hasn’t yet shown the margin improvement investors are probably hoping for," commented Brian Jacobsen, Chief Economic Strategist at Annex Wealth Management. "Instead of jump-starting the transformation, at first blush, this seems more like jumping the shark instead."