Starbucks has explored a takeover of Chipotle Mexican Grill, in an ambitious gambit to unite two of America’s best-known brands in a deal that would rank as the biggest-ever tie-up in the restaurant sector.
The world’s leading coffee shop chain has worked with advisers in recent months on a takeover proposal for Chipotle, a burrito chain with a $41bn market value, according to people familiar with the matter.
The status of Starbucks’ takeover plans and whether the company has submitted any formal offer to Chipotle could not be determined.
A transformative deal of this size might struggle to get off the ground, the people warned, and a tie-up may never materialise given the complexity of combining two consumer giants.
The early-stage plans would also reunite Brian Niccol, Starbucks’ chief executive, with the fast-food chain where he made his name over a six-year stint as CEO. Since Niccol left Chipotle in August 2024, its stock has nearly halved in value.
Shares in Starbucks tumbled as much as 6.7 per cent following the FT report on Thursday, later paring losses to close 0.4 per cent lower. Chipotle shares jumped 6.2 per cent.
A potential takeover of Chipotle would eclipse Burger King’s $11.4bn acquisition of Canadian coffee-and-doughnut chain Tim Hortons in 2014, the largest restaurant buyout to date.
It would also stand out as the latest megadeal in a mergers and acquisitions boom, as corporate America tries to take advantage of the light-touch antitrust regulation under US President Donald Trump.
A deal would create a combined company with almost $50bn in sales last year. Starbucks has about 41,000 owned and licensed stores, two-fifths of them in the US. Almost all of Chipotle’s 4,200 restaurants are in the US.
A combination of the two companies entailed “no obvious revenue synergies”, said Sharon Zackfia, an analyst at William Blair, despite potential cost savings and opportunities such as offering Starbucks refresher drinks with a burrito bowl.
“Investors would likely heavily question the rationale and whether such a move signals that management has less confidence in Starbucks’ future growth prospects,” she said in a note.
Under Niccol, the coffee chain is in the early stages of a turnaround, called the “Back to Starbucks” strategy, which is beginning to bear fruit with same-store sales and profits on the rise.
His plan has included adding baristas, introducing menu items, speeding up service and renovating cafés. He has hired two former Chipotle executives, Tressie Lieberman and Stephen Piacentini, to run marketing and coffee shop development respectively.
Starbucks said it did not comment on rumours or speculation about the company, adding: “Our team is laser-focused on executing our Back to Starbucks strategy. We have strong momentum and confidence in our long-term growth potential.” It said it would update investors with quarterly results and financial guidance later this month. Chipotle did not respond to a request for comment.
Niccol served as Chipotle chief executive for more than six years, gaining a reputation as a star restaurant executive after engineering a corporate turnaround in the aftermath of a major food safety crisis. He was previously at Yum Brands, which owns restaurant groups including the KFC fried chicken chain and Mexican-themed Taco Bell.
Starbucks’ stock soared 24 per cent on the day Niccol’s move to the coffee chain was announced, when its board was under pressure from activist investor Elliott Management to reverse a sharp decline in sales.
He continues to have a home in Chipotle’s headquarters city of Newport Beach, California, where Seattle-based Starbucks built a satellite executive office.
Chipotle’s shares have fallen by about 20 per cent in the past year, hit in part by consumer fears after the company last summer removed jalapeño peppers from a supplier that had been tied to a salmonella outbreak. Chief executive Scott Boatwright served as Chipotle’s chief operating officer under Niccol.
Additional reporting by Aaron Kirchfeld