Starbucks reportedly exploring Chipotle takeover

A Chipotle Mexican Grill restaurant inside Aventura Mall, Miami, Florida. Photograph: Jeff Greenberg/Universal Images Group/Getty ImagesView image in fullscreenA Chipotle Mexican Grill restaurant inside Aventura Mall, Miami, Florida. Photograph: Jeff Greenberg/Universal Images Group/Getty ImagesStarbucksStarbucks reportedly exploring Chipotle takeoverMove would reunite chief executive Brian Niccol with chain he led before joining coffee company two years ago

Starbucks has explored a takeover of Chipotle Mexican Grill, the Financial Times reported on Thursday, in a move that ⁠would reunite chief executive Brian Niccol with the burrito chain he led before joining the coffee giant two years ago.

The potential deal comes as restaurant chains wrestle with uncertain demand from inflation-weary ⁠consumers and rising operating costs, prompting ⁠companies to look ​for new avenues of growth while facing pressure to improve profitability.

Starbucks has worked with advisers in recent months on a takeover proposal for Chipotle, the FT reported, citing people familiar with the ⁠matter.

Starbucks and Chipotle did not immediately respond to Reuters requests for comment.

Shares of Chipotle, which has a market capitalization of nearly $39bn, were up about 6% on Thursday, while those of Starbucks were down about ⁠3%. Starbucks is worth about $107bn, according to LSEG data.

Analysts said any acquisition would probably be a costly undertaking for Starbucks, which is ​still investing heavily in its turnaround efforts.

“A deal could require ‌heavy borrowing or issuing shares,” said ‌Lale Akoner, global market strategist at eToro. “Without a compelling financial case, investors may view the deal as an expensive distraction.“

Starbucks is in ‌the midst of a turnaround under Niccol, who has prioritized customer satisfaction through investments in staffing and store improvements aimed at reducing wait times and restoring the coffeehouse atmosphere that helped make the chain a global brand.

Since Niccol joined the company in September 2024, Starbucks has committed at least $500m to labor investments as part of its reorganization, contributing to pressure on profitability. As of the fiscal third quarter, adjusted operating margin was 14.4%, down from 16.7% in the same quarter two years earlier, according to LSEG data.

Starbucks ‌has reported four consecutive quarters of comparable sales growth under Niccol, but in July he said that, “We have more work to do.“

“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. Instead of jump-starting the transformation, at first blush, this seems more like jumping the shark instead,” said Brian Jacobsen, chief economic strategist, Annex Wealth Management.