Starbucks has explored a takeover of Chipotle Mexican Grill, a deal that would rank as the largest restaurant acquisition on record. The coffee chain's shares fell on the report while Chipotle's jumped, and the plan would reunite Starbucks chief executive Brian Niccol with the chain he once ran.
Starbucks 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. Whether Starbucks has submitted a formal offer could not be determined, and the people warned a deal of this size might never materialize given the complexity of combining two consumer giants.
A completed takeover would eclipse Burger King's $11.4bn acquisition of Tim Hortons in 2014, the largest restaurant buyout to date. Combined, the two chains generated almost $50 billion in sales last year. Starbucks runs about 41,000 owned and licensed stores, two-fifths of them in the US, while nearly all of Chipotle's 4,200 restaurants sit in the US.
Shares move on the report
Starbucks shares fell 3.6% after the report, giving the company a market capitalization of $103 billion. Chipotle shares jumped 5.7% in response. Starbucks declined to comment, and Chipotle did not immediately respond to a request for comment.
A reunion with Niccol
Niccol left Chipotle in August 2024 to take over at Starbucks, after more than six years as the burrito chain's chief executive. Chipotle's stock has nearly halved in value since his departure, while under Niccol's "Back to Starbucks" turnaround plan, Starbucks has brought on more baristas, renovated cafés and hired two former Chipotle executives, Tressie Lieberman and Stephen Piacentini, to run marketing and coffee-shop development.
Elliott Management had been pressuring Starbucks' board to reverse a sharp decline in sales at a time when its stock soared 24% the day Niccol's move to the company was announced.
Chipotle, meanwhile, has been battling muted consumer demand and rising input costs amid still-high inflation. Its shares have fallen almost 20% over the past year, hit in part by consumer fears after the company removed jalapeño peppers from a supplier tied to a salmonella outbreak.
Sources: Financial Times, Reuters via Investing.com
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