Starbucks Explored a Chipotle Takeover, FT Reports, in What Would Be the Biggest Restaurant Deal Ever

Starbucks has been working with advisers on a takeover proposal for CMG in recent months, the Financial Times reported on Thursday, citing people familiar with the matter. No formal offer has been made, and a Starbucks spokesperson told CNBC the company does not comment on rumors and speculation. Chipotle shares rose about 7% in afternoon trading while SBUX fell roughly 4%; SentiSense price data showed Chipotle up 6.2% late in the session.

The deal would be large by any restaurant-industry measure. Chipotle carries a market value of roughly $42 billion, which would make it the biggest restaurant takeover ever. Starbucks is the second-biggest U.S. chain by sales at about $31 billion a year, and Chipotle ranks seventh with more than $11 billion. Starbucks had about $9.4 billion of debt at the end of June; William Blair's Sharon Zackfia estimated leverage would rise to about six times if it paid a 20% premium funded mainly with debt, while an all-stock deal would dilute earnings per share by about 10%.

The link between the two is CEO Brian Niccol, who ran Chipotle for more than six years before joining Starbucks in September 2024. Chipotle's revenue nearly doubled under him, but the stock has fallen sharply since he left: about 40% by CNBC's count and 47% as of Wednesday's close by the Motley Fool's. Starbucks, meanwhile, is mid-turnaround: fiscal third-quarter revenue slipped 1% to $9.3 billion, reflecting the spin-off of its China operations, while comparable store sales rose 7.9%.

Analysts are split. Stephens' Jim Salera notes that roughly 90% of Chipotle restaurants sit within a mile of a Starbucks, pointing to shared real estate and a combined rewards program, while Melius' Jacob Aiken-Phillips sees few synergies, noting "It's not like Starbucks has a grill". BTIG's Pete Saleh warned a deal could consume management time before Starbucks shows sustainable margin recovery, and D.A. Davidson's Matt Curtis puts the odds of completion at about 20%. Watch for a formal proposal, the financing mix and any comment from either board.