Starbucks held discussions about acquiring Chipotle Mexican Grill, a grand plan that would merge two of America's most recognized consumer brands and, if completed, would rank as the largest merger in the history of the restaurant industry.
People familiar with the matter said the world's leading coffee chain operator has worked with a team of advisors in recent months to study a potential deal for Chipotle. The burrito-focused chain currently has a market value of nearly $39 billion.
It remains unclear where Starbucks' acquisition plan currently stands and whether the company has submitted a formal offer to Chipotle. The people cautioned that a transformation-level deal of this magnitude may well fail to materialize, as integrating two consumer giants would be extremely difficult and the merger may ultimately not be reached.
This still-early-stage acquisition plan would bring Starbucks (ASX: SBUX) Chief Executive Brian Niccol back to the fast-casual company where he built his industry reputation. He served as CEO of Chipotle for six years, and after he left in August 2024, Chipotle's share price was nearly halved.
If the acquisition of Chipotle were completed, the deal would surpass Burger King's $11.4 billion purchase of Canadian coffee and doughnut brand Tim Hortons in 2014. It would also become the latest mega-deal in the current wave of merger activity, as American companies seek to seize the opportunity presented by relatively relaxed antitrust oversight during the Trump administration. Following completion, the combined company's revenue last year would be close to $50 billion.
Starbucks (ASX: SBUX) operates about 41,000 company-owned and licensed stores, two-fifths of which are in the United States, while Chipotle's 4,200 locations are almost entirely domestic. Starbucks declined to comment, and Chipotle did not immediately respond to a request for comment.
Under Niccol's leadership, Starbucks (ASX: SBUX) is in the early stages of implementing a turnaround strategy called "Back to Starbucks," with same-store sales and profits continuing to recover and the strategy's results gradually emerging. Niccol's reform measures include adding more baristas, introducing new food items, speeding up service and renovating stores. He also poached two former executives from Chipotle: Tressie Lieberman and Stephen Piacentini, who are responsible for marketing and store expansion, respectively.
On the day it was announced that Niccol would become Starbucks CEO, the company's share price surged 24%. At the time, Starbucks' board was under pressure from activist investor Elliott Management to reverse a sharp decline in revenue. Niccol led Chipotle for more than six years. After the company suffered a major food safety crisis, he drove its recovery and earned a reputation as a star restaurant executive. He still owns a home in Newport Beach, California, where Chipotle is headquartered; Seattle-based Starbucks (ASX: SBUX) has also set up a satellite executive office there.
Over the past year, Chipotle's share price has fallen nearly 20%, partly because a salmonella outbreak last summer linked to jalapeño peppers sourced from one supplier raised consumer concerns. Current CEO Scott Boatwright previously served as Chipotle's chief operating officer during Niccol's tenure.