Starbucks hired advisers in recent months to work on a takeover proposal for Chipotle.

Starbucks said in a statement: "Our team is laser-focused on executing our Back to Starbucks strategy." The company stated it typically does not comment on rumors and speculation, adding that it looks forward to sharing its next earnings results later in October. "We have strong momentum and confidence in our long-term growth potential," the company said.

Chipotle shares rose approximately 6.2% to 8% on Thursday following the report. Starbucks shares fell between 3% and 6.6% during trading on Thursday before closing slightly lower or largely flat.

Brian Niccol is the CEO of Starbucks. He joined the coffee chain in September 2024 after serving as the CEO of Chipotle for more than six years. Scott Boatwright is the CEO of Chipotle.

Roughly 90% of Chipotle restaurants are within one mile of a Starbucks cafe, according to a research note from Stephens analyst Jim Salera. D.A. Davidson analyst Matt Curtis estimated the odds of a deal being completed at about 20%.

Why It Matters

Starbucks had a market capitalization of more than $105 billion to $107 billion, while Chipotle had a market capitalization of approximately $39 billion to $41 billion prior to the report. Starbucks is the second-biggest U.S. restaurant chain by sales with about $31 billion in annual domestic sales, and Chipotle is the seventh-biggest U.S. restaurant chain by sales with more than $11 billion in annual system-wide sales.

Starbucks has roughly 40,000 stores globally, including about 18,000 in North America, while Chipotle had nearly 4,000 restaurants in the United States and about 100 international locations as of the end of last year. The companies operate under different strategic pressures: Starbucks' adjusted operating margin was 14.4% in the fiscal third quarter, down from 16.7% in the same quarter two years earlier, according to LSEG data, while Chipotle shares have declined by more than 11% this year and more than 20% over the last 12 months.

What's New

In July, Niccol said, "We have more work to do." In a memo to employees in September, he wrote that "Starbucks is aiming to be 'the world’s greatest customer service company.'" Starbucks' adjusted operating margin fell from 16.7% in the same quarter two years earlier to 14.4% in the fiscal third quarter, according to LSEG data.