Starbucks describes talk of possible Chipotle takeover as ‘rumors’

After saying adios to Chipotle Mexican Grill two years ago, Starbucks CEO Brian Niccol could be envisioning a future where lattes and burritos go hand-in-hand.

On Thursday, the Financial Times first reported the Seattle-based coffee giant has been working on a possible proposal during recent months to take over Chipotle, citing sources familiar with the matter.

“As a matter of policy, we don’t comment on rumors and speculation,” a Starbucks spokesperson said Thursday. 

Still, stakeholders reacted, with stocks rising for Chipotle while holding steady for Starbucks after a fall earlier in the day.

Analysts and academics predict hurdles for the potential deal, due to its size, cost and questions around antitrust laws.

Niccol, who took charge at Starbucks in September 2024, previously served as the head of Chipotle for six years. Chipotle is a fast-casual restaurant chain that sells Mexican-inspired food. It’s headquartered in Newport Beach, Calif.

Chipotle didn’t immediately respond to a request for comment. The company has almost 4,300 locations in the U.S. and Canada, including 86 in Washington, per its website. It also operates 30 stores in Europe.

Starbucks’ North American store count was 18,371 at the end of June, according to its most recent earnings report.

Niccol is behind the “Back to Starbucks” plan, which focuses on reviving the company’s traditional coffeehouse experience with upgraded stores, more staffing, smoother operations and reduced consumer wait times.

“Our team is laser focused on executing our Back to Starbucks strategy,” Starbucks said Thursday.

‘Very risky’

Doron Levit, professor of finance and business economics at the Foster School of Business at the University of Washington, foresees problems with the potential takeover. For one, he isn’t convinced Starbucks has the cash needed to make it happen.

Another challenge is the sheer size of the possible deal. Levit doesn’t believe Niccol has experience in such a large merger or acquisition.

“Most mergers and acquisitions tend to fail” because companies overestimate how much synergy they would create, Levit said Thursday. “This is very risky business strategies.”

Ari Felhandler, an equity analyst at investment research company Morningstar, said the acquisition of Chipotle would make Starbucks the third-largest restaurant firm by sales, holding almost 2% of the global market, according to his analyst note.

“Still, we posit a deal could distract from the brand’s ongoing turnaround,” Felhandler wrote Thursday.

When it comes to antitrust laws, “the acquisition could raise lots of issues,” said Douglas Ross, professor from practice at the University of Washington School of Law, who specializes in antitrust and class action litigation. Still, Ross sees “ultimately nothing that should block it from going through.”

He predicted any case brought by a U.S. antitrust agency on the claim of less competition in the markets would fail.

The federal government could investigate a merger involving two products that don’t compete with each other — otherwise known as a “conglomerate” merger. But Ross said this is unlikely under the Trump administration.

“Starbucks sells coffee; Chipotle sells Mexican food,” he added. “There is virtually no overlap here.”