A deal for the $41bn burrito chain would be the largest restaurant takeover on record, and Starbucks investors sold the shares on the report
Starbucks has worked with advisers on a possible takeover of Chipotle Mexican Grill, a company worth about $41bn at its October 8 close, according to a Financial Times report published that day. A deal would reunite Starbucks chief executive Brian Niccol with the burrito chain he ran from 2018 until he joined the coffee group on September 9, 2024.
It is not clear whether Starbucks has made an offer, and neither company has confirmed one. “Our team is laser-focused on executing our Back to Starbucks strategy. We have strong momentum and confidence in our long-term growth potential,” Starbucks said in a statement.
The two share prices moved in opposite directions. Chipotle rose 6.2 per cent on October 8 to close at $32.68. Starbucks fell as much as 6.7 per cent during the session before recovering to close 0.4 per cent lower at $93.21, then lost a further 2.6 per cent on October 9 to $90.75. Chipotle gave back 3.3 per cent that day.
The size of the cheque
At the October 8 close, Chipotle’s 1,265,418,000 shares outstanding, the count on the cover of its second-quarter 10-Q, were worth about $41.4bn. Starbucks’s roughly 1.14bn shares were worth about $106bn.
Any bid would need a premium. At an illustrative 30 per cent premium, the equity cheque would be close to $54bn, about half of Starbucks’s own market value. Starbucks carried $13.3bn of long-term debt, including the current portion, at June 28, according to its quarterly filing. An offer of that size would require heavy new borrowing, a large share component, or both.
The record for a restaurant takeover is Burger King’s agreement to buy Tim Hortons for about $11.4bn, announced in August 2014. Chipotle’s market value alone is more than three times that figure.
Why Chipotle is cheaper now
Chipotle’s shares traded as high as $69.26 in June 2024, adjusted for the 50-for-1 stock split the company completed that month. Niccol left two months later. The stock has since lost more than half its value.
The business has kept growing while margins have narrowed. In the second quarter of 2026, revenue rose 9.3 per cent to $3.3bn and comparable restaurant sales grew 2.2 per cent, the company said on July 29. Operating margin fell to 15.7 per cent from 18.2 per cent a year earlier, and restaurant-level margin slipped to 25.2 per cent from 27.4 per cent. Chipotle raised its full-year guidance for comparable sales.
For Niccol, the case would rest on familiarity. When Starbucks hired him in August 2024, it said Chipotle’s revenue had nearly doubled, profits had risen nearly sevenfold and the share price had climbed nearly 800 per cent during his leadership.
Questions for Starbucks shareholders
The share price reaction suggests Starbucks investors see their own turnaround as unfinished. Niccol’s Back to Starbucks plan, centred on service times and the in-store experience, is now two years old. Buying a separate fast-casual chain would add a second operational project and, depending on how a deal was financed, a heavier balance sheet.
Not every analyst is dismissive. Jim Sanderson of Northcoast Research told Reuters that the appeal lay in using Starbucks’s licensed partnerships in Europe to expand Chipotle faster.
No terms have been disclosed. Starbucks’s results for the fiscal year that ended in September will give analysts their first scheduled chance to put the question to Niccol directly.