TLDR
- Chipotle (CMG) stock fell about 4% Monday, while Starbucks (SBUX) rose about 1%.
- Starbucks said, “we are not buying Chipotle,” after a Financial Times report last week.
- The report had lifted Chipotle more than 7% and dropped Starbucks about 3%.
- Analysts questioned the cost, the funding and the lack of overlap between the two brands.
- Starbucks plans to report fourth-quarter results and fiscal 2027 guidance later this month.
Chipotle (CMG) stock fell between 3% and 4% on Monday after Starbucks (SBUX) said it is not buying the burrito chain. Starbucks stock rose about 1% on the same news.
Chipotle Mexican Grill, Inc., CMG
“As a matter of policy, we don’t comment on rumors and speculation, but we want to be clear we are not buying Chipotle,” a Starbucks spokesperson said. Chipotle declined to comment.
The company said it is “laser focused” on its Back to Starbucks strategy. It also said it has “strong momentum and confidence” in its long-term growth.
How the Rumor Started
The Financial Times reported on October 8 that Starbucks had worked with advisers in recent months on a possible proposal for Chipotle. The report cited people familiar with the matter.
That report sent Chipotle stock up more than 7% last week. Starbucks fell about 3% over the same stretch.
Chipotle’s market value topped $41 billion last week. Reuters put it at around $40 billion.
A deal would have been the largest in the restaurant sector. It would have created a company with about $50 billion in annual sales.
It also would have reunited Starbucks CEO Brian Niccol with the chain he led for six years. He left for Starbucks in 2024.
Current Chipotle CEO Scott Boatwright served as chief operating officer under Niccol. It was a reunion story that never got past the rumor stage.
Why Analysts Were Skeptical
William Blair analysts said a deal would likely cost closer to $50 billion. They called it a “tough math” scenario for Starbucks.
The firm also saw “no obvious revenue synergies” between the brands. It noted they run “very different supply chains.”
Paren Knadjian of EisnerAmper said a premium price would likely need a mix of debt and equity. He said that could test leverage and dilute existing holders.
Seaport Research Partners analyst Eric Gonzalez said another large restaurant business could distract management from the turnaround. Starbucks is still working through that effort.
Starbucks has put more than $500 million into staffing, scheduling and other employee efforts. It also closed about 250 cafes last month that failed to reach “acceptable financial performance.”
Chipotle has dealt with softer traffic as consumers cut back on discretionary spending. Higher food and labor costs have also pressed margins across the industry.
Starbucks aims to report fourth-quarter results later this month. It will also give fiscal 2027 guidance at that time.
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