Starbucks has denied any plans to purchase Chipotle Mexican Grill, which was reported to be the largest restaurant acquisition ever. Starbucks isn’t the buyer of the burrito chain, a company spokesman said on Monday. The company’s shares surged days after a report in the newspaper that caused both companies to have their share prices fluctuate. What actually happened and why the rumour got so much attention.
Starbucks denies the deal
A Starbucks spokesman told CNBC’s Jim Cramer that Starbucks isn’t acquiring Chipotle on Monday, Oct. 12. The company stated it typically does not comment on rumors or speculation, but it was important that it was “clear that it is not pursuing the deal. Chipotle did not respond to the request for comment.
How the rumor started
Speculation started Oct. 8, when The Financial Times reported on a possible takeover bid for Chipotle by Starbucks, according to people close to the situation. Semafor previously reported in early October that Chipotle was hiring advisers to fend off activist investors or a hostile bid.
Shares swing both ways
Shares of Chipotle rose more than 7% while Starbucks dipped approximately 3% after the initial report. The moves reversed after Starbucks refused to buy the deal on Monday. Chipotle shares fell by approximately 4% and Starbucks shares climbed 1% to 1.5%.
The Brian Niccol link
The rumor was picked up because previously the CEO of Starbucks, Brian Niccol, had been CEO of Chipotle for six years. He departed in 2024 to take over the helm at Starbucks. Some of Chipotle’s investors were hoping that a deal will bring back the executive that is responsible for the digital expansion and solid growth of the company.
A record-breaking deal
Based on its $40-plus billion valuation, a deal with Chipotle would have been the largest restaurant deal of all time. If the two businesses were merged, they would have been generating sales of approximately $50 billion in 2025 and operating approximately 41,000 stores around the world, according to the Puget Sound Business Journal.
Focus on the turnaround
Starbucks told CBS News in a statement that its team is working on its Back to Starbucks strategy and has confidence that it will continue to grow in the long term. The company also plans to release fourth-quarter results, as well as fiscal 2027 guidance, later this month.
Analysts were skeptical
The deal from the beginning was questionable for many analysts. Last week, TD Cowen analysts noted that a Starbucks and Chipotle deal is a low possibility, per their note. Other people wondered if it made sense to get a big deal done before Starbucks had its own turnaround.
Chipotle’s challenges
The rumour came as a bad news day for Chipotle. The company’s stock has lost approximately 20% in the last year, and the chain has been suffering from a decrease in restaurant traffic. Investors now will turn to Chipotle’s plans to regain growth as Starbucks has ruled a deal out.
