Starbucks is not buying Chipotle Mexican Grill, the coffee chain said on Monday, quashing speculation about what could have been the largest restaurant deal on record.
"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.
Shares of the coffee giant were up 1% in early trading, while Chipotle fell about 3%.
Starbucks reiterated that its management was "laser focused" on "Back to Starbucks" strategy and had "strong momentum and confidence" in its long-term growth prospects. The company aims to share its fourth-quarter results and fiscal 2027 guidance later this month.
The statement follows a report by the Financial Times on Oct. 8 that Starbucks had worked with advisers in recent months on a potential proposal to acquire Chipotle, citing people familiar with the matter.
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The report prompted the investor community to speculate about a tie-up that would have brought together two of the largest US restaurant brands and reunited Starbucks CEO Brian Niccol with the burrito chain he led for six years before joining Starbucks in 2024.
Customers wait to enter one of the first Starbucks stores at Pike Place Market in Seattle, Washington. The coffee chain on Monday said it is not buying Chipotle Mexican Grill.
A potential deal would have created a restaurant giant with about $50 billion in annual sales, positioning it to better navigate uncertain demand from inflation-hit consumers, rising operating costs and the squeeze on profits. The burrito chain has a market capitalization of around $40 billion.
While the report last week sent shares of Chipotle up more than 7% and Starbucks down about 3%, several analysts questioned the strategic rationale for a deal as Starbucks continues to execute a turnaround under Niccol.
"Funding a premium takeover price would likely require a mix of debt and equity, which would test leverage and could dilute existing shareholders while Starbucks is still executing its turnaround," Paren Knadjian, Partner at Transaction Advisory Services, EisnerAmper, said last week.
Starbucks has been investing heavily in staffing and store upgrades aimed at reducing wait times and improving customer experience under Niccol, who joined the company after leading Chipotle through a period of rapid growth and digital expansion.
Chipotle, meanwhile, has grappled with softer traffic as consumers pull back on discretionary spending, while higher food and labor costs have weighed on margins across the restaurant industry. Their shares have nearly halved in value since Niccol's departure.
