Starbucks is exploring a possible takeover of Chipotle Mexican Grill in a deal that could be worth nearly $39 billion, bringing two of the biggest names in American restaurants under one company.

The Financial Times reported that Starbucks has worked with advisers in recent months on a potential proposal to acquire Chipotle. However, the discussions remain at an early stage, and there is no confirmation that Starbucks has made a formal offer.

A deal is also far from certain. People familiar with the matter cautioned that a transaction of this size could ultimately fall apart. Combining two major consumer brands would present significant challenges.

If completed, the acquisition would rank among the largest deals ever seen in the restaurant industry.

Why Chipotle is on Starbucks’ radar

The potential deal has one unusually direct connection: Starbucks CEO Brian Niccol previously ran Chipotle for more than six years.

Niccol left Chipotle in August 2024 to take over as Starbucks chief executive. His move came as Starbucks faced pressure over weakening sales and growing demands from activist investor Elliott Management for changes at the coffee chain.

His arrival was welcomed strongly by investors. Starbucks shares jumped 24% when his move to the company was announced.

At Starbucks, Niccol launched a turnaround strategy known as “Back to Starbucks.” The plan focuses on improving the customer experience through measures including hiring more baristas, introducing new menu items, speeding up service and renovating cafés.

The strategy has shown early signs of improvement, with Starbucks seeing higher same-store sales and profits under Niccol’s leadership, according to the Financial Times.

A $39 billion restaurant bet

Chipotle’s current market value is around $39 billion, putting the potential transaction on a scale rarely seen in the restaurant business.

It would also be substantially larger than Burger King’s $11.4 billion acquisition of Tim Hortons in 2014.

The two businesses together generated almost $50 billion in sales last year. Starbucks, however, has a far larger global footprint, with around 41,000 owned and licensed stores worldwide. About two-fifths of those locations are in the US.

Chipotle has around 4,200 restaurants, with almost all of them located in the US.

That difference in scale and geography would make a combined business considerably larger, while also creating a complicated integration challenge.

Niccol’s Chipotle ties run deep

Niccol’s relationship with Chipotle extends beyond his previous role as chief executive.

Two former Chipotle executives, Tressie Lieberman and Stephen Piacentini, have joined Starbucks under his leadership. Lieberman is leading marketing, while Piacentini is working on coffee-shop development.

There is also a connection between Niccol and Chipotle’s current leadership. Scott Boatwright, who is now Chipotle’s chief executive, previously served as the company’s chief operating officer while Niccol was CEO.

Niccol also continues to have a home in Newport Beach, California, where Chipotle is headquartered. Starbucks has established a satellite executive office in the Newport Beach area as well.

Those links would give any potential Starbucks-Chipotle combination an unusual degree of familiarity between the leadership teams.

Chipotle shares have fallen since Niccol’s departure

Chipotle’s stock performance has also become part of the takeover story.

The company’s shares have nearly halved since Niccol left in August 2024 and have fallen almost 20% over the past year, according to the Financial Times.

Chipotle has also faced consumer concerns, including an issue last summer involving the removal of jalapeño peppers from a supplier that had been linked to a salmonella outbreak.

For Starbucks, the reported interest comes while Niccol is still working to rebuild momentum at the coffee chain.

Starbucks has not confirmed the takeover

Despite the reported work with advisers, Starbucks has not confirmed that it plans to acquire Chipotle.

There is also no indication that a formal offer has been accepted, or even made. The discussions could still end without a transaction.

The potential acquisition nevertheless stands out because of the existing ties between the two companies. Niccol previously led Chipotle, two former Chipotle executives now hold senior roles at Starbucks, and Chipotle’s current CEO previously worked under Niccol.

If Starbucks eventually pursues and completes a nearly $39 billion acquisition, the combination would create a restaurant group generating almost $50 billion in annual sales and mark one of the biggest corporate deals the sector has seen.

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