Chipotle Shares Are Soaring on News That Starbucks May Acquire It
Key Points
Starbucks' CEO once engineered a turnaround at Chipotle.
He's also attempting to turn around poor sales at Starbucks.
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Shares of Chipotle Mexican Grill (NYSE: CMG) soared this past Thursday on news that Starbucks (NASDAQ: SBUX) has been considering an acquisition of the fast-casual burrito chain.
On Thursday, The Financial Times reported that Starbucks has been working with advisors in recent months on a takeover proposal for Chipotle. Chipotle shares were up almost 7% in late morning trading on Thursday, while Starbucks' share price dropped more than 3%.
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It's far from certain that Starbucks will actually attempt the takeover. It would be a massive deal, as Chipotle's market capitalization is north of $41 billion. And the acquisition could also face antitrust obstacles, though the Trump administration has so far not applied those laws strictly.
FT reports that an acquisition of Chipotle would be the biggest-ever merger in the restaurant sector, dwarfing Burger King's 2014 acquisition of Canadian coffee chain Tim Hortons, at around $11.4 billion.
Starbucks' CEO has engineered corporate turnarounds before
Interestingly, Starbucks CEO Brian Niccol is a former Chipotle CEO. He led the restaurant for six years. Since he left, the company's share price has fallen by nearly half. Niccol also worked for Yum! Brands, which owns KFC and Taco Bell.
Niccol engineered a well-respected turnaround at Chipotle after becoming CEO in 2018. While he was there, sales soared, and the share price climbed more than eightfold, moving from around $6 to $56. He has been attempting the same kind of transformation at Starbucks, which recorded six consecutive quarters of falling sales from early 2024 to late 2025.
Customers had complained about their experience at the coffee shops, including long lines, too few employees, and inconsistent product offerings. Niccol's "Back to Starbucks" turnaround plan has attempted to make service more consistent and faster, and make the coffeehouses' environments warmer.
Since Niccol left Chipotle in late August 2024 to take the helm at Starbucks, Chipotle's share price has fallen by about 40%. Starbucks shares are down about 5% since that date.
The latest news that Niccol is looking at combining the two chains suggests he sees more value in Chipotle than investors do; that, with the share price significantly below where it was when he left, he believes the price of an acquisition is favorable right now; and that he thinks he can lead the combined company's stock price higher, possibly benefiting from synergies that come from mergers.
With Chipotle shares up sharply on the news, it seems investors believe Niccol could improve that business once again, though the undertaking might divert his attention from Starbucks' operations.
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Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends Yum! Brands and recommends the following options: short December 2026 $38 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
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