Starbucks has explored a potential takeover of Chipotle Mexican Grill, according to a Financial Times report, in what could become one of the largest deals in the restaurant industry.

Starbucks has worked with advisers in recent months on a possible offer for Chipotle, which has a market value of nearly $39 billion, the FT reported, citing people familiar with the matter.

The status of the plans and whether Starbucks has submitted a formal offer could not be determined.

Chipotle shares CMG rose 6.5% in Thursday trading following the report, while Starbucks stock SBUX fell 3%.

The potential deal remains at an early stage and may not ultimately materialise, according to people familiar with the matter.

Starbucks explores potential Chipotle acquisition

A takeover would bring together two major US restaurant brands and could become the largest-ever transaction in the sector if completed.

The potential deal follows reports earlier this week that raised the possibility of a combination between the two chains.

Speculation about a potential buyer emerged after Chipotle hired bankers to defend against a possible takeover.

A transaction would surpass Burger King’s $11.4 billion acquisition of Tim Hortons in 2014. A combined company would have generated almost $50 billion in sales last year, according to the FT report.

Starbucks operates about 41,000 owned and licensed stores, with around two-fifths located in the US. Chipotle has approximately 4,200 restaurants, almost all of them in the US.

Both companies declined to comment on the reported takeover discussions.

Deal would reunite Starbucks CEO with Chipotle

A potential acquisition would also reconnect Starbucks Chief Executive Brian Niccol with Chipotle, where he served as CEO for more than six years before joining Starbucks in August 2024.

Niccol gained recognition during his tenure at Chipotle following efforts to turn around the business after a major food-safety crisis.

Chipotle Chief Executive Scott Boatwright previously served as the company’s chief operating officer under Niccol.

At Starbucks, Niccol is overseeing a turnaround strategy known as Back to Starbucks. The plan includes adding baristas, introducing new menu items, improving service speeds, and renovating cafes.

The strategy has coincided with an improvement in same-store sales and profits.

Niccol has also brought two former Chipotle executives, Tressie Lieberman and Stephen Piacentini, into senior roles at Starbucks.

Starbucks shares surged 24% when Niccol’s move to the company was announced, amid pressure from activist investor Elliott Management over declining sales.

Chipotle shares have fallen over the past year

Chipotle’s shares have fallen nearly 20% over the past year. The stock has also lost almost half its value since Niccol left the company in August 2024.

The decline has partly reflected consumer concerns following the removal of jalapeño peppers from a supplier linked to a salmonella outbreak last summer.

The reported takeover discussions come as restaurant-sector mergers and acquisitions remain active. A deal between Starbucks and Chipotle, however, would face the complexity of combining two large consumer businesses and remains uncertain.

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