The Zhitong Finance App learned that, according to reports from people familiar with the media, global coffee chain Starbucks (SBUX.US) has been cooperating with consultants in recent months to study a potential acquisition plan for the American-Mexican restaurant chain Chipotle Mexican Restaurant (CMG.US). The deal is aimed at merging two major US consumer brands. If implemented, it will become the largest merger and acquisition in the history of the catering industry.
The report also pointed out that the specific progress of Starbucks' potential acquisition plan is still unclear. Considering that the deal is likely to be huge, this acquisition may eventually fail to move forward. As a result, there is still great uncertainty in related discussions, and it is uncertain whether the two sides will reach a formal deal.
According to Wall Street analysts, the possibility of Starbucks merging with Chipotle Mexican Grill is low. Logan Reich, an analyst at RBC Capital, believes that the strategic logic behind Starbucks' acquisition of Chipotle Mexican Grill is unclear because the two companies' businesses overlap to a limited extent. “We believe there may be some synergy between the two companies in terms of general and administrative expenses and supply chain optimization, but these synergies are insufficient to justify the acquisition,” he said.
BTIG analyst Peter Saleh said the bank's initial reaction to this “rumor of a major deal” in the restaurant industry was highly skeptical because the deal was not very reasonable from a supply chain or operational perspective. Peter Saleh pointed out that this deal is also likely to cause serious earnings per share dilution for Starbucks shareholders, and at the same time, from the management perspective, it will also greatly disrupt the two brands. He added: “While there are many reasons against this deal, we believe that using Starbucks' coffee products to provide breakfast business for Chipotle Mexican Barbecue is the only compelling reason behind this deal.”
However, the launch of any type of breakfast business by Chipotle Mexican Grill is considered to face a range of challenges, including the company's lack of drive-thru (drive-thru) stores, the breakfast business may encroach on the lunch and dinner business, operational complexity, and widespread difficulties in entering the breakfast market itself.
TD Cowen analyst Andrew Charles and his team agree that at this stage, this potential deal is unlikely to happen. Andrew Charles stated in his latest report: “We believe that Brian Niccol's primary task at Starbucks has always been to implement the 'Back to Starbucks' (Back to Starbucks) US business reversal plan, and advancing an acquisition transaction of over $44 billion (assuming no acquisition premium included in the benchmark scenario) does not seem consistent with this goal. However, we also understand why Brian Niccol would evaluate Chipotle Mexican Grill because he is very familiar with the business and has a relevant track record.”
According to reports, Brian Niccol served as CEO of Chipotle Mexican Grill for six years and made a name for himself in the industry. After he left Chipotle Mexican Grill in August 2024, the company's stock price almost fell short. Today, under Brian Niccol's leadership, Starbucks is in the early stages of implementation of the “Return to Starbucks” recovery strategy. Same-store sales and profits continue to rise, and the results of the strategy are gradually showing. Brian Niccol's reforms include adding baristas, introducing new food, speeding up meals, and refurbishing stores. He also hired two former executives from Chipotle Mexican Grill to be responsible for marketing and store development, respectively.