Chipotle Stock Falls as Starbucks Says It Won’t Be Buying the Burrito Chain

Starbucks denied a report of a tie-up with the burrito chain. (Michael M. Santiago/Getty Images)

Key Points

• Starbucks says it’s not buying Chipotle.
• The statement follows a report that Starbucks had engaged with advisors to discuss a potential proposal.
• A Starbucks spokesperson says the company is focused on executing its Back to Starbucks strategy.

Starbucks won’t be buying Chipotle Mexican Grill , Starbucks said Monday.

Starbucks had been connected to a possible takeover of the burrito chain, whose market capitalization topped $41 billion last week, following a report it had engaged with advisors to discuss a proposal. The potential transaction would have been the largest-ever tie-up in the restaurant sector.

“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 told Barron’s. The spokesperson added the company is “laser focused on executing our Back to Starbucks strategy,” reiterating a comment it made last week.

Shares of Chipotle fell 4.1%, while Starbucks rose 0.5%.

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An acquisition would have reunited CEO Brian Niccol with Chipotle, where he oversaw a turnaround from 2018 until leaving for Starbucks in 2024. Current Chipotle CEO Scott Boatwright served as the company’s chief operating officer under Niccol during his tenure.

Such a deal likely would disrupt Niccol’s ”Back to Starbucks” strategy to revitalize the company’s brand. He said last month the coffee chain had invested more than $500 million in additional staffing, scheduling, and other employee initiatives as part of the strategy, while also revamping locations and adding new menu items.

The company also has started closing underperforming locations. Starbucks closed about 250 cafes last month that they said failed to achieve “acceptable financial performance.”

Wall Street was skeptical about how Starbucks would have financed the Chipotle deal as it carried out its turnaround. William Blair analysts wrote last week a deal would likely be closer to $50 billion, presenting a “tough math” scenario for the company. They added there are “no obvious revenue synergies between the two brands,” which operate with “very different supply chains.”

Seaport Research Partners’ analyst Eric Gonzalez wrote that while Starbucks was still working through its own turnaround adding on another major restaurant business may also distract management from those efforts.

Write to Ty Roush at tyler.roush@barrons.com

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