Starbucks (SBUX.US) declines to comment on rumors of Chipotle (CMG.US) acquisition: fully focused on transformation, potential acquisition may be costly
Starbucks (SBUX.US) declined to comment on Thursday regarding a report that it had attempted to acquire Chipotle Mexican Grill (CMG.US).
Zhitong Finance APP has learned that Starbucks (SBUX.US) on Thursday declined to comment on a report stating that the company attempted to acquire Chipotle Mexican Grill (CMG.US). Starbucks stated that the company is "highly focused" on its transformation under the leadership of CEO Brian Niccol.
Previously, foreign media, citing people familiar with the matter, reported that Starbucks had been working with advisors in recent months to explore a potential acquisition of Chipotle. Before Niccol was appointed CEO of Starbucks in 2024, he led Chipotle for about six years.
In response to the report, a Starbucks spokesperson stated that the company does not comment on rumors and speculation, adding that Starbucks remains focused on its two-year transformation plan under Niccol's leadership, with strong momentum and confidence in its long-term growth potential.
Starbucks, with a market capitalization of about $107 billion, trimmed losses on Thursday and closed nearly flat; Chipotle shares surged 6%, bringing the Mexican burrito chain's market cap to about $41 billion.
At Chipotle, Niccol was praised for leading the company out of its food safety crisis and expanding its digital business, driving years of strong sales growth.
"For Chipotle, we view this as positive, primarily because Brian Niccol would be returning to the brand," said RBC Capital Markets analyst Logan Reich.
However, Reich pointed out that investors have long been skeptical of restaurant companies driving growth through more brand acquisitions and said the strategic reasoning for a Starbucks-Chipotle deal remains unclear.
A potential acquisition could be costly
Analysts noted that, as Starbucks is making significant transformation investments, a deal could come at a high cost.
"The deal may require a lot of borrowing or issuing shares," said eToro Global Markets Strategist Laileh Akona. "If there is a lack of compelling financial rationale, investors may view the deal as an expensive distraction."
Over the past two years, Niccol has prioritized enhancing customer satisfaction through investment in staffing and store improvements, aiming to reduce wait times and to restore the café ambiance that helped make the chain a global brand.
As part of the comprehensive overhaul, the company has committed at least $500 million to workforce investment, which puts pressure on profitability. Under Niccol’s leadership, Starbucks has posted same-store sales growth for four consecutive quarters, although he said in July, "We still have more work to do."
"The timing seems somewhat odd because Starbucks is in the middle of a transformation and has yet to show the margin improvement investors may want to see," said Annex Wealth Management Chief Economic Strategist Brian Jacobsen.
According to LSEG data, Starbucks' adjusted operating margin in the third fiscal quarter was 14.4%, down from 16.7% two years ago.
The company also said Thursday it looks forward to announcing fourth-quarter results and providing guidance for the next fiscal year later this month.
The deal could boost Chipotle’s international expansion
Still, analysts said a deal could help accelerate Chipotle’s international expansion. "I think what makes this potential deal attractive is that CEO Brian Niccol may have the opportunity to leverage Starbucks' licensed partner relationships in Europe to expand Chipotle more aggressively," said Northcoast Research analyst Jim Sanderson.
International expansion has been a focus for Chipotle’s current CEO, Scott Boatwright, who succeeded Niccol. This year, the company opened its first restaurants in Mexico and Saudi Arabia, bringing its number of international outlets to about 100.
Last year, Chipotle also announced it was setting up a joint venture with Korean food company SPC Group to expand into the Asian market.
Starbucks has about 40,000 stores worldwide. Based on annual reports from both companies, as of last year, Chipotle operated 3,938 restaurants in the U.S., while Starbucks had about 18,000 stores in North America.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Delta Air Lines Lowers Profit Forecast as Fuel Cost Increase Outpaces Ticket Price Growth
Delta Air Lines lowers its annual profit forecast due to a $6 billion increase in fuel costs; sharply rising ticket prices test travelers’ willingness to pay. The company’s refinery business is expected to generate $700 million in profits to help offset the impact of fuel costs. Rajesh Kumar Singh, Reuters Chicago, October 9 – Delta Air Lines (DAL.N) lowered the midpoint of its annual profit forecast by nearly a quarter on Friday, as surging fuel costs offset the positive effects of strong travel demand and higher ticket prices. This downgrade highlights the increasingly severe challenges faced by U.S. airlines: if fuel prices remain high, will passengers be willing to accept further price hikes? Airlines have already increased ticket prices considerably this year, and analysts warn that further hikes could test travelers’ willingness to continue spending. The Atlanta-based airline expects its annual fuel spending to increase by about $6 billion compared to last year. Its third-quarter fuel expenses jumped 62% year-on-year to $4.1 billion, more than $500 million higher than July’s expectations. When asked about the reasons for the revised forecast, Delta CFO Erik Snell told reporters, “It’s entirely a fuel issue,” noting that crude oil and refined jet fuel prices have both increased since the summer. Delta now expects adjusted annual earnings per share of $5.10–$5.60, down from its July forecast of $6.50–$7.50. According to data from London Stock Exchange Group (LSEG), the new median of $5.35 is below analysts’ average forecast of $5.46. The company expects an adjusted pre-tax profit of $4.5 billion in 2026. According to LSEG, third-quarter adjusted earnings per share were $1.72, slightly below the average analyst forecast of $1.76. Its adjusted operating margin dropped from 11.1% to 9.4%. Delta is the first major U.S. airline to report third-quarter earnings; its competitors United Airlines (UAL.O), American Airlines (AAL.O), and Southwest Airlines (LUV.N) will release their results later this month. Ticket Price Increases According to the U.S. Bureau of Transportation Statistics, in the first eight months of 2026, U.S. airlines spent $42.9 billion on fuel for scheduled flights, nearly $13.2 billion more than in the previous year, despite a slight decrease in fuel consumption. Strong demand and limited seat growth have helped airlines pass higher fuel costs onto passengers. According to the U.S. Bureau of Labor Statistics’ Consumer Price Index, over the five months ending in August, average U.S. airfares increased about 25% year-on-year. With fuel prices remaining high and industry capacity growth set to further accelerate in the fourth quarter, analysts are closely watching whether airlines including Delta can raise ticket prices further without suppressing travel demand. Deutsche Bank analysts expect the industry’s proportion of fuel costs recouped through revenue to decline in the fourth quarter, with full recovery not expected until early 2027. Delta says demand remains strong. Snell noted that with fourth-quarter bookings already near 60%, the company expects revenue to increase by around 20% year-on-year. According to LSEG, Delta forecasts fourth-quarter adjusted earnings per share of $1.15–$1.65, with the median $1.40 roughly in line with analysts’ average expectation of $1.39. Refinery Advantage Delta holds an advantage over other major U.S. airlines: it owns a refinery near Philadelphia, which Snell expects will generate $700 million in profits this year. “We own a refinery, which gives us a hedge—part hedge—on fuel prices that no other airline has,” he said. Delta acquired the Monroe refinery in 2012, which processes crude oil into jet fuel and other products. While Delta must still pay market prices for fuel consumed by its airline operations, refinery profits remain within the company. When the price spread between crude oil and refined products widens, this helps offset fuel cost pressures for airlines sourcing externally. However, this protection depends on refinery margins; when margins fall, the refinery may also incur losses. Nevertheless, the refinery can only partially ease the impact of rising fuel prices. Even with an expected refinery benefit of 40 cents per gallon, Delta forecasts its fuel cost to rise from $3.61 per gallon in the third quarter to $4.25 per gallon in the fourth quarter. Snell said fuel costs are expected to remain high for some time. “Ultimately, fuel prices will come down. As to when, we’re not sure,” he said. (For the convenience of non-native English speakers, Reuters offers automated translations of its reports into several other languages. Due to possible errors or lack of context in automated translations, Reuters does not guarantee the accuracy of automated translation texts and provides them only for reader convenience. Reuters assumes no responsibility for any damages or losses from use of automated translation featur
SUI Price Pullback Sparks Debate: Correction or Next Buying Opportunity?
"SaaS Apocalypse" Debunked? Autodesk (ADSK.US) and Intuit (INTU.US) Lead Growth Against the Trend as Wall Street Reprices the "AI Eating Software" Narrative
This week, Autodesk and Intuit are expected to record their strongest weekly gains in months, defying pressure on the overall technology sector. This strong performance signals a renewed optimism in the market regarding the growth prospects of the SaaS (Software as a Service) industry.
Starlink Targets the US Mobile Communication Market, SpaceX (SPCX.US) Opens New Growth Opportunities: Wall Street Focuses on the Reshaping of the Telecom Industry Landscape
Combining the existing satellite capacity, SpaceX is supplementing its capabilities to upgrade from “occasional emergency connectivity” to “daily mobile service.” The satellite network provides wide-area coverage and fills ground blind spots, while low-frequency terrestrial networks improve connectivity inside buildings and in environments with complex obstructions. The two form a complement to each other.
Crypto prices
More
